(Washington, D.C.) — The United States Senate yesterday approved a bipartisan amendment to expand and make permanent the Minority Business Development Agency (MBDA). The measure, which was sponsored by U.S. Senate Committee on Small Business and Entrepreneurship Chair Ben Cardin (D-Md.), U.S. Senate Committee on Commerce Chair Maria Cantwell (D-Wash.), U.S. Senate Committee on Commerce Ranking Member Roger Wicker (R-Miss.), and U.S. Senators Tim Scott (R-S.C.), Tammy Baldwin (D-Wis.) and John Cornyn (R-Texas), is now included in the Bipartisan Infrastructure Investment and Jobs Act.
The MBDA was originally established by Executive Order as the Office of Minority Business Enterprises by President Richard Nixon on March 5, 1969. For nearly 50 years, the Congress has appropriated funding for the MBDA on a bipartisan basis. The MBDA is the only federal agency solely dedicated to supporting the development and expansion of minority business enterprises (MBEs).
“The MBDA is one of our best tools to address the historic barriers to small business ownership that minority entrepreneurs face,” Cardin said. “The COVID-19 pandemic has shined a bright light on the unique burdens that minority entrepreneurs face, so I am proud that the Senate has moved to provide the MBDA with the stability, leadership, and resources it needs to invest in minority businesses.”
“The Minority Business Development Agency has been a lifeline for many minority business owners and entrepreneurs seeking to start and grow their businesses,” Wicker said. “I am pleased that my fellow cosponsors of the MBDA Act supported my provisions to help expand MBDA resources to leverage the expertise of our nation’s HBCUs. The MBDA brings tremendous value in helping businesses create jobs and promote entrepreneurship.”
MBEs have been among the businesses hardest hit during the pandemic. According to a National Bureau of Economic Research analysis of the impact of COVID-19 on small businesses from February to April 2020, an estimated 41 percent of Black-owned businesses, 32 percent of Latino-owned businesses, and 26 percent of Asian-owned businesses closed, as compared to 17 percent of white-owned businesses.
The disproportionate impact of the COVID-19 pandemic on minority-owned businesses reflects long-standing racial disparities in access to capital, mentorship, and technical training. MBEs are more likely to be denied loans than non-MBEs; on average, the annual gross receipts reported by MBEs are only one-third of the annual gross receipts reported by non-MBEs. MBEs are also half as likely as non-MBEs to have employees.
The amendment would expand the geographic reach of the MBDA by authorizing the creation of regional MBDA offices and rural business centers to be administered through Historically Black Colleges and Universities (HBCUs) and minority serving institutions (MSIs), and it would create the Parren J. Mitchel Entrepreneurship Education Grants Program to cultivate the next generation of minority entrepreneurs on the campuses of our nation’s HBCUs and MSIs. The amendment would also increase the MBDA’s grant-making capacity to partner with community and national nonprofits engaged in private and public sector development as well as research.
The amendment would authorize $110 million in annual funding to the MBDA through FY2025—more than double the agency’s FY2021 appropriation of $48 million. The amendment also:
- makes the MBDA more effective by putting into law the mission and goals of the agency and giving it the proper tools to carry them out successfully;
- creates an advisory council to consult federal agencies on supporting MBEs and coordinate federal MBE programs;
- creates a presidentially appointed and Senate-confirmed Under Secretary of Commerce for Minority Business Development to lead the agency; and
- mandates additional reporting.
The amendment includes language from the Minority Business Resiliency Act of 2021, which was introduced by Senator Cardin in April 2021 and cosponsored by 20 senators; and the Reaching America’s Rural Minority Businesses Act of 2021 introduced by Senators Wicker and Tim Kaine (D-Va.) in May 2021.
The amendment’s language is identical to the Minority Business Development Act of 2021, which was approved by the Senate Commerce Committee on August 4, 2021.
The Minority Business Development Act of 2021 is endorsed by the National Urban League, Page 30 Coalition (including, U.S. Black Chambers, U.S. Hispanic Chamber of Commerce, and National ACE), Prosperity Now, LISC, and Small Business Majority.