Response to Federal Judge’s Order on Minority-Business Agency

Recent legal developments continue to challenge Diversity, Equity, and Inclusion (DEI) initiatives. A notable example is the case in Texas where the Wisconsin Institute for Law & Liberty (WILL) secured a permanent injunction against the Minority Business Development Agency (MBDA). The lawsuit argued that the MBDA’s programming, which aims to support minority business enterprises, was racially discriminatory as it provided services based on race and ethnicity. This, they claimed, violated the Equal Protection Doctrine. The MBDA, created by the 2021 Infrastructure Act, supports businesses owned by individuals facing racial or ethnic prejudice or cultural bias. However, the court’s ruling emphasized that any racial classification by the government must be narrowly tailored to a compelling interest. This decision could have broader implications, potentially impacting other programs designed to assist socially or economically disadvantaged groups.

We strongly oppose the recent decision declaring MBDA’s programs unconstitutional. These programs are essential for addressing the systemic barriers and historical disadvantages that minority-owned businesses face. This is underscored by the harsh realities that only 29% of Black-owned businesses that apply for loans receive at least some portion of the requested amount, in stark contrast to 60% of white-owned businesses; that the credit denial rate for Black-owned businesses stands at a significantly higher 38%, compared to just 14% for their white-owned counterparts; and that loans granted to Black-owned businesses typically come with interest rates that are, on average, 1.4 percentage points higher than those offered to white-owned businesses. 

By providing targeted support and resources to bridge these divides, MBDA’s initiatives foster a more equitable and diverse economic landscape. Stripping away these programs not only undermines our collective efforts towards inclusivity and equal opportunities for all entrepreneurs in underserved communities but also weakens the overall economy by stifling the growth and innovation that diverse businesses bring.

We beseech the Justice Department to appeal this decision. Unfortunately, contrary to the views of some, economic and education opportunities are not equal for people of color in America, underscored by the fact that minority-owned businesses are three times more likely to be denied traditional bank loans than non-minority businesses.