For most aspiring entrepreneurs, the challenges of starting and growing a business are immense. From accessing affordable capital to finding training and mentorship opportunities, navigating the landscape requires persistence, determination and flexibility. This is especially true for minority business owners and individuals who continue to face discrimination that limits their potential and opportunities.
For half a century, the Small Business Administration’s 8(a) program has stepped in. It has provided tools for small firms entering the federal marketplace and the resources necessary to assist small business owners in building and scaling their companies to compete in both the public and private sectors.
All small contractors supporting the federal government, the largest buyer of goods and services globally, face added complexities and barriers to competing for and winning contracts in this market. The government imposes unique requirements and rules that are disconnected from the commercial sector and often require different business systems and compliance mechanisms.
Recognizing these challenges, Presidents Lyndon Johnson and Richard Nixon began to lay the groundwork for the modern 8(a) program in the late 1960s and early 1970s, with Congress giving the SBA express statutory authority for its 8(a) program for minority-owned businesses in 1978.
The vast majority of the 4,800 businesses participating in 8(a) were certified under the presumption of social disadvantage that was enjoined by the court. These firms must now document each instance of discrimination that led to the loss of equal opportunity. This process is insensitive and frustrating. But it is also necessary.
However, despite the SBA’s remedial action addressing the court ruling, the attacks continue. Many small businesses are now left in limbo wondering if a program that they’ve come to rely on will be unrecognizably altered or even shut down by the court.
As ranking member of the House Small Business Committee and the president and CEO of the United States Hispanic Chamber of Commerce (USHCC), we are disappointed and frustrated. These continued attacks will set back efforts to address discrimination against minority-business owners, especially Hispanic-owned businesses.
In our roles we regularly hear firsthand of the challenges still facing minority owned firms in the procurement marketplace, even with the presence of the 8(a) program. These challenges — including and especially discrimination that leads to a loss of access and opportunity — are not a relic of the past. They are active and ongoing.
We know that barriers to entry are even more significant for minority-owned businesses, which also must deal with historical obstacles like discriminatory lending practices, and fewer mentorship and business opportunities.
In fact, only 1.7% of the federal government’s overall annual contracting and buying goes to Hispanic-owned businesses. Moreover, there are more than 5 million Hispanic-owned businesses in the United States that are able to provide valuable services to add enhanced quality and efficiency to the U.S. government.
Hispanic Americans start more companies per capita than their non-Hispanic counterparts. The Hispanic population in America is already at 65 million and growing. We believe that the 8(a) program is essential to continuing to grow government contracting for everyone and in turn generate increased jobs and entrepreneurship to fuel America’s future economy.
Small firms often don’t have the resources or time to compete for complex federal procurements. A recent survey by the Bipartisan Policy Center found that 54% of small businesses had not applied for a federal contract because they found the federal procurement process too time-consuming.
We have not solved these challenges. Anglo business owners are still nearly twice as likely to have their loans fully approved compared to their Hispanic, Black and Asian peers. Meanwhile, a 2019 survey found that 46% of American women entrepreneurs experienced gender bias when trying to raise capital.
Reductions in use, or even the loss of the 8(a) program, would be a loss for minority-owned small businesses, causing them to potentially lose out on billions of dollars in contracts as well as vital technical assistance that allowed them to start the business in the first place. It would be a loss for families and communities who have been uplifted by these programs and the investments that follow. And it would be a loss for the government and private sector. Based on the program’s requirements, these companies are not exclusively focused on set-aside government contracts and are in fact well-positioned for commercial success and growth. We’d lose the innovation and the benefits of greater competition that diversity in the marketplace brings.
These attempts to weaken the 8(a) program are incredibly misguided and dangerous. We expect the administration to use any and all options available to them to protect the intent and integrity of the program — and for Congress to act if they cannot.
Rep. Nydia Velázquezrepresents New York’s 7th Congressional District and serves as ranking member of the Small Business Committee