- Biden administration calls for billions of dollars in investments in initiatives to support minority-owned businesses as part of larger effort to reduce racial wealth disparity in the United States
- Additional $100 billion in federal procurement to be directed to small disadvantaged businesses over the next five years
- Initiatives proposed for the administration’s infrastructure bill would also create several new programs under the SBA as well as a $1 billion grant program for minority-owned manufacturers
Summary by Dirk Langeveld
The Biden administration has released a proposal to launch a number of initiatives aimed at narrowing the racial wealth gap in the United States, including several efforts to provide additional support to small businesses. These would include billions of dollars in procurement opportunities, a new grant program, and numerous efforts overseen by the U.S. Small Business Administration to remove barriers to entrepreneurship.
The goals were announced on the 100th anniversary of the Tulsa Race Massacre, a white supremacist attack that laid waste to the thriving “Black Wall Street” community of Greenwood and left hundreds dead. The White House says redlining housing policies, barriers to capital access, and other discriminatory practices have created an enormous racial wealth gap over the course of several decades, with the median Black family owning 13 cents for every dollar held by White families.
One of the policies announced by the Biden administration aims to direct an additional $100 billion over five years to small disadvantaged businesses (a category including Black, Latino, and other minority business owners) through federal procurement. Currently, just 10 percent of federal purchases are made through small disadvantaged businesses. The increase sought by the White House would boost the share of contracts going to these businesses by 50 percent.
This initiative would take place across all federal government agencies. The administration says it will “assess every available tool to lower barriers to entry and increase opportunities for small businesses and traditionally underserved entrepreneurs to compete for federal contracts.”
The Biden administration says it is also looking to incorporate $30 billion in new initiatives through the U.S. Small Business Administration to assist minorities in starting businesses. These initiatives would include:
- A new direct loan program for the nation’s smallest businesses
- New loan products to support small manufacturers and businesses that invest in clean energy
- A new Small Business Investment Corporation to make early-stage equity investments in small businesses, with those owned by socially and economically disadvantaged individuals receiving priority access
- Investments to improve mentoring and technical assistance to 8(a) firms, create more pathways for subcontractors to become prime contractors, and encourage diversification among Fortune 500 procurements and federal research and development programs
The White House is also proposing a new $1 billion grant program through the Minority Business Development Agency to improve private capital access for minority-owned manufacturers.
The business assistance proposals are couched within a broader set of initiatives. These include a tax credit to spur investment in the development and rehabilitation of affordable housing, an interagency initiative to address inequity to housing appraisals, an incentive program for the elimination of exclusionary zoning rules, and a $10 billion Community Revitalization Fund to promote community revitalization efforts.
