The Minority Business Development Agency: Making Minority-Owned Businesses Great

by Kathy Grear 12/26/2017

By 2044, the Nation’s prosperity will rely even more on minority-owned businesses, the fastest growing segment of the population. Entrepreneurship is a sure pathway to wealth creation and a thriving national economy. Today, U.S. minority-owned businesses 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.

Minority-Owned Businesses:

Building Prosperity for American Families

Create a new generation of minority-owned businesses with $100M in annual revenue to generate more jobs and help grow the U.S. economy through targeted programs and services.
Increase wealth creationthat secures personal and family well-being, reduces dependence on government resources, and contributes to overall economic vitality.
Cultivate successful minority-owned businesses to foster economic activity in local communitiesand increase utilization of community benefits, such as transportation, infrastructure, housing and quality education.

Expanding Economic Investments

MBDA secures an annual average of $5.4B worth of contracts and financial investmentin minority-owned businesses, increasing the number of businesses with revenues that exceed $1M and create jobs for Americans.
MBDA leverages public-private partnerships whereby the private sector contributes nearly $5.5M annually in non-federal investments to the national network of MBDA programs.
Minority-owned businesses expand and diversify the tax base creating sustainable communities with a steady rate of economic growth.

Strengthening America’s Competitiveness

Position minority-owned businesses to perform in high growth industries, emerging markets, and corporate supply chains.
Reduce the trade deficit by leveraging the unique assets of minority-owned businesses in global markets.
Commission research reports and business analytics that demonstrates the minority business community as a vibrant and growing business sector.

Return on Investment: For every federal $1 spent MBDA gets one of the highest returns for business assistance in the Federal Government. Over the past 10 years the Agency’s programs and services have secured more than $40B in contracts and capital, with accelerated performance averages and returns on investment.

Unique Challenges Faced by Minority Firms

Overall, minority-owned businesses 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 businesses generating gross receipts of more than $1M and only 11% of minority-owned businesses with paid employees.

Capital

Minority firms are more likely to be denied loans at a rate nearly 3x’s higher than non-minority businesses
Minority firms are likely to pay higher interest rates; on average 7.8% while non-minority businesses pay on average 6.4%
Minority firms are less likely to receive loans; and when approved, receive lower loan amounts.

Contracts

Minority firms secure a lower number and dollar amount of contracts in proportion to the number of available minority businesses in the relevant market.
Pervasive barriers cited in contracting disparities studies include:
- access to capital;
- large contract sizes;
- network access; and
- marketplace inequities.

MBDA – The Solution Provider

The only Federal Government agency solely dedicated to the growth and global competiveness of minority business enterprise.

MBDA:

Provides access to market-based financing solutions.
Facilitates teaming arrangements and mergers and acquisitions.
Partners with private-sector Fortune 500 firms to provide access to global supply chains.
Transitions minority 8(a) [SBA program] graduate firms to the private sector.
Develops policy recommendations that address minority business inequities

This collection of links and resources will minority-owned businesses learn more about MBDA.

If you need additional information, please contact us at 202-482-6272

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