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KOLUMN Magazine
The Quiet Dismantling of America’s Only Minority-Business Agency
AND the Entrepreneurs Left Stranded
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The first sign that something was wrong was the silence.
For years, when Tacoma, Washington, contractor David Lee (he asked that his business name not be used publicly) hit a wall with bonding, contracts, or bank financing, he picked up the phone and called the local Minority Business Development Agency (MBDA) Business Center. Staff there had helped him renegotiate a credit line, prepare federal bids, and structure a joint venture that finally got his company in the door on a state highway project.
Then, this spring, the calls stopped being returned. A few weeks later, an email arrived: the center’s federal grant had been abruptly terminated. After helping minority-owned firms in the region create or retain nearly 1,500 jobs and secure hundreds of millions in contracts and financing, the Tacoma center was closing its doors.
“I didn’t just lose a consultant,” Lee said. “I lost the one place in government that felt like it was actually built for people like me.”
His experience is echoed in Utah, Texas, California, and across the country, where an obscure but consequential federal agency has become a front line in the Trump administration’s broader effort to roll back civil-rights-era economic policies.
The only agency of its kind
The Minority Business Development Agency, housed in the Commerce Department, was created by President Richard Nixon in 1969 (originally as the Office of Minority Business Enterprise) with a simple but radical mandate for its time: help minority entrepreneurs overcome the structural barriers that had kept them out of mainstream capital and contracting markets.
Over the decades, MBDA evolved into a small but influential institution. It never wrote loans or handed out grant money directly to businesses. Instead, it funded a national network of business centers and, more recently, “capital readiness” programs that provided hands-on technical assistance—helping firms clean up their books, build lender relationships, navigate federal procurement systems, and negotiate with private banks and investors.
According to former acting MBDA head Eric Morrissette, the agency helped client firms secure roughly $3.2 billion in contracts and $1.6 billion in capital, supporting more than 23,000 jobs in a single recent year.
The beneficiaries were not only Black- and Latino-owned businesses, but also Native American firms, Asian American tech startups, veteran-owned logistics companies, and rural, white-owned small manufacturers that met statutory tests for social and economic disadvantage.
For these firms, MBDA was often the bridge between a “no” at the bank and a viable plan to become bankable—helping owners refine financial statements, understand underwriting standards, and line up guarantees or alternative lenders such as community development financial institutions (CDFIs) and minority-owned banks.
A long-running target
Despite its modest budget—roughly $30–70 million in recent years—the MBDA has repeatedly found itself in political crosshairs.
In 2017, President Trump’s first budget blueprint proposed eliminating the agency outright, calling its mission “duplicative” of other federal and private efforts and asserting that minority business support could be handled by the Small Business Administration and its partner network. The U.S. Black Chambers, a national coalition of Black business organizations, warned that scrapping MBDA would gut “the only program dedicated to advancing minority business enterprises,” even though it accounted for far less than one-tenth of one percent of federal spending.
Congress, including some Republicans, ultimately rejected that proposal and continued to fund MBDA—then later codified and expanded it in 2021 as part of the bipartisan infrastructure law, giving the agency a stronger statutory foundation.
But the legal footing did not end the campaign against it. In 2024, a federal judge in Texas ruled that MBDA’s race-conscious eligibility criteria violated equal-protection principles and ordered the agency to open its programs to white entrepreneurs as well, a decision widely cheered by conservative litigators who had targeted the agency as a symbol of “reverse discrimination.”
Advocates describe that ruling as the judicial prelude to what came next.
Executive Order 14238: “Continuing the Reduction of the Federal Bureaucracy”
On March 14, 2025, President Trump signed an executive order titled “Continuing the Reduction of the Federal Bureaucracy.” Among seven entities singled out for downsizing or elimination was the Minority Business Development Agency.
The order directed MBDA and the other named agencies—including the Institute of Museum and Library Services and the Community Development Financial Institutions Fund—to reduce their functions to the bare minimum required by law, a phrase that critics and state attorneys general argued was deliberately vague but functionally amounted to a shutdown order.
The administration’s 2026 “skinny” budget followed with a more explicit goal: abolishing MBDA entirely, citing its embrace of “equity” and arguing that its mission had strayed beyond race-neutral economic development.
Within weeks of the order:
- Nearly all MBDA career staff were terminated, reassigned, or placed on leave, leaving only a handful of political appointees.
- The agency canceled its business center and Capital Readiness Program grants, severing funding to dozens of local intermediaries.
