The United States spent $800 billion assisting businesses during the COVID-19 pandemic, through the Paycheck Protection Program and EIDL program Now, Congress is dragging its feet on reauthorizing the U.S. Small Business Association.
According to Goldman Sachs 10,000 Small Businesses Voices National Director Joe Wall in a recent press release, “While Congress and the Small Business Administration took critical, commendable steps to aid 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 the federal government’s support for small businesses across the country.” press release
Elements of reauthorization
A new report by Goldman Sachs in partnership with the Bipartisan Policy Center makes the argument that the SBA should focus on four critical concerns that small company owners face today. A lack of diversity in the allocation of government contracts to minority and women-owned firms is one of them. According to a report published by the US Small Business Administration in 2020, non-minority businesses or corporations received around 91 percent of the $560 billion in government contracts awarded that year.
The modernization of the SBA will likely bring the most significant long-term boost to small businesses and the US economy in the last two decades. Increased equity in awarding federal contracts can lessen wealth and company ownership inequities, according to a White House paper from the Biden Administration in 2021. It might also lead to more economic inclusion, reduced crime, and a slew of other advantages across the board.
Regrettably, the barriers to entry for small firms seeking to collaborate with the federal government remain prohibitively high. We experience personally the absence of inclusiveness in government contracts for office furniture as a minority small business owner of Government Office Furniture and an 8(a) disadvantaged enterprise because year after year, we see the same large public companies receive 90% of the contracts, the same top 5 companies that mainly ignore cooperating or subcontracting with small disadvantaged enterprises.
From 2010 to 2019, the number of small firms providing common products and services to the federal government dropped by 38 percent, according to a Bipartisan Policy Center analysis released in March 2022. Even more concerning, the number of new small businesses entering the federal procurement market dropped by 79 percent during that time. Since its inception in 1994, the federal contracting objective for women-owned small companies has only been met twice, and the SBA's HUBZone program goal has never been met.
These disparities in government contracting are well-known to the White House. “The current release of data shows that the share of Federal procurement dollars going to underrepresented businesses generally falls behind those firms’ representation in the overall economy,” their own report from 2021 states. We must implore Congress to do what is essential for the country's financial and economic well-being.
“Small business owners can’t catch a break,” says Global Head of Corporate Engagement & President of the Goldman Sachs Foundation Asahi Pompey. “Whether it’s labor shortages, supply chain issues or inflationary pressures, the tail of the pandemic is long.”
89 percent of small company owners support legislators increasing possibilities and lowering barriers for small firms interested in government contracting, according to Goldman Sachs/BPC research. Small business owners from Iowa to California agree that updating the SBA is a no-brainer for assisting small businesses and, by extension, the economy.
Goldman Sachs CEO David Solomon put it best, “Small businesses add to the economic vitality of our country, but outdated policies are holding them back.”