The Minority Business Development Agency Established in Statute

The Minority Business Development Agency Established in Statute

INSIGHTi
The Minority Business Development Agency
Established in Statute
December 1, 2021
Congress has considered an increasing number of policies designed to promote individual economic
mobility as wel as broader national economic growth. They include several proposals to reduce inequities
and advance minority entrepreneurship, innovation, and business expansion activities. Such policies have
included efforts to expand the Department of Commerce’s Minority Business Development Agency
(MBDA) programs and establish the agency in statute. The agency was original y established by
Executive Order under President Nixon over 52 years ago. On November 15, 2021, the Minority Business
Development Act of 2021 (Division K of P.L. 117-58) authorized the MBDA in statute. The act codified
select existing programs, added new programs and roles, and expanded the scope and scale of the
MDBA’s services. This Insight highlights the agency’s expanded roles and new programs, and identifies
some considerations for Congress.
MBDA Overview
The MBDA is the lead federal agency supporting the minority business community’s growth and global
competitiveness. The agency provides management and technical assistance to minority business
enterprises (MBEs) through a network of minority business centers and specialty centers. To further
increase MBE’s access to capital, contracts, and markets, MBDA partners with other agencies and private
sector partners on business development services, cross-sector initiatives, annual events, and interagency
groups and commissions. The statute defines an MBE as a business enterprise that is not less than 51%-
owned by one or more social y or economical y disadvantaged individuals; and the management and daily
business operations of which are controlled by one or more social y or economical y disadvantaged
individuals. For information on MBDA activities, see CRS Report R46816.
Agency Establishment
Congress has considered proposals to codify the MBDA for decades. The MBDA’s powers and duties are
now to be set in accordance with the statute “and without regard to Executive Order 11625 (36 Fed. Reg.
19967; relating to prescribing additional arrangements for developing and coordinating a national
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program for minority business enterprise).” Additional y, the organization and duties of MBDA offices
and the location of regional offices wil likely shift. The MBDA is to be led by an Under Secretary of
Commerce for Minority Business Development to be selected by the President and confirmed by the
Senate.
New Programs and Partnerships
The act established several new MBDA programs and activities, including:
 Initiatives to promote economic resiliency for MBEs, including:
 An annual diverse business capital formation forum,
 A study on alternative financing, and
 Grants to historical y black colleges and universities (HBCUs) and minority-serving
institutions (MSIs) for entrepreneurship curriculum development and activities to
increase entrepreneurial education and training;
 Rural Business Centers;
 Grants to nonprofit organizations to support MBEs;
 An MBE Advisory Council; and
 Coordination and convening activities among federal agencies regarding social y or
economical y disadvantaged businesses.
The act authorizes the MBDA to implement services through partnerships with both private and public
sector entities, and directs the agency to engage with specific partners (e.g., HBCUs, MSIs, community-
based organizations, national nonprofit organizations, and community-based organizations) on several
new programs. For instance, the act directs MBDA to establish Rural Business Centers with MSIs, and to
partner with HBCUs, MSIs, and others on new entrepreneurial education activities. New activities include
the Parren J. Mitchell Entrepreneurship Education Grants Program to develop and implement
entrepreneurship curricula as wel as education and training activities to support social y or economical y
disadvantaged individuals in the fields of business, management, and entrepreneurship. Additional y, once
established, the MBE Advisory Council—composed of both public and private sector members—wil
advise the MBDA on plans, programs, and activities.
Support for Existing Programs
In some instances, the Minority Business Development Act of 2021 expands the scope of existing
activities. For example, the act expands support for the MBDA Business and Specialty Center programs
and the agency’s research, evaluation, outreach, and informational activities. The Rural Business Center
program—although a new program—may be viewed as an expansion of the existing MBDA Business
Center program to serve MBEs in rural areas. The act codifies the agency’s research, evaluation, and
outreach activities, and directs the agency to undertake certain studies and outreach roles.
The act authorized to be appropriated $110 mil ion for the MBDA for each of FY2021 through FY2025.
The act directed the MBDA to al ocate the majority of annual appropriations, if approved, to the Business
Center program and to reserve $20 mil ion each fiscal year for the Rural Business Center program. The
MBDA received $73 mil ion in appropriations for FY2021, and is currently operating, as al federal
agencies are, under continuing appropriations for FY2022.

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Considerations
Absent specific statutory requirements, the President could have exercised authority to effectively
terminate the MDBA’s discretionary activities at any time without congressional consultation or consent.
Now that the agency is statutorily authorized, the President no longer has this authority.
The act establishes the agency and expands its roles and programs, which may increase awareness of the
agency’s services and increase access to these services by new and previously underserved communities
and MBEs. For instance, once established, the Rural Business Centers wil serve lower-density regions
that may not have large concentrations of minority populations or MBEs compared to more populous
regions or metropolitan areas. The establishment of regional MBDA offices may further extend the
MBDA’s services through their engagement with local and regional business development partners,
lending partners, and federal, state, and local procurement offices. Additional y, the authorizing statute
involves the Under Secretary in partnerships, outreach, and other activities with public sector entities in
order to leverage resources and promote the position of MBEs in local economies. The act authorizes the
agency to coordinate federal MBE programs, which may elevate the agency’s overal visibility among
federal agencies and MBEs, and may expand interagency collaboration and programming opportunities.
Congress may wish to conduct oversight on implementation of the Minority Business Development Act
of 2021, focusing on the efficacy of the new and expanded activities authorized by the legislation.
Congress may also be asked to confirm a presidential nominee for Under Secretary of Commerce for
Minority Business Development to lead the MBDA and may consider the level of funding for the
expanded agency.

Author Information

Julie M. Lawhorn

Analyst in Economic Development Policy

Disclaimer
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