66 www.blackeoejournal.com Black EOE Journal
he small business ecosystem in under- served communities has struggled for too long to keep up with better-funded busi- nesses and entrepreneurs in more prosperous communities. Entrepreneurs of color regularly report being turned away by traditional finan- cial institutions for loans at higher rates than their white counterparts. And the community lenders committed to filling that gap similarly report that shortfalls in capital and technical capacity limit their ability to invest in the com- munities that need them the most. To combat this, Vice President Kamala Harris announced a slew of new programs that will be dedicated to serving diverse small businesses by providing capital and resources. These actions will come from both the federal and private sectors and will build upon the Economic Opportunity Coalition, a private sector initiative committed to investing bil- lions of dollars in underserved communities and the small businesses that emerged from the pandemic. The new policies include the following: Government contracts for small, dis- advantaged businesses (SDBs): The Office of Management and Budget (OMB) will be issuing a memorandum to federal agencies to spend an unprecedented 12 percent of fiscal year 2023 government-wide procurement dol- lars to go to small, disadvantaged businesses, otherwise known as SDBs. This is a 1 percent increase from the fiscal year 2022 spending goal and a 5 percent increase from the initial statutory goal. New lenders for underserved small busi- nesses: The Small Business Administration (SBA) will be proposing a rule to allow new small business lenders to apply for a license
New Initiatives to Drastically Boost Your Small Business Needs
with their 7(a) business loans program. By implementing this policy, the SBA hopes to grow the number of lenders that receive its loan guarantee, thus increasing small busi- ness lending, particularly in smaller-dollar and underserved markets where borrowers are most acutely shut out of current lending. Technical assistance for underserved en- trepreneurs : The Minority Business Develop- ment Agency (MDBA) will issue a $100 mil- lion notice of funding opportunity to provide technical assistance grants for entrepreneur- ship technical assistance providers to help businesses owned by socially and economical- ly disadvantaged individuals (SEDIs) launch, scale and connect with growth capital. Opportunities for smaller asset manage- ment firms: The Pension Benefit Guaranty Corporation (PBGC) is releasing a review of its Smaller Asset Manager Pilot Program, a irst-of-its-kind program to reduce barriers to competition and create opportunities for smaller investment management firms to man- age some of the agency's fixed-income assets. CDFI Fund increasing accountability and clarifying impact for financially under- served communities: The CDFI Fund, other- wise known as the Community Development Financial Institutions Fund, is in the process of updating the requirements and standards for CDFI certification. The organization will be working to implement clearer guardrails for the activity of CDFIs and greater transparency into their impact. The CDFI Fund also published for-public comment criteria for designating a certified CDFI as an MLI (Minority Loaning Institution). These policy steps will clarify the value of investing through community finan- cial institutions, which is important for private investors that seek to align with recent historic federal investment in this sector. Coordinating federal investments in un- derserved communities: The newly-formed Interagency Community Investment Commit- tee (ICIC) issued a request for information to gather input from the American people on how to improve the effectiveness and impact of federal community investment programs. The committee invites feedback from community stakeholders, including local government, civil society, as well as the private sector, to under- stand the specific challenges of accessing and working with federal community investment programs. This feedback will enable the ICIC to better align numerous federal programs, thereby facilitating the flow of resources into underserved communities. Feedback on small-balance mortgages: To facilitate greater availability of small-bal- ance mortgages, the Department of Housing and Urban Development (HUD) is issuing an RFI to solicit specific and actionable feedback on the barriers that prevent the origination of these mortgages, and recommendations for increasing the volume of small-mortgage loans in Federal Housing Administration (FHA) programs. Private sector provisions: In addition to the above federal provisions, different corpo- rations and foundations will commit more than $1 billion in assets to help diverse small busi- nesses. This will be done through the newly formed Economic Opportunity Coalition (EOC). These funds will help small businesses access capital, grow their networks, improve their digital presence, provide professional and technical assistance and so much more.
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