The recent decision by the Trump administration to dismantle an agency dedicated to supporting minority-owned businesses has raised concerns among Democratic lawmakers and nonprofits, who argue that this move could negatively impact job creation and the businesses that depend on the agency’s resources.
Last month, President Trump signed an executive order aimed at effectively disbanding seven agencies “to the maximum extent consistent with applicable law,” including the Minority Business Development Agency. This agency, located within the Commerce Department, provides funding for over thirty centers nationwide that deliver technical assistance to minority-owned businesses, helping them secure loans and contracts.
Almost all of the agency’s approximately 70 employees were placed on administrative leave late last month, with only three remaining, as per a source familiar with the situation.
Democratic lawmakers have criticized the actions of the Trump administration. Senator Tammy Baldwin from Wisconsin called for immediate transparency regarding the proposed agency cuts and their potential impact on small business owners. In a letter addressed to Commerce Secretary Howard Lutnick, Senators Maria Cantwell of Washington and Lisa Blunt Rochester of Delaware expressed that a significant reduction in the agency’s workforce would be “detrimental to the U.S. economy” and severely hinder its ability to “execute its programs and responsibilities as mandated by Congress.”
During the last fiscal year, the Minority Business Development Agency assisted businesses in obtaining more than $1.5 billion in capital and created or preserved approximately 23,000 jobs, according to its annual report.
Advocates for the agency voiced concerns that its dismantlement could negatively affect minority-owned businesses, which already encounter various barriers to capital, including limited capacity, expertise, and networks.
“Its obliteration is alarming,” said Marc H. Morial, president and CEO of the National Urban League. “These businesses will now have to either pay for these services elsewhere or go without them.”
Officials from the White House and the Commerce Department did not respond to requests for comments.
The agency was established in 1969 by President Richard M. Nixon as the Office of Minority Business Enterprise. It received about $70 million in funding last year and was later made permanent and expanded through a bipartisan infrastructure bill signed into law by President Joseph R. Biden Jr. in 2021. At that time, Biden administration officials stated that the move aimed to “level the playing field” and enhance the growth and competitiveness of minority-owned businesses.
The dismantling of the agency aligns with the Trump administration’s aggressive efforts to eliminate initiatives related to diversity, equity, and inclusion, which the president has deemed essential for “forging a society that is colorblind and merit-based.”
Last year, the Minority Business Development Agency was involved in a case that led to a federal judge in Texas ruling that it must provide its services to individuals of all races and ethnicities. The judge determined that the agency’s assumption that businesses owned by Black, Latino, and other racial minorities were disadvantaged violated the Constitution. This ruling followed a lawsuit filed by three white business owners against the agency.
Some fiscal conservatives have voiced support for closing the agency, although they believe such changes should go through legislative approval.
“Congress should pass legislation to close the agency,” stated Chris Edwards, an economist at the libertarian Cato Institute. “Employees deserve fair treatment, and the agency should perhaps be phased out over two or three years.”
Mr. Edwards expressed the view that it would be “more fitting” for assistance and deregulatory measures to come from state and local governments rather than the federal government.
Some beneficiaries of the agency’s grants have expressed worries about how the Trump administration’s decisions could influence their operations. Lamar Heystek, the president of ASIAN Inc., a nonprofit that manages one of the agency’s business centers in San Jose, California, anticipated that federal officials might attempt to cut off his organization’s funding. He stated that federal resources had enabled his organization to assist thousands of firms in crafting business plans, securing financing from banks, and obtaining contracts from both public and private sectors.
Should the Trump administration attempt to sever the nonprofit’s federal funding, it would likely lead to a reduction in the number of staff members offering technical assistance, ultimately resulting in fewer businesses receiving support, Mr. Heystek stated.
“The executive order represents a reckless attack on the economic advancement of all Americans,” Mr. Heystek conveyed in an email. “In the president’s relentless pursuit to impose trauma on the federal bureaucracy, ultimately, this trauma will resonate with all of us on Main Streets from Arizona to Wisconsin.”
