The United States has spent $800 billion to help businesses during the COVID-19 pandemic, through the Paycheck Protection Program and the EIDL program. Now Congress is dragging its feet on reauthorizing the US Small Business Association.
According to Goldman Sachs 10,000 Small Businesses Voices Country Director Joe Wall in a recent press release, “While Congress and the Small Business Administration have taken critical and laudable steps to help small businesses in the face of strong economic headwinds During the pandemic, a congressional reauthorization of the Small Business Administration provides an ideal opportunity to revitalize federal government support for small businesses across the country. Press release
A new report from Goldman Sachs in partnership with the Bipartisan Policy Center argues that the SBA should focus on four critical concerns small business owners face today. One is the lack of diversity in the awarding of government contracts to minority and women-owned businesses. According to a report released by the US Small Business Administration in 2020, non-minority businesses or corporations received approximately 91% of the $560 billion in government contracts awarded that year.
Modernizing the SBA will likely provide the most significant long-term boost to small business and the US economy in the past two decades. Greater fairness in the awarding of federal contracts can reduce inequalities in wealth and business ownership, according to a 2021 Biden administration White House document. It could also lead to greater economic inclusion, crime reduction and a multitude of other benefits at all levels.
Unfortunately, the barriers to entry for small businesses seeking to collaborate with the federal government remain prohibitive. We personally experience the lack of inclusivity in government contracting for office furniture as a minority owner of a small government office furniture company and a disadvantaged 8(a) business because year after year we see the same large state-owned companies receive 90% of the contracts, the same top 5 companies that mostly ignore cooperation or subcontracting with small disadvantaged companies.
From 2010 to 2019, the number of small businesses providing common products and services to the federal government fell 38%, according to a Bipartisan Policy Center analysis released in March 2022. Even more concerning, the number of new small businesses entering the federal procurement process the market fell 79% during this period. Since its inception in 1994, the federal contracting target for women-owned small businesses has only been met twice, and the SBA’s HUBZone program target has never been met.
These disparities in government contracts are well known to the White House. “The current data release shows that the share of federal procurement dollars going to underrepresented businesses is generally lower than those businesses’ representation in the overall economy,” says their own 2021 report. We Must Implore Congress to do what is essential for the financial and economic well-being of the country.
“Small business owners can’t take a break,” says Asahi Pompey, global head of business engagement and chairman of the Goldman Sachs Foundation. “Whether it’s labor shortages, supply chain issues or inflationary pressures, the tail of the pandemic is long.”
According to a Goldman Sachs/BPC study, 89% of small business owners support lawmakers in increasing opportunities and lowering barriers for small businesses interested in government contracts. Small business owners from Iowa to California agree that the SBA update is a no-brainer to help small businesses and, by extension, the economy.
Goldman Sachs CEO David Solomon said it well: “Small businesses contribute to our country’s economic vitality, but outdated policies hold them back.