The Minority Business Development Agency (MBDA) released a study arguing for the benefits of government support for minority-owned businesses.  The report entitled “The Minority Business Development Agency: Vital to Making America Great” highlights the effectiveness of the MBDA despite its small budget.  For example, according to the report, the MBDA’s Return on Investment is great as “for every federal $1 spent MBDA gets one of the highest returns for business assistance in the Federal Government.”

The study touches on a few vital points in terms of the nation’s future and the agency’s main focus.  As minorities are “the fastest growing segment of the population”, the MBDA argues that investing in entrepreneurship will help to increase wealth among the community.  “Today, U.S. minority business enterprises represent 29% of all firms but only 11% have paid employees. If MBEs were to obtain entrepreneurial parity, the U.S. economy would realize 13 million more jobs.”

While the MBDA highlighted its main goals and objectives, a few that stood out included the following:

  1. Create a new generation of minority-owned firms with $100M in annual revenue to generate more jobs and help grow the U.S. economy through targeted programs and services
  2. Commission research reports and business analytics that demonstrates the minority business community as a vibrant and growing business sector

One of the main issues plaguing minority firms is support and research dedicated to understanding how best to support them.  Helping top minority firms understand how to hire and grow while commissioning studies to figure out efficient ways to assist in the development and growth of small and mid sized MBEs is crucial to the success of America’s future.  As the study reveals, “minority-owned firms are smaller in size and scale than their non-minority counterparts. The gap in combined gross receipts is 10:1, with only 2% of minority firms generating gross receipts of more than $1M and only 11% of minority-owned firms with paid employees.”  helping solve this issue is necessary.

Lastly, the report discusses MBEs constant issue with winning investment.  While well known in the business community, the MBDA points out that “Minority firms are more likely to be denied loans at a rate nearly 3x’s higher than non-minority firms, Minority firms are likely to pay higher interest rates; on average 7.8% while nonminority firms pay on average 6.4%, and Minority firms are less likely to receive loans; and when approved, receive lower loan amounts.”  These are major roadblocks to the success of MBEs as access to capital is the best way to grow a company quickly.

The main purpose of the report is simply to argue for an increase in funding and I believe the agency deserves it. Under the last Fiscal Year of the Obama administration, the MBDA received about $35 million “to expand its services and assistance to the nation’s eight million minority businesses.” This number must grow to have a realistic chance of focusing support on minority firms.

The Trump administration most originally argued to cut funding for the agency and merge it with the SBA, but decided against it.  If this is still the feeling among government officials, then unfortunate minority owned firms will be left out in the cold.

For more information on the MBDA and similar reports, check out the Supplierty News Insights Page

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