- MBDA’s signage was removed from parts of the Commerce Department headquarters, a symbolic gesture that Senate Democrats later cited as evidence that officials were attempting to erase the agency in defiance of Congress.
A joint op-ed in Word In Black by Morrissette and Dedrick Asante-Muhammad, president of the Joint Center for Political and Economic Studies, described the process as a “deliberate dismantling” that hollowed the staff from 23 career employees to none.
In practical terms, the agency that Nixon once envisioned as a tool to solve the “unavailability of credit, insurance and technical assistance” for minority entrepreneurs was reduced to a shell.
Lives behind the line items
The Trump administration has framed its actions as fiscal prudence and an overdue correction of what it calls discriminatory “DEI bureaucracy.” But the impact of MBDA’s dismantling is felt most acutely far from Washington, in small offices and storefronts where entrepreneurs had come to rely on the agency’s ecosystem.
Tacoma: A pipeline severed
In Tacoma, the MBDA Business Center had, in just a few years, helped minority-owned firms create or retain nearly 1,500 jobs, secure about $191 million in contracts, and access roughly $217 million in financing—numbers documented in a letter from Sen. Maria Cantwell and colleagues demanding answers from the administration.
One construction-firm owner there described the center as “my translator with the banks.” Staff walked him through debt-service coverage ratios, helped restructure a high-interest line of credit, and prepared him for meetings with lenders who had previously dismissed his company as too risky. When the center’s grant was terminated, he lost not just technical assistance but also the credibility that came from being an MBDA-vetted client.
Utah: A successful year, then a sudden stop
In Utah, a minority business center housed at a local college had celebrated its most successful year—running workshops, mentoring dozens of businesses, and helping entrepreneurs secure contracts—before its MBDA contract was abruptly cut off under the executive order. The center’s 2025 impact report recounts how its work “ceased operation in June 2025,” leaving clients in the middle of multi-year growth plans without their main source of technical support.
Local banks had come to see the center as a trusted partner; when it vouched for a borrower’s financial projections, lenders were more willing to extend credit. The center’s closure, community leaders say, effectively removed a neutral third party from the delicate relationship between marginalized entrepreneurs and cautious banks.
San Antonio: A broader backlash
In Texas, the administration’s new Department of Government Efficiency, or DOGE, canceled or clawed back millions in grants tied to MBDA and related Commerce Department programs. A San Antonio newspaper analysis found that local universities and nonprofits lost at least $5.7 million in funding linked to the “recently dismantled” MBDA, on top of other cuts targeting climate and equity initiatives.
For Black and Latino business owners already squeezed by new legal limits on affirmative-action contracting programs and local rollbacks of minority-business preferences, the MBDA cuts felt like yet another door closing.
From incarceration to entrepreneurship – and what’s at stake
The human stakes are perhaps clearest in the success stories MBDA itself once highlighted. One program in South Carolina, funded through MBDA’s Entrepreneurship Education for Formerly Incarcerated Persons, helped a man named Imari Mackey turn his life after prison into a construction and rehab business, assisting other returning citizens in securing jobs and building assets.
His story—a combination of financial literacy training, mentorship, and introductions to local lenders—is exactly the kind of “bank-customer narrative” MBDA’s defenders point to: without targeted technical help, many of these entrepreneurs would never have cleared a bank’s underwriting hurdles, no matter how strong their work ethic or business idea.
Advocates worry that dismantling MBDA will mean fewer such stories in the years ahead.
A battle over law, power, and precedent
The administration’s moves did not go unchallenged.
In May 2025, a coalition of 21 states sued, arguing that Trump’s executive order violated the constitutional separation of powers by effectively nullifying agencies that Congress had created and funded. Federal district judge John McConnell Jr. agreed, issuing a preliminary injunction blocking the downsizing of MBDA, the Institute of Museum and Library Services, and the Federal Mediation and Conciliation Service.
McConnell criticized the administration’s vague justification for the cuts as likely “arbitrary and capricious” under administrative law and emphasized that only Congress—not the president—can decide whether an agency lives or dies.
In September, the 1st U.S. Circuit Court of Appeals upheld that injunction, rejecting the administration’s request to let the downsizing proceed while litigation continues.
On paper, the rulings require MBDA to maintain operations at the levels Congress funded. In practice, however, the courts cannot easily reconstruct an agency whose staff have been scattered and whose grant infrastructure has been dismantled. As one Senate oversight letter put it, the administration “unlawfully dismantled the MBDA—terminating virtually all its staff, canceling its grant programs, and removing its signage—before the courts could act.”
