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March 18, 2022

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MBDA no longer in limbo thanks to infrastructure bill

By Monica Stavish Skaggs

Small businesses in minority communities will get a boost now that the U.S. Department of Commerce’s Minority Business Development Agency, or MBDA, is a permanent agency in the U.S. Department of Commerce. Legislation in November 2021 expanded the scope of MBDA, helping it enhance the competitiveness of 9 million minority-owned businesses in the United States.

The measure was included in the Infrastructure Investment and Jobs Act. (See related article on Page 12). Its passage marks a historic bipartisan commitment to restore the nation’s infrastructure systems and invest in minority-owned businesses around the nation.

This action is “the most significant piece of legislation in the MBDA’s 50-year history,” said Miguel Estién, acting national director, MBDA.

“This bill is good for the U.S. By making the economy work for everyone, we make our democracy stronger,” he added. “The law establishes an undersecretary for the agency, authorizes creation of regional offices and business centers, and increases the number and scope of existing programs.”

The Minority Business Development Act of 2021 is authorized to create several new programs, reporting requirements and the appropriation of $110 million each fiscal year from 2021-2025.

“The establishment of MBDA as a permanent agency dedicated to the growth of [Minority Business Enterprises] is a great step toward achieving economic inclusion,” said Ying McGuire, CEO and president, National Minority Supplier Development Council Inc., or NMSDC. 

“The NMSDC is looking forward to strengthening our partnership with the MBDA, as we foster a new generation of minority business growth in a suite of emerging industries for the 21st century global economy,” she said. “The NMSDC has been a long-time partner of MBDA, and we commend this vital step to ensuring that MBEs will have equal opportunity with access to capital, contracts and technology.”

Inclusion of MBDA in the infrastructure act sends an important message that MBEs are a vital part of the American economic fabric, Ying said. “The NMSDC will be a vital thought leader partner and policy advocate to ensure that this investment into the MBDA will be successful for all MBEs,” she said.

MBDA is the only federal agency solely dedicated to supporting minority-owned businesses, said Ben Cardin (D-Maryland), chairman of the U.S. Senate Committee on Small Business & Entrepreneurship. The legislation was decades in the making and was led by the efforts of minority business leaders who advocated for MBDA to be made permanent, he said. 

“The COVID-19 pandemic clearly demonstrated the federal government’s critical role in removing the historic barriers that prevent minorities from starting and growing businesses,” he said. “I am proud that the MBDA will continue to lead the way in breaking down these barriers.”

John F. Robinson, president and CEO, National Minority Business Council Inc., said, “It’s so important from a historical point of view that MBDA is now a permanent agency of the government agency like the [Small Business Administration]. Until this action, since 1969, it was always in a state of limbo. This is good news for the minority business community. It levels the playing field.”

MBDA was established by executive order as the Office of Minority Business Enterprises by President Richard Nixon in 1969. For five decades, Congress has appropriated funding for it on a bipartisan basis. The agency was never written in statute, leaving its funding open to the whims of each incoming president.

“That meant any president could come along and cancel the executive order and leave it with no teeth or budget,” Robinson said. “So, this bill makes MBDA a permanent agency that will be able to provide more services such as financing to the minority business community.”

Elevating MBDA’s role offers great promise, but “the proof will be in the pudding as the saying goes,” said Michael Verchot, director, Consulting and Business Development Center at the University of Washington Foster School of Business.

“Research done by our faculty and other academic researchers over the last 50 years has demonstrated the systemic barriers that entrepreneurs of color face as they seek to grow the management capacity, gain access to money and secure market access in the form of contracts and supply-chain partnerships,” he said. “Current and future MBDA leadership will need to demonstrate their abilities to increase federal government contracting opportunities, including holding major contractors accountable for any failures to meet goals in use of MBE suppliers.”

Those leaders, Verchot said, should also demonstrate their abilities to increase federal research grants, technology transfers and loans from federally regulated financial institutions to MBEs. 

“As we recognize this milestone of reaching this new starting line, we need to support MBDA’s success going forward if we’re to grow more generational wealth to create MBEs,” he said.

Robinson encourages MBDA to form a national advisory board to provide input to make the agency even more effective. The board should consist of leaders from minority organizations across the nation, he said. Robinson hopes MBDA’s director will be named as a full cabinet member.

“We need to thank the advocates who’ve been pushing for this since 1969. To see it become a reality is a real tribute to those people,” he said. “The word should go out loud and clear that this is going to help the minority business community. We wish MBDA good luck. They can count on support from the National Minority Business Council.” 

To learn more about MBDA, visit mbda.com.