The Small Business Administration released an equity plan Thursday alongside dozens of other federal agencies as part of a wider effort to reduce lending and program disparities among minority entrepreneurs.
The equity plan covers a wide range of programs, including the agency’s lending program and stems from an executive order President BIden signed in 2021 directing federal agencies to create plans and address issues that could lead to racially inequality.
The equity plan includes:
• Boost access to capital: The agency said it will improve access to its lending programs and remove barriers, including re-engineering existing loan programs such as the Community Advantage program, of which it recently announced an overhaul. It also said it would build stronger relationships with community development financial institutions.
• Improve government contracting opportunities: The SBA said it will put additional efforts to help guide firms seeking to certify as a small disadvantaged business for the purposes of winning government contracts.
• Improving access to its disaster assistance programs: The SBA said it will make further efforts to help underserved small-business owners become better equipped to face natural disasters with an increased focus on preparedness as “climate change and storms intensify,” the agency said in a press release.
• Improve access to its counseling and training services: The SBA said it will prioritize outreach to underserved communities through its Community Navigators Pilot program, which it awarded contacts through in 2021, as well as through its Women Business Centers, its Veteran Business Outreach Centers and field offices.
“The SBA’s Equity Action Plan reaffirms our agency-wide commitment to breaking down longstanding barriers to ensure underserved entrepreneurs can access the capital, networks, resources, and opportunity they need to realize their American dream of business ownership,” said SBA Administrator Guzman in a press release announcing the plan. “Alongside plans from over 90 other federal agencies, the SBA’s Equity Action Plan aims to level the playing field for all small businesses and startups, a priority of the Biden-Harris Administration, and empower them to compete in an increasingly global economy and navigate new opportunities presented by transformational legislation, such as President Biden’s Infrastructure and Investment Jobs Act (Bipartisan Infrastructure Law).”
The SBA also created an equity leadership team that includes senior leadership, such as Guzman, as well as Natalie Madiera Cofield, assistant administrator of the Office of Women’s Business Ownership and Zina Sutch, assistant administrator of the Office of Diversity, Inclusion and Civil Rights.
The push for equity comes after the SBA’s Paycheck Protection Program initially favored larger businesses with better access to existing lending relationships. The Biden Administration ultimately created special periods in which just smaller lenders could approve PPP loans in early 2021, as well as included the smallest of businesses in additional rule making to help boost underserved businesses.
But it has also faced some problems as well, with its Targeted EIDL Advance grant program being limited to businesses in low-income areas, although the mapping tool it used for that program left out business owners in areas while allowing those in gated communities and other locations to participate.
An effort to prioritize underserved businesses such as women-, minority- and veteran-owned businesses in the popular Restaurant Revitalization Fund also died after a series of court setbacks forced the agency to freeze grants it had promised to thousands of business owners, leaving some on the outside looking in as funds ran out. An effort to replenish the RRF and establish new grant programs has finally gained some momentum in Congress after months of negotiations, although it faces strong headwinds in the Senate.
Additionally, a special report by The Business Journals in 2020 found a significant drop in SBA lending to black-owned businesses in the years leading up to the pandemic.
The equity effort come as lawmakers tussle over the future of the SBA. Sen. Ben Cardin, D-Md., chairman of the Senate Small Business and Entrepreneurship Committee, said in a speech on the Senate floor March 25 that Congress should take the lessons it learned from the PPP and EIDL programs and create a new direct-lending program at the SBA.
And the SBA continues to deal with the aftermath of the historic rescue programs, including setting up a new Fraud Risk Management Board to manage risk in agency programs, including the PPP and EIDL programs.
In a congressional hearing in January, the SBA inspector general stressed the agency’s Covid-19 relief programs had high susceptibility to fraud after the agency relaxed some requirements for those programs in 2020.
Meanwhile, experts say the PPP forgiveness process will continue into early 2023 — and the appeals could ensure that the SBA is still deciding on individual PPP cases for years to come.