Small Business Administration program upended in wake of Supreme Court affirmative action ruling

Small Business Administrator Isabella Casillas Guzman, speaks in the Rose Garden of the White House in Washington, Monday, May 1, 2023, about National Small Business Week. h)

Under the new guidelines, being Black, Hispanic, Asian or Native American is no longer enough to automatically qualify as socially disadvantaged - a key step in making it into the program. Instead, in a mass email distributed Aug. 22 by SBA officials, business owners were instructed to submit an essay demonstrating that race had hindered their success.

In the meantime, additional SBA staff are being trained to review the narratives, according to the agency, which is working with the Justice Department to create additional guidance for businesses and the agencies they work with. The SBA changes come amid a broad legal assault on diversity, equity and inclusion initiatives in the private sector, one that has only intensified in the wake of the Harvard and UNC decisions. Edward Blum, the conservative activist behind the two college admissions cases, has several pending lawsuits targeting private-sector DEI programs.

Pottroff said the Harvard-UNC rulings have essentially made no SBA program safe from scrutiny and legal challenges, including the Service-Disabled Veteran-Owned Small Business program, Women-Owned Small Business program, the Small Disadvantaged Business program and the Historically Underutilized Business Zones program - all of whose certifications are key in helping disadvantaged business owners win contracts throughout the federal government.

The ruling against the 8 program came in a lawsuit filed in March 2020 by Ultima Services Corp., an administrative and technical support business. Ultima’s owner, Celeste Bennett, claimed she was precluded from being awarded a contract under the 8 program because she is White.

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