The logo for the Minority Business Development Agency is seen on their website on a computer in New York, Wednesday, March 6, 2024.
It’s the latest sign the government is untethering its definition of social disadvantage from broad racial and ethnic classifications, a presumption increasingly besieged by legal challenges. Last year, the Small Business Administration was forced to overhaul a program for minority government contractors and now requires applicants to prove their disadvantage through essays.
The MBDA changes mark the second time the federal government has abandoned racial classifications after a court ruling. In July, a federal judge in Tennessee enjoined the SBA’s 8 program, which helps minority-owned businesses secure government contracts, from presuming certain minorities were disadvantaged.
Before the order, the MBDA presumed that a list of groups were socially and economically disadvantaged, including Black people, Latinos, Native Americans, Asians, Puerto Ricans, Eskimos, Aleuts and Hasidic Jews. Businesses’ eligibility for assistance is also determined based on race-neutral criteria such as the age of the business, an applicant’s net worth and the business’s sustainability, according to a March 20 guidance.