by Jeffrey McKinney
February 3, 2024
In 2021, Biden set a goal of awarding 15% of federal prime contracting to small disadvantaged businesses by fiscal year 2025.
After posting banner numbers, the U.S. Small Business Administration (SBA) hopes an upgraded government contract training program and other efforts will provide billions of more federal contracting dollars to Black businesses yearly.
The increase could come as the federal agency revitalized its SBA 7(j) Training Program. Rebranded as Empower to Grow (E2G), the initiative is intended to improve small, disadvantaged businesses readiness for federal contracting, according to an SBA press release.
SBA 7(j) Training Program. Rebranded as Empower to Grow (E2G), the initiative is intended to improve the readiness of small, disadvantaged businesses readiness for federal contracting, according to an SBA press release.
The revised program arrives as the SBA released new data from fiscal years 2022 and 2021 revealing how small businesses in almost every demographic landed record-breaking federal contracting dollars. This new data shows an increase in contracting dollars for Small Disadvantaged Businesses.
The Biden-Harris administration too announced actions to expand small business access to federal contracts. It has been reported that the federal government is the largest purchaser of goods and services worldwide, making those agreements an influential tool to help build wealth in underserved communities. The White House mentions the E2G program when talking about steps being taken to support small businesses.
In 2021, President Joe Biden set an overall goal of awarding 15% of federal prime contracting to small, disadvantaged businesses (SDB) by fiscal year 2025 – a 50% increase from spending on these businesses when he first took office. This increase could be a potential $100 billion boom for minority-owned and underserved businesses.
The SBA added the E2G program is just one part of the Biden-Harris Administration and SBA’s robust efforts to achieve the SDB goal, which has already led to an increase of half a billion dollars in federal contracts going to Black-owned small businesses in 2023.
“Small business growth creates jobs while strengthening communities and our economy – which is why the Biden-Harris Administration continues to prioritize equity and a level playing field so all small business owners, including those from disadvantaged communities, can successfully compete for over $700 billion in small business-eligible federal contracts,” SBA Administrator Isabel Casillas Guzman stated.
The latest data showed Black-owned small businesses got $9.5 billion from federal contracts in 2022, up $490 million from 2021. Native Americans captured a whopping $19 billion two years ago, up $1.62 billion from the prior year. But the 2022 number is a fraction when compared to the almost $163 billion spent for all federal contracts that year.
An SBA spokesperson says there are existing disparities that the agency is addressing. The disparities include barriers for entry for Black businesses to secure government contracts. That hurdle is especially difficult for those firms because criteria like past performance can be a decisive factor in them gaining access to contracts. As such, the SBA says it is adding resources to help more disadvantaged business owners, including Black firms, conquer those barriers.
The SBA reported program improvements to E2G being made include customizable one-on-one coaching to ensure the SBA is meeting Black business owners where they are with the resources they need to start or grow their contracting revenue. The revamped program is more personalized, and the offerings have expanded for Black-owned firms, making the coaching more geared to their needs.
Further, E2G will provide new tools on accessing $2 trillion in state and local bid opportunities – including market intelligence, training, and technical assistance to eligible small businesses for state and local opportunities. Hence, the matchmaking will connect more Black-owned firms with more state and local contracting opportunities. Data shows that the number of Black families that reported owning a business rose to 11% in 2022, doubling from 4.8% in 2019.
The SBA says the program’s impact in terms of contracting dollars for Black-owned businesses depends on how many businesses choose to participate. It reports the bid win rate for contractors using 7(j) services in the past has been around 60%, a number that could rise with driven by the increased emphasis from the added E2G resources.
Check out comments from business leaders on the rebranded small business program and more details about it here.
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