The Brief

California’s small businesses — employers to more than half the state’s workforce — are staring down what some owners, experts and advocates say could be immense negative consequences from President Donald Trump’s slew of executive orders.

Trump’s embattled federal funding freeze and anti-diversity push have seeded uncertainty about the economy, jobs and spending on infrastructure and innovation.

The freeze, imposed on Jan. 27, affected hundreds of billions of dollars for thousands of federal programs, including many aimed at small businesses. After states including California filed suit, a federal judge issued a temporary restraining order putting the freeze on hold. Since then there has been more legal wrangling, including a court order stating that Trump failed to comply with the initial ruling.

The administration has said funding for small business would not be paused, but owners and advocates are not sure if that will prove true, and say uncertainty about the freeze may already be doing damage.

Liz Perez, who owns a small general contracting firm in San Diego County, said news of the funding freeze gave some people in her Native American community “heart attacks.” She said some projects that were under construction had to be temporarily halted while those in charge tried to figure out what was going on.

“I’ve never seen tribal leaders — the most put-together leaders — so frazzled,” Perez said.

Perez and other small business owners, allies and experts worry that a freeze could mean fewer opportunities for entrepreneurs to start and grow businesses, which could lead to fewer jobs and less spending and investment for communities, industries and larger businesses.

Small businesses with fewer than 20 employees accounted for 29% of jobs in California, and businesses with 20 to 100 employees accounted for 30% of jobs in the state as of the end of 2022, according to an analysis of Bureau of Labor Statistics data by the Public Policy Institute of California.

California, the nation’s most populous state, is the biggest recipient of Small Business Administration loans, with $1.15 billion in loans approved for this year. Not all loans from the agency are federally funded, but they are guaranteed by the government. The loans funded by the agency, which could be most at risk from the freeze, include disaster loans and microloans.

Other federal funds that help small businesses and were on the list of programs to be frozen include the $25 million for the State Small Business Credit Initiative, which the Finance Department said is in the state’s 2025-2026 fiscal year budget. Community development financial institutions, which provide banking services to small businesses, are also facing a “real and immediate threat” to their funding that includes possible cancellation of contracts, the CDFI Coalition said in an email to its members this week that was seen by CalMatters.

Simon Brown, spokesperson for national advocacy group Small Business Majority, said small business owners, who “struggle to access capital from all institutions at all levels,” count on the Small Business Administration as a key source of help. Although he is unclear about whether funding from the agency will be affected, he is concerned. “If SBA funding was choked off in some way, it would be a major blow to the entire ecosystem,” Brown said.

Representatives from the Small Business Administration did not return multiple requests for comment, and neither did the White House.

Alex Bloom, economic development manager for Central Sierra Economic Development District as well as Mother Lode Job Training — which handles training funded by the federal Workforce Innovation and Opportunity Act — said the effects of a federal funding freeze could be far-reaching.

“Overall there’s a level of uncertainty,” that could lead to a drop in investor confidence, he said. And “a funding freeze or delay could halt infrastructure projects, which would affect job creation and development that are critical to our region,” Bloom added.

Others say a freeze or pullback on funding will have an impact on equity — that it could hurt those who need the most help.

How federal aid and policies have boosted small business 

Perez said she served in the U.S. Navy for nine years, then “transitioned right into a recession.” At one point, she was pregnant and had nowhere to live. She began working in construction and eventually started a business.

“My business helped get me out of poverty,” said Perez, owner of GC Green, a general contracting and consulting firm that focuses on clean energy, and subsidiary Veterans Energy Services Company.

Liz Perez, owner of GC Green, a general contracting and consulting firm that focuses on clean energy, walks around an electric vehicle charging station that was recently completed at a Sonic location in Vista on Jan. 31, 2025.

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Ariana Drehsler

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CalMatters

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On the list of programs the Trump administration is examining include funds for small business development centers, development loans and technical assistance for small businesses.

The budget office also said it wanted to root out “Marxist equity, transgenderism, and green new deal social engineering policies.”

California Attorney General Rob Bonta, who with other state attorneys general won a temporary restraining order against the freeze, said last week during a press conference that, if enacted, it would affect 34% of the state’s budget, which he called “a massive, irreplaceable chunk.”

As a woman, veteran and Native American, Perez said she has been helped by some DEI initiatives. But she said “starting my company didn’t mean I cut in line, or got in front of everybody. It means I got my foot in the door.”

Perez also was able to secure a federal loan to help Native American-owned businesses during the pandemic, during President Joe Biden’s administration, which she said helped her expand her business.

“You roll back these initiatives, what is that going to do to our economy, our supply chains, our workforce?” she asked.

The budget office followed up its original memo with another one that said “funds for small businesses, farmers, Pell grants, Head Start, rental assistance, and other similar programs will not be paused.” But there is evidence that at least one of the things on that list has not been spared: Some Head Start programs have had trouble accessing funding and at least one has been forced to shut down in Washington, according to media reports and the states’ lawsuit.

