The Minority Business Development Agency (MBDA), the only federal agency solely focused on the growth of minority-owned businesses, has undergone a significant reduction in operations. In March 2025, nearly all of its roughly 50 employees had been laid off. The remaining five career employees received Reduction in Force (RIF) notices on Wednesday April 9, 2025. While the agency remains statutorily authorized, this shift effectively guts the agency and ensures its dormancy.
This marks a major shift in the federal government’s engagement with minority business enterprises (MBEs), a sector that has historically faced structural barriers to capital, contracts, and market access.
A Legacy of Impact
Established by Executive Order in 1969 and codified by Congress in 2021, the MBDA operated for more than five decades as the federal government’s primary resource for minority business development. According to its FY 2024 Annual Performance Report, the agency helped facilitate over $5.6 billion in capital, contracts, and export deals for minority-owned businesses and contributed to the creation or retention of over 22,000 jobs.
Through a network of more than 40 business centers, MBDA provided technical assistance to African American, Latino, Asian American, Pacific Islander, Native American, and Hasidic Jewish entrepreneurs. The agency also partnered with Historically Black Colleges and Universities (HBCUs), tribal colleges, chambers of commerce, and trade associations to expand outreach and service delivery.
Federal Statute and Sudden Scale-Back
The Consolidated Appropriations Act of 2021 made MBDA a permanent federal agency, granting expanded authority to establish regional offices, enter cooperative agreements, and conduct research on economic disparities. While this statute affirms MBDA’s long-term mission, the recent staffing reductions raise questions about its capacity to fulfill these responsibilities in practice.
Although the agency remains authorized, the reduction to a core staff—now also subject to RIF—marks a significant limitation in federal support infrastructure for MBEs.
Impact on Business Networks and Supplier Diversity
There are more than 9.9 million minority-owned businesses in the U.S., generating over $1.8 trillion in annual revenue and employing 8.9 million workers. According to the Federal Reserve, these businesses are more likely to be denied financing or offered less favorable terms than their white-owned counterparts. MBDA played a vital role in helping businesses navigate these inequities.
The agency also served as a key federal partner in advancing supplier diversity. It worked in close coordination with the National Minority Supplier Development Council (NMSDC) and co-hosted the annual Minority Enterprise Development (MED) Week—a signature event convening policymakers, corporations, and business leaders to celebrate and support MBEs. Due to the agency’s recent restructuring, MED Week has been cancelled for 2025 with no clear directive for future reengagement.
A Shift in the Minority Business Ecosystem
MBDA’s partnerships with regional development organizations, supply chains, and nonprofit intermediaries helped shape a national framework for minority business support. Its contraction leaves a gap in coordination, data, and federal investment that previously supported equitable economic development.
As the agency’s future remains uncertain, stakeholders across government, philanthropy, and the private sector may face greater pressure to meet the needs of diverse entrepreneurs. This shift could prompt reassessments of how technical assistance, capital access, and procurement opportunities are delivered. Meanwhile, evolving federal policy and mounting DEI rollbacks in the corporate sector may lead to further scale-backs—leaving the future of supplier diversity in limbo.
For over 50 years, MBDA helped expand economic participation for communities historically excluded from traditional business pathways. Its reduction marks a critical inflection point—not just for the agency, but for the broader pursuit of inclusive economic growth.
Read the full article here
