America's small businesses are the backbone of our economy, helping to keep the country competitive through innovation and new ideas. Democrats recognize that one of our nation's greatest assets is our diversity. Investing in minority businesses, therefore, helps to increase the value of that asset and to promote economic growth and job creation.

African-American small business enterprises are growing. Over the last 10 years, minority business enterprises accounted for over 50 percent of the two million new businesses started in the United States, crossing every industrial sector from financial services and health care to construction and transportation. Today there are more than four million minority-owned companies in the country with annual sales totaling $694 billion. Between 1997 and 2002, the number of African American-owned firms increased by 45 percent. More than half of African American-owned businesses had less than $10,000 in business receipts in 2002. Black-owned firms, however, had the highest growth rates in terms of number of firms and receipts between 1997-2002. (SBA Office of Advocacy, 4/2007)

A state-by-state report on the number of African-American small businesses is attached in Appendix A.

Minority-owned firms, however, make significantly less than their non-minority counterparts. The average gross receipts of minority firms were $162,000 - considerably lower than the $448,000 average gross receipts of non-minority firms. On average, for every dollar that a White-owned firm made, Black-owned businesses made 43 cents; Pacific Islander-owned firms made about 59 cents; and Hispanic-, Native American-, and Asian-owned businesses made 56 cents, according the Small Business Administration (SBA) (SBA Office of Advocacy, 4/2007).

African-American-owned firms receive a disproportionately low percentage of government-backed business loans. African-Americans represent 13.4 percent of the U.S. population. (Census Bureau, 12/2007) The amount of government-backed loans to African American small business owners have generally remained stagnant and percentage-wise remain well below their percentage of the general population. Last year, African Americans received only nine percent of 7(a) loans - the government's largest loan program for working capital - and only 5 percent of total dollars lent. Proportionally, more African Americans benefit from the Microloan Program ($35,000 or less). About one-third of all microloans go to African American small business owners. (SBA)

The Small Business Administration should be a resource for minority-owned firms. The SBA is supposed to reach out to more minorities, women and other underserved communities to market their financing, contracting, and training programs. For the last seven years, however, the Bush Administration has not made helping underserved communities a priority.

The continuing disparity between the number and earnings of minority firms in the United States and the continuing barriers many minorities face as they seek to start or expand a business demonstrates the need for targeted programs at the federal level for minority entrepreneurs. Despite signs that small businesses are facing increasingly difficult market conditions, President Bush's Fiscal Year 2009 budget proposal for the SBA raises fees on loans, provides no funding for microloans, fails to invest in more contracting oversight, and cuts funding for key business assistance programs like Women's Business Centers and Small Business Development Centers. 

Appendix A

African-American-Owned Small Businesses

Source: SBA Office of Advocacy, 2007. Minority-owned business data are from 2002, the most recent data available from SBA and the Department of Commerce. Statewide figures are from 2006, the most recent data available from SBA and the Department of Labor.