At least one expert CalMatters spoke with said he thinks small business is “probably one of the last places the spigot will be turned off.” Robert Dekle, an economics professor at the University of Southern California, said “it would actually be suicidal for the Republican party to continue with” cutting off aid to small businesses because he said small business owners make up “a large part of Trump’s base.” (A poll after Trump won the election showed changes in optimism among small business owners differed along party lines.)

‘We’re going backwards’ 

But Catalina Amuedo-Dorante, an economics professor at UC Merced, said this administration has made its priorities clear. “We’re going backwards (in terms of) rights for different minority groups, groups that need more assistance in medical care, food, education,” she said.

The professor added that “harming human capital” is a recipe for disaster. She called the possible rollback of funding to small business, medical research and other programs a threat to this generation and next.

Line cook Leticia Andrade, left, puts together a lunch order at Creative Ideas Catering, a small business, in San Francisco on June 11, 2024.

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Juliana Yamada

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CalMatters

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Another one of Trump’s executive orders — titled “Ending Illegal Discrimination And Restoring Merit-Based Opportunity” — includes a directive to the Office of Federal Contract Compliance Programs within the Department of Labor to stop “promoting diversity” and “allowing or encouraging Federal contractors and subcontractors to engage in workforce balancing based on race, color, sex, sexual preference, religion, or national origin.”

The president’s anti-diversity push rides a wave of similar sentiment that has swept the country in recent years, including through lawsuits against affirmative action in government. Last year, a judge ruled that a small business lending program meant to help Black, Latino and other underrepresented entrepreneurs should be open to white people.

In late January, the Small Business Administration reportedly decreased its goals for federal contract awards to small and disadvantaged businesses to 5%, apparently because of the Trump directive on DEI. Under Biden, the goal was 15%.

What all this could mean, regardless of what happens with the funding freeze, is that some small businesses that might otherwise have been considered for federal government contracts may no longer get those chances.

Perez, the small business owner, said DEI initiatives can help when it comes to landing general contracting work, but not always: “Just because these policies are in place, it doesn’t mean you’re going to get the job. It’s so difficult. It’s grinding all the time.”

Carolina Martinez, chief executive of CAMEO Network, a small business advocacy group, said procurement opportunities were already limited, and the Trump administration’s new policies will make things worse. “It seems clear they’re opening the door to discrimination and racism,” she said.

Randell Leach is CEO of Beneficial State Bank in Oakland, a community development financial institution, which serves low-income customers and small businesses that may not be able to get loans elsewhere. Leach said he is concerned about the intersecting effects of “the curtailment of funding and anti-DEI measures that could come together and impact women entrepreneurs and communities of color.”

Not only does that directly affect historically underrepresented small businesses but also, potentially, “a whole host of vendors and tech companies that support them,” he said.

The bottom line: “It’s important to be aware that discrimination in any form is not only bad for communities, but for the economy,” Martinez said.

A federal judge has ordered Los Angeles to pay more than $1.8 million in attorneys’ fees and costs to the L.A. Alliance for Human Rights and other organizations that sued the city over what it deemed an inadequate response to the homelessness crisis.

The city is appealing the decision.

The details

L.A. Alliance is a group of business owners and residents who sued the city and county of Los Angeles in 2020 in an effort to push both governments to provide more shelter to unhoused people in the region.

The city of L.A. settled with the plaintiffs in 2022, and U.S. District Judge David O. Carter is overseeing the city’s progress in keeping up with the terms of that agreement. The judge found the city breached its agreement in multiple ways in a ruling last summer.

Specifically, the judge found that the city did not provide a plan for how it intends to create 12,915 shelter beds, as promised, by 2027. The court also found the city “flouted” its responsibilities by failing to provide accurate, comprehensive data when requested and did not provide evidence to support the numbers it was reporting, according to court documents.

In addition to $1.6 million in attorneys’ fees and $5,000 in costs to L.A. Alliance, Carter awarded about $200,000 in fees and $160 in costs to the Los Angeles Catholic Worker and Los Angeles Community Action Network.

The organizations are considered “intervenors” in the suit, representing people experiencing homelessness on Skid Row. Their attorneys include those from the Legal Aid Foundation of Los Angeles.

Why it matters

In his order, released Tuesday, Carter compared the recent award to the millions of taxpayer dollars city officials agreed to pay an outside law firm representing L.A. in the settlement.

Carter wrote in the order that the attorneys' fees and costs to L.A. Alliance and others “is reasonable, especially in light of the approximately $5.9 million that the City’s outside counsel is charging.”

LAist’s housing and homelessness coverage was cited several times in the order.

“It has fallen to plaintiff, intervenors, and journalists to point out the deficiencies in the city’s reporting,” Carter wrote, referring to data the city is required to report to the court as part of the settlement.

“Plaintiff and intervenors must be compensated for this,” he said.

The city’s response 

Attorneys representing the city filed a notice of appeal with the U.S. District Court in Los Angeles on Thursday.

L.A. City Attorney Hydee Feldstein-Soto’s office did not respond to LAist’s requests for comment by phone or email.

Shayla Myers, senior attorney with the Unhoused People's Justice Project at the Legal Aid Foundation of Los Angeles, told LAist the intervenors participated in the case without compensation “because it's incredibly important given what is at stake in these proceedings that unhoused folks have a voice.”

