The Minority Business Development Agency (MBDA), a federal program that has supported small minority businesses for nearly a half-century, faces extinction.
A spokesman for the U.S. Commerce Department, which the MBDA is part of, says that $32 million would be cut from the MBDA under the Trump administration budget blueprint for 2018.
The MBDA is being eliminated because the agency duplicates other federal, state, local, and private sector efforts, the spokesman said. He contends that a major priority set by the President is to revolutionize our education system by promoting social programs, which will have a major impact in minority communities.
He said federal programs that offer similar services as the MBDA include district offices and small business development centers of the U.S. Small Business Administration.
Small minority businesses will be able to turn to those offices and centers for support services instead of the MBDA if the current budget proposals are approved.
But Trump’s budget cuts also would include a 5% reduction for the SBA. The move would mean a $12 million decrease in usable grant programs that offer growth, education, and other resources for small businesses, according to Black Enterprise research. The SBA would not confirm the numbers.
Linda McMahon, the SBA’s new administrator, stated America’s entrepreneurs and small businesses create two out of every three net new jobs. She says she is committed to ensuring SBA has the resources it needs to continue serving them in the most effective and efficient way possible.
“This budget blueprint supports the effectiveness of the agency by maintaining the loan programs that enable access to capital and the technical assistance that small businesses need to succeed.” It also improves efficiency by reducing redundant programs and eliminating those whose services are better provided by the private sector.â€
Efforts to get a comment from the Trump administration were unsuccessful.
Founded by President Richard Nixon 48 years ago under his capitalism initiative, the MBDA says it supports minority firms in all industries ranging from construction to manufacturing to information technology to professional services. The agency operation’s consists of a national network of more than 40 business centers, helping minority entrepreneurs and business owners with consulting, bonding and certification services. It also assists firms with financing and contracting opportunities.
The MBDA says it has helped and contributed to millions of minority entrepreneurs through specialized business development services, federal funding opportunities, seminars, business matchmakers, and popular online platforms.
Ron Busby, president & CEO of the U.S. Black Chambers Inc., shared his sentiments about the MBDA budget cuts.
“To eliminate the Minority Business Development Agency (MBDA) at a time when entrepreneurs-of-color, specifically when black entrepreneurs are leading as the fastest growing population of entrepreneurs in the U.S., is deeply concerning.
“The Minority Business Development Agency serves as a resource for entrepreneurs-of-color across the ethnic spectrum that has been historically and presently marginalized. The notion that the MBDA duplicates SBA programming lacks the full facts that although MBDA offers small business programming, the MBDA’s sole focus is serving an under-served population of American entrepreneurs.
“President Trump’s proposed cuts would be detrimental to the minority small business community and to the economy. Specifically, the cuts could erase $665,000 in MBDA grants to the U.S. Black Chambers and essential funding to other minority organizations in desperate need of funding.”
Marc Morial, president and CEO of the National Urban League, says if the new administration and Congress are serious about small business growth, they would be strengthening the MBDA’s budget and not eliminating it.
He says while the National Urban League’s 13 Entrepreneurship Centers around the country serve more than 10,000 small businesses, it does not have the capacity to absorb the thousands more that need support services and are assisted by the MBDA.
He says the MBDA is needed because it has centers that offer consulting and coaching services to help minority businesses with services like developing a website, getting minority business certification, or completing a business loan application.
Morial added, “Cuts to small business programs by the Trump administration are designed to get more than $50 billion in additional spending for the military, federal government funding that the military has not requested or does not need.”
“I can assure you that we will be fighting aggressively against these cuts that would hurt minority small businesses,” he says.
Some observers contend the proposed cuts could impact black business across the board, slowing down a sector that helps to fuel the nation’s growth engine.
Stephen L. Hightower, CEO and president of Hightowers Petroleum Co., (No. 15 on the BE 100s Industrial/Service Companies list), says he was “shocked” when he saw the budget slashing of the MBDA. He describes the agency as the only lifeline targeted for minority businesses in federal government. An entrepreneur himself, Hightower knows and understands the fragile lifespan of small minority companies or any company in an adolescent growth stage.
He added that MBEs and WBEs represent a key opportunity in the nation’s economic resurgence. “When resources to promote and support entrepreneurship and economic growth in minority communities across America and globally are taken away, then you suppress the very essence of opportunity to reach the American dream,” Hightower says.
Jeffrey McKinney is a long-time freelance business writer and reporter, contributing to Black Enterprise magazine on a broad range of business and financial topics.