The U.S. Census Bureau reports that of the 5.9 million U.S. employer firms in 2023, 201,000, or 3.4 percent, were Blackowned—with $249 billion in receipts. Among non-employer firms, Black-owned businesses accounted for 4.4 million, or 14.4 percent, generating $128.7 billion in receipts.

According to the most recent data available from the U.S. Census Bureau, 201,000, or 3.4 percent, of employer firms are Black-owned, while 4.4 million, or 14.4 percent, of non-employer firms are Black-owned. Adeolu Eletu on Unsplash Despite Black-owned businesses continuing to create jobs and contribute billions to the U.S. economy, business leaders say they are navigating a new set of economic and policy challenges.

“We’re in a state of flux,” said Carl Brown, executive director of the D.C. Small Business Development Center (DCSBDC). “We have a large federal workforce, primarily of African Americans, that were let go, and they’re not spending their money.”

Brown says these cautious spending habits are not limited to furloughed workers though.

“Anyone who has any logic will say, ‘With a war going and the price of gas, groceries and everything going up, do I really need to buy this?’” said Brown. “People are not spending their money; they’re holding onto their money.”

Carl Brown serves as the executive director of the D.C. Small Business Development Center. Meta (Facebook) Another challenge that Brownhighlighted was a recent revision to the Small Business Administration’s 8(a) Business Development Program, which was originally designed to help sociallyand economically-disadvantaged small businesses compete for federal contracts.

In line with his administration’s executive actions to dismantle equity, diversity and inclusion initiatives across the federal government, the 47th president has moved to make the program race-neutral. Instead, it would require business owners to individually demonstrate social disadvantage rather than allowing certain minority groups to qualify through a previous presumption based on historical experiences with discrimination.

“That’s the way you politely say, ‘We’re destroying the program or determining that it’s no longer effective, and we’re not going to use it anymore,” said Brown.

While federal policies shape the contracting landscape, Wendell Stemley, president of the National Association of Minority Contractors, said states can play a critical role in determining how minority-owned businesses access opportunities moving forward.

He noted that the federal government’s role is to establish budgets and frameworks for programs, but states ultimately decide how they engage small businesses and whether minority-owned firms have opportunities to compete for contracts.

Wendell Stemley serves as president of the National Association of Minority Contractors’.

Louis American Amid the national debate over diversity initiatives, Stemley said some states have responded by limiting their own efforts to support disadvantaged businesses instead of identifying ways to maintain support.

“States have to take ownership and ask, ‘What can we do?’ versus worrying about all of the things they can’t do,” said Stemley. “They have to ask, ‘What can we do to try to help those in our community who are at the bottom of the totem pole?’”

Beyond policy changes, Stemley said another challenge facing minority-owned businesses is capacity. He said he often hears from contractors that they do not have the workforce to take on available contracts. However, he argued that Black communities represent an untapped pool of talent that could be trained for skilled positions, particularly as African Americans have the highest unemployment rate in the country.

“If we’re not getting opportunities down to the lowest level in all of our communities, then we’re hurting ourselves,” said Stemley.

Even before the latest changes on the federal level, Brown said Black entrepreneurs have long been navigating structural barriers that continue to limit their businesses’ growth. He pointed to historical challenges, including the lack of access to capital, cash-flow constraints and weaker relationships with financial institutions.

Through his work at the DCSBDC, Brown helps entrepreneurs become “capital-ready” by reviewing business plans, strengthening loan applications and preparing owners to seek financing.

“If you come into the bank with a business that is credit-worthy, you’re going to walk out of there with some money,” said Brown. “That’s what we’re working with them on.”

If business owners are struggling to win federal contracts, Brown advised that they shift their focus to state and local contracting opportunities. He also encouraged entrepreneurs to cultivate strong relationships with banks, particularly Community Development Financial Institutions (CDFIs), which are dedicated to expanding access to capital for underserved businesses and communities.

“Procurement opportunities may be limited, and economic uncertainty is worldwide at this point,” said Brown. “Building relationships, trust and marketing are musts.”

This story was first published in The Afro.