The previous administration, in its final day in office, proposed that the Small Business Association (SBA) allow religiously affiliated businesses (e.g., a Christian bookstore) to receive loans through the agency, according to the Washington Post. Such businesses, despite not technically being religious organizations (more like organizations that are also religious), have generally been barred from receiving SBA loans due to concerns about chuch-state separation. The outgoing SBA head, though, argued that owners of such businesses should have the same rights as secular enterprises, including the ability to access taxpayer-backed loans.

Religious organizations, including houses of worship, were actually able to access SBA loans via the Paycheck Protection Program (PPP) in the CARES Act, which waived the normal religious restrictions temporarily. The proposed regulation, which has a comment period ending Feb. 18, would give religious businesses permanent access to the agency's loan programs as if they were secular businesses.

The Post said that the regulation presents the new administration with a thorny question over separation of church and state. While the new SBA administrator, Isabel Guzman, could simply scuttle the whole thing, such a move would likely draw condemnation from religious groups and create another front in the ongoing culture war over the separation of church and state.