January 27, 2021

Cardin, Hirono & Duckworth Introduce Legislation to Make SBA Programs More Equitable

Office of Emerging Markets Would Coordinate Agency’s Access to Capital Initiatives

WASHINGTON — Senate Committee on Small Business & Entrepreneurship Ranking Member Ben Cardin (D-Md.) and U.S. Senators Mazie K. Hirono (D-Hawaii) and Tammy Duckworth (D-Ill.) today introduced the Unlocking Opportunities in Emerging Markets Act, which would establish an Office of Emerging Markets (OEM) within SBA’s Office of Capital Access to ensure that SBA’s access to capital initiatives address the specific needs of entrepreneurs in underserved communities in a coordinated way. Cardin introduced similar legislation in July 2019.

“SBA has a vital role to play in the economic recovery that lies ahead, so we in Congress must examine, fine-tune, and, if necessary, shake up programs at the agency,” Cardin said. “The Office of Emerging Markets will coordinate SBA’s strategies to ensure that our most vulnerable small businesses have access to SBA’s loans and resources. SBA’s initiatives must be tailored to meet the specific needs of minorities, women, veterans, and other underserved and underbanked communities.”  

“Even before the coronavirus pandemic, women and minority-owned businesses had difficulty accessing capital,” Hirono said. “Our economic recovery will depend on making sure we are addressing the needs of all businesses—especially underserved businesses that have been disproportionately impacted by the coronavirus. Creating an Office of Emerging Markets within the SBA will help make sure these businesses have access to SBA’s loan programs and other resources, and that they are not left behind.”

“If we’re serious about lifting up our small business community, then we must ensure we are assisting our entire community and addressing the systemic barriers facing entrepreneurs of color and women,” Duckworth said. “That’s one reason why I’m proud to join Senator Cardin and Senator Hirono in introducing this important legislation that would help ensure that our entrepreneurs in underserved communities are able to access SBA’s loans and resources.”

The COVID-19 pandemic has highlighted the pre-existing disparities that minority entrepreneurs face in access to capital, mentorship and technical training. According to a National Bureau of Economic Research analysis of the impact of COVID-19 on small businesses, from February to April 2019, an estimated 41 percent of Black-owned businesses, 32 percent of Latino-owned businesses, and 26 percent of Asian-owned businesses closed while 17 percent of white-owned businesses closed.

Historically, access to capital has been an especially uneven playing field for minorities, who are two to three times more likely to be denied credit; more likely to avoid applying for loans, based on the belief that they will be turned down; and more likely to receive smaller loans and pay higher interest rates on the loans that they do receive. Due partially to these trends and other historical roadblocks, minorities own only 29 percent of small businesses despite representing 39 percent of the overall population. These challenges are felt most acutely by Black business owners.

The Unlocking Opportunities in Emerging Markets Act would create and empower the Office of Emerging Markets to:

  • create and implement strategies and programs that provide an integrated approach to the development of small business concerns in an emerging market;
  • develop and recommend policies concerning the microloan program and any other access to capital program of the Administration as they pertain to small business concerns in an emerging market;
  • establish partnerships to advance the goal of improving the economic success of small business concerns in an emerging market; and
  • review the effectiveness and impact of the microloan program and any other access to capital program of the Administration that is targeted to serve small business concerns in emerging markets.

The bill is endorsed by Friends of the Microloan Program, U.S. Black Chamber, Association of Women’s Business Centers, Association for Enterprise Opportunity, Opportunity Finance Network, Mission Lenders Working Group, and the National Association for Latino Community Asset Builders.