The legal fight matters not just for MBDA but for the precedent it sets: if a president can effectively nullify disfavored agencies by starving them of staff and suspending their programs—even when Congress continues to appropriate money—then large parts of the modern administrative state could be vulnerable to similar “dismantling by neglect.”
The administration’s case — and its critics
The Trump administration’s public case against MBDA rests on three main claims:
- Duplication and efficiency. Officials argue that SBA district offices, Small Business Development Centers, and private organizations already provide robust support to entrepreneurs, making MBDA redundant.
- Race neutrality. The White House has framed MBDA as emblematic of race-conscious “DEI bureaucracy” it says violates equal-treatment principles, pointing to the Texas ruling that struck down MBDA’s race-based eligibility criteria.
- Fiscal restraint. In a budget that calls for sweeping domestic cuts and increases in defense spending, eliminating MBDA is presented as part of a broader effort to trim what the administration regards as “unnecessary” agencies.
Critics counter that each of these points collapses under scrutiny.
- On duplication, MBDA’s defenders note that it operates with a tiny budget compared to SBA and the Commerce Department but plays a distinct role: coordinating federal minority-business policy, running specialized centers that understand the nuances of discrimination in capital markets, and convening banks, CDFIs, and community institutions around minority-business growth.
- On race neutrality, they argue that MBDA’s programs already served a broad set of “socially and economically disadvantaged” businesses—including some white-owned firms in regions of deep, persistent poverty—and that courts have long recognized the government’s compelling interest in remedying documented discrimination in lending and contracting.
- On fiscal restraint, advocates stress that MBDA’s entire budget is smaller than many single corporate tax breaks and that its track record—tens of billions in contracts and capital facilitated over time—makes it one of the more cost-effective economic-development tools in the federal arsenal.
For Black business organizations, civil-rights groups, and many economists, the deeper concern is symbolic and structural: dismantling MBDA signals that the federal government is retreating from its role in addressing the racial wealth gap, just as new data show that minority- and women-owned firms remain more likely to be denied bank credit or pay more for it.
Bank customers left in limbo
The consequences ripple through the financial system.
A Black-owned tea shop in Atlanta that had worked with an MBDA Capital Readiness Program accelerator to prepare its first expansion loan found its mentorship team disbanded just as it approached the bank. Without advisors to help interpret the lender’s questions and refine its projections, the owners say, the deal fell apart.
In Oklahoma and Texas, CDFIs that had collaborated with MBDA centers on joint loan programs for small contractors report that referral pipelines have dried up. Without MBDA staff to vet business plans and coach borrowers, underwriters at community banks are seeing fewer complete, loan-ready applications from minority-owned firms—and are more likely to reject those that do arrive.
For many of these entrepreneurs, the loss is not ideological. It is painfully concrete: higher interest rates, delayed expansions, missed contract opportunities, and, in some cases, businesses that will never open their doors.
What comes next
For now, MBDA exists in a kind of legal and institutional limbo.
On paper, court orders require the administration to keep the agency functioning at congressionally funded levels. In reality, rebuilding an experienced staff, re-establishing grants, and restoring trust with entrepreneurs and financial partners will take years—even if a future administration fully embraces the mission.
Advocates have sketched out several paths forward:
- Congressional guardrails. Groups like the Joint Center and the U.S. Black Chambers are urging lawmakers to strengthen MBDA’s statutory independence, guarantee multi-year funding, and clarify that future presidents cannot simply hollow it out via executive action.
- Deeper partnerships with banks and CDFIs. Some business-development organizations are exploring ways to replicate MBDA-style technical assistance through philanthropy or state and local funding, particularly in regions where centers have closed.
- A broader fight over economic civil rights. Civil-rights lawyers warn that the attack on MBDA is part of a coordinated effort to roll back race-conscious economic policy—from federal contracting goals to community-reinvestment rules. The outcome of the MBDA litigation could shape how far government can go in addressing structural discrimination in the marketplace.
Back in Tacoma, David Lee has started paying a private consultant to help with bids and bank negotiations—an expense he says he can barely afford. He worries about younger entrepreneurs without his years of relationships and experience.
“MBDA didn’t guarantee you anything,” he says. “You still had to hustle. You still had to convince the bank. But they were in the room with you. Now, a lot of us are walking into those rooms alone.”
Whether the Minority Business Development Agency can be rebuilt—or whether its dismantling becomes a template for future rollbacks of economic-justice institutions—will determine how many more business owners find themselves standing alone at the bank door.