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Monday, June 12, 2017

Is This Government Program Failing Black and Other Minority-Owned Businesses?

Black entrepreneur

The U.S. Small Business Administration (SBA) runs a program designed to help minority businesses - that is, businesses owned by African Americans, Hispanics, Asians, Native Americans, and/or disabled veterans.
It's called the 8(a) Business Development Program, and it is supposed to help socially and economically disadvantaged entrepreneurs become more successful in business, and gain a foothold in government contracting.”.

However, a recent study led by Grant Lewis at George Mason University discovered that businesses being helped by the program are:

* more likely to go out of business.

* no more or less likely to remain in business over the 6-year period surveyed.

* not necessarily more competitive or stronger businesses.

Lewis says that he suspects that the 8(a) program is being taken advantage of by people who incorporate businesses solely for short-term benefits and who close their businesses after their eligibility expires (after nine years).

More harmful than helpful?

He comments, "The limited term of the program, rather than encouraging firms to become self-sustaining, in fact encourages them to exit the market once subsidies are withdrawn."

The conclusion of the study is that this government program, instead of helping Black and other minority-owned businesses, may actually be failing them!

For more details on the study, visit:
https://link.springer.com/article/10.1007/s11187-017-9860-z

For more details about the 8(a) Business Development Program, visit:
www.sba.gov/contracting/government-contracting-programs/8a-business-development-program

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