Matthew Umhofer, an attorney for L.A. Alliance, told LAist he’s thrilled the court is imposing accountability on the city, including sanctions for violating the settlement agreement. But Umhofer said he’s saddened that L.A. Alliance is going to have to keep fighting to hold the city to its promises.

“The obvious city strategy here is hire a big, good law firm to fight on absolutely every front in hopes that the plaintiffs, the intervenors or the court will ultimately give up trying to hold the city accountable,” he said.

What's next

The parties are scheduled to appear in federal court in downtown L.A. on Monday, when a hearing will resume to determine whether the judge will hold the city of Los Angeles in contempt of court.

Carter has said in documents that he’s concerned “the city has demonstrated a continuous pattern of delay” in meeting its obligations with court orders under the settlement and that the “delay continues to this day.”

Every January, the open-air downtown food fair reopens after its winter break and announces new additions to its carefully selected group of regular vendors.

This year’s new vendor class demonstrates the resilience of L.A.'s independent food scene, ranging from a Grammy-nominated producer's Persian-influenced pizza to Southern fried fish celebrating Black American culinary traditions, to an LAist 2025 Tournament of Cheeseburger heavyweight contender.

The reopening also marks the start of Smorgasburg LA's 10th anniversary year, and will feature 41 returning vendors, who've helped build the regular event into a fun, family-friendly opportunity to try new, often cutting-edge food you may not be familiar with.

Doors open from 10 a.m. to 4 p.m. at DTLA’s The Row, with free entry and free parking for the first two hours.

A new year

General manager Zach Brooks said this is his favorite time of year. "We add the new vendors at the beginning of the new year, everyone's excited."

Vendors apply through Smorgasburg's website, and the team meets with every applicant to taste their food before acceptance. Brooks said it's not a vetting process like "Shark Tank" but rather a matter of seeing if it's a good fit. Competition remains fierce, with many more applicants than available spots.

"I think it's just a testament to L.A. and the resilience of people who love this business and have a passion for it, and are going to continue to persevere and start their businesses and want to be out there selling food," Brooks said.

Here are a few highlights:

Viral orange chicken sandwich 

Long Beach-based Terrible Burger becomes Smorgasburg's new permanent burger vendor after standout appearances at LAist's Tournament of Cheeseburgers and the market's rotating Smorgasburger Stand. The smashburger pop-up, run by husband-and-wife team Nicole and Ryan Ramirez, specializes in burgers that draw from pop culture and global influences. They've made waves with a Korean barbecue burger topped with bulgogi barbecue sauce and a viral orange chicken sandwich, previously available only at their Tuesday night residency at Long Beach's Midnight Oil, making its L.A. debut Sunday.

Terrible Burger's viral orange chicken sandwich makes its LA debut at Smorgasburg after being available only in Long Beach.

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Courtesy Terrible Burger

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"We have been big Smorgasburg fans for a really long time before we even started Terrible Burger. We would go to Smorgasburg on dates, just eat and hang out. And it was just always a little dream of, "oh, what if we ever sold food here?" Nicole Ramirez said.

Crispy fried snapper and thick-cut fries 

Orange County-based Hot Grease, run by Asha Starks, is among four vendors graduating from residencies to permanent status. The Southern fried fish pop-up celebrates Black American history through food that honors Starks' family heritage.

"Folks often forget that there are Black folks in Orange County. My family came to Orange County during the second wave of the Great Migration, and they settled in Santa Ana... my food is very cultural. And the story, I feel like, is just as important to highlight," Starks said.

Hot Grease's crispy buttermilk fried snapper with thick-cut fries and "Ill Dill" tartar sauce.

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Courtesy Hot Grease

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Hot Grease serves crispy buttermilk fried snapper with thick-cut fries and small-batch sauces like "Ill Dill" tartar. Honoring the fish fry's history as a site of mutual aid, Starks directs 3% of sales to the Potlikker Line, Hot Grease's reproductive justice mutual aid fund. For January, she's added fish and grits, black-eyed peas and collard greens.

Pizza with a Persian twist

Mamani Pizza brings studio-born energy to Smorgasburg LA with pies featuring Persian-inspired creativity.

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Courtesy Mamani Pizza

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Mamani Pizza, from the Grammy-nominated producer Farsi, part of the music production team Wallis Lane, started making Neapolitan-style pizzas at his West L.A. recording studio a year ago. What began as late-night pies for friends and artists became an underground hit. Most pizzas are traditional, but Farsi adds Persian touches like The Mamani, topped with ground wagyu koobideh, roasted Anaheim chilis, Persian herbs and pomegranate molasses.

Other new vendors

Banana Mama - Asian-inspired pudding
Barranco's Yogurt - Oaxacan fruit yogurt
Franzl's Franks - Austrian sausages
Melnificent Wingz - Gourmet chicken wings
Piruchi - Peruvian street food
RuRu's Golden Tea - Karak chai
Stick Talk - vegan corn dogs
SouuLA - Taiwanese breakfast concept
Unreal Poke - Hawaiian poke
Zindrew Dumpling Shop - Spicy wontons