28-03-2025
Economic equity in the Bay Area could take a hit with Trump gutting MBDA
Thousands of businesses across the U.S. may lose a crucial lifeline as the Trump administration looks to gut the Minority Business Development Agency (MBDA).
The big picture: President Nixon established MBDA in 1969 to drive economic equity and address the racial wealth gap in America. The agency serves minority business enterprises, which are defined as firms owned by economically or socially disadvantaged individuals.
Its mission is to help expand financing opportunities, remove systemic barriers to capital and assist in financial planning.
MBDA was codified under the Minority Business Development Act of 2021 in an attempt to preempt a president from eliminating it.
Friction point: Trump's March 14 executive order directed MBDA, among other government entities, to "reduce the performance of their statutory functions and associated personnel to the minimum presence and function required by law."
The move is meant to eliminate parts of the "federal bureaucracy" Trump deems "unnecessary."
The latest: It quickly drew outcry from the Black, Hispanic and Asian Pacific American congressional caucuses.
"This administration's efforts to take our country back in time and remove critical tools of economic success for minority populations will hinder the potential economic growth of every community in this nation," the Black caucus wrote in a letter Wednesday to Commerce Secretary Howard Lutnick.
Zoom in: One of MBDA's greatest areas of impact comes from its business centers, which are staffed with experts and located in areas with large concentrations of minority populations and businesses.
California is home to three, including one in San José that serves the greater Bay Area.
Together, they assisted almost 6,800 businesses, helped create and/or retain over 5,200 jobs and generated more than $819 million in value of contracts from 2021 to 2024.
The potential shutdown of these centers has raised an alarm bell for local businesses that relied on their services.
What they're saying: Michael Tejada, who runs the Spanish immersion child care business Mi Second Casa in San Mateo, called Trump's order "foolish."
"As a former state auditor, I understand the desire to increase government efficiency and decrease wasteful spending, but the MBDA is a worthwhile investment into business owners that create jobs and goods/services that are in need," Tejada told Axios.
Mi Second Casa reached out in 2022 to MBDA's San José business center, operated by ASIAN Inc., to seek help planning their expansion and covering some operating expenses.
"[W]ithout their help, we would have not been able to open a second location and create additional childcare spaces that are in desperate need within our community."
Anita Chan, owner of the San Francisco-based wellness center Anita B Spa, told Axios via email that gutting MBDA will "only further the systemic prejudices and restrict opportunities for many capable, hardworking, and ambitious entrepreneurs."
MBDA's operations have allowed minority groups to access assistance and capital they were excluded from for centuries, Chan noted.
The San José center helped her secure funding with a Small Business Administration loan to purchase a commercial building and facilitated town halls where she could share specific concerns with local officials.
"We must do all we can to save organizations like MBDA so that the following generations no longer need to have this conversation again."
What we're hearing: MBDA placed most of its federal employees on administrative leave last Friday, according to three sources familiar with the situation who asked to remain anonymous, citing fears of retaliation.
There has been no communication about what to expect or how Trump's order will impact business centers and grants that have already been awarded, they told Axios.
Despite MBDA's mission to serve all socioeconomically disadvantaged groups, not just people of color, there is prevailing sentiment that Trump targeted the agency largely because its name contains "minority."
