U.S. Senate Committee on Small Business and Entrepreneurship

May 6, 2024

** Testimony by Natalie Madeira Cofield, President and CEO**

Chairman Cardin, Senator Van Hollen, Congressman Ivey, and esteemed Members of the Senate Committee on Small Business and Entrepreneurship:

As an entrepreneur, advocate, and former Assistant Administrator for the U.S. Small Business Administration (SBA), I have witnessed firsthand the transformative power of programs like the 8(a) Business Development program in shaping the landscape of small business ownership in America. Today, I offer my testimony on the positive and negative aspects of participating in the SBA’s 8(a) program, drawing from my extensive experience in the field of economic development and entrepreneurship.

The history of the SBA’s 8(a) Business Development program traces back to the 1950s when the Small Business Act was implemented, with the aim of promoting the growth and development of small businesses across the United States. Recognizing the systemic barriers faced by minority-owned businesses, particularly those owned by socially and economically disadvantaged individuals, the program was expanded in 1968 to include a specific provision for minority-owned firms. Since then, the 8(a) program has evolved to become a cornerstone of the federal government’s efforts to promote diversity and inclusion in contracting. Over the decades, the program has undergone revisions and enhancements to better serve the needs of underserved communities, including updates to eligibility criteria, contracting preferences, and mentorship requirements. Today, the 8(a) program continues to play a vital role in leveling the playing field for minority entrepreneurs, providing them with access to government contracts, technical assistance, and mentorship opportunities that are critical for their success.

The importance of the SBA’s 8(a) program to underserved communities across the United States cannot be overstated. For decades, minority-owned businesses have faced systemic barriers to accessing capital, contracts, and other resources needed to thrive in the marketplace. The 8(a) program addresses these barriers head-on by providing a pathway to government contracting opportunities, which can serve as a catalyst for growth and economic empowerment. By participating in the program, minority entrepreneurs gain access to a wide range of benefits, including sole-source contracts, set-aside opportunities, and mentorship from experienced professionals. These resources not only help minority-owned businesses compete more effectively but also contribute to the broader goal of building wealth and opportunity in underserved communities. As we look to the future, it is essential to continue supporting and strengthening programs like the 8(a) program to ensure that all entrepreneurs, regardless of background or circumstance, have the opportunity to succeed and thrive in the American economy.

The 8(a) program serves as a vital resource for underserved entrepreneurs, particularly those from minority backgrounds, by providing access to crucial resources, contracts, and mentorship opportunities. Through my tenure at the SBA and my involvement with organizations like the Association for Enterprise Opportunity (AEO), I have seen countless success stories of businesses that have thrived because of their participation in the program.

One of the most significant positive effects of the 8(a) program is its role in fostering economic empowerment and upward mobility among historically marginalized communities. AEO’s research on Small Business Outcomes by Ethnicity underscores the importance of programs like 8(a) in leveling the playing field for minority entrepreneurs, who often face systemic barriers to accessing capital and contracts. By providing a pathway to government contracts and procurement opportunities, the 8(a) program empowers minority-owned businesses to compete on a more equal footing and achieve sustainable growth.

Furthermore, the mentorship component of the 8(a) program is invaluable in nurturing the next generation of diverse entrepreneurs. As CEO of Walker’s Legacy, a platform dedicated to empowering women through entrepreneurship, I have seen the profound impact that mentorship can have on aspiring business owners. Through the 8(a) program, participants learn from seasoned professionals, gain valuable insights, and navigate the complexities of government contracting, ultimately positioning them for long-term success.

Mentorship and collaboration with regional partners are essential components of the success of the 8(a) program. Mentorship provides participants with invaluable guidance, support, and access to networks that can help them navigate the complexities of government contracting and grow their businesses sustainably. By fostering relationships with experienced mentors, 8(a) participants can tap into a wealth of knowledge and expertise, accelerating their learning curve and positioning them for greater success. Additionally, working closely with regional partners, including community-based lenders, non-profit organizations, and local government agencies, can further enhance the impact of the 8(a) program. These partners play a critical role in providing access to capital, technical assistance, and market opportunities, ensuring that 8(a) participants have the resources they need to thrive. By building strong partnerships at the regional level, we can create a supportive ecosystem that empowers entrepreneurs to overcome challenges, seize opportunities, and contribute to the economic vitality of their communities. AEO’s focus on regionalism, exemplified by its six dedicated regional councils, ensures that these collaborative efforts are coordinated and strategic, maximizing the collective impact on local economies and fostering sustainable growth.

While the 8(a) program has undoubtedly had a positive impact on many businesses, it is not without its challenges and limitations. One of the primary concerns is the potential for over-reliance on government contracts, which can leave businesses vulnerable to fluctuations in federal spending and market demand. This issue is particularly relevant in light of recent budgetary constraints and uncertainties, which have underscored the importance of diversifying revenue streams and building resilience.

Additionally, there have been criticisms regarding the transparency and accountability of the 8(a) program, particularly in terms of contract allocation and oversight. As someone who has worked extensively in government and economic development, I recognize the importance of ensuring that taxpayer dollars are used effectively and equitably. Therefore, it is essential for policymakers and program administrators to implement robust monitoring mechanisms and accountability measures to prevent fraud, waste, and abuse within the program.

Moreover, while the 8(a) program has been instrumental in advancing minority entrepreneurship, it is not a panacea for addressing systemic inequalities in the business landscape. AEO’s research on Small Business Revenue by Ethnicity highlights the persistent disparities in business revenue and profitability across different racial and ethnic groups, underscoring the need for broader structural reforms and investment in inclusive economic development initiatives.

Recommendations:

In conclusion, while the 8(a) program has played a significant role in promoting minority entrepreneurship and economic empowerment, there is still work to be done to maximize its effectiveness and address its shortcomings. As CEO of the Association for Enterprise Opportunity, I am committed to advocating for policies and programs that support the development of a more inclusive and equitable marketplace for underserved small businesses and entrepreneurs.

To that end, I offer the following recommendations:

  1. Strengthen oversight and accountability measures to ensure transparