New court ruling rolls back minority business programs

Another court case is upending how programs focused on helping minority-owned businesses qualify for those initiatives.

Three White-owned businesses sued the Minority Business Development Agency because they were denied services that could help their businesses.

In a decision handed down on Tuesday, a U.S. district court judge in Texas ruled that the agency violated the constitutional rights of those three businesses. The judge cited the Supreme Court decision that declared Harvard’s and the University of North Carolina’s race-based affirmative action programs violated equal protection guarantees in the U.S. Constitution.

In July, another court ruling used that same Supreme Court decision to force the Small Business Administration to drop its so-called “rebuttable presumption” process to certify companies as small, disadvantaged business so they could join the 8(a) set-aside program.

Under that process, SBA automatically accepted companies as socially disadvantaged because the owners were part of a minority group. A district court judge in Tennessee ruled that SBA could no longer use that process.

SBA now requires companies to file a “Social Disadvantage Narrative” that describes how they as an individual has faced discrimination.

The Minority Business Development Agency used a similar presumption process.

The MBDA has not responded to a request for comment, though an attorney representing the three businesses told the Washington Post that he expects an appeal to be filed. The three businesses were represented by the Wisconsin Institute for Law & Liberty.

The MBDA operates several programs such as a business centers, advanced manufacturing centers, export centers and a federal procurement center. Until this lawsuit, the centers were only open to minority-owned businesses.

The three companies that filed suit all argued that their small businesses would benefit from MBDA’s services, but they could not apply because they were white.

The California Association of Micro Enterprise Opportunity, a small business advocacy group, criticized the decision.

“This lawsuit is part of a concerted effort by anti-diversity activists to wage a war of poverty against Black and Brown business owners by thwarting access to the American dream of self-reliance and business ownership,” said Carolina Martinez, CEO of CAMEO.

Martinez said that lawsuits and decisions such as this one close the “door to prosperity for entrepreneurs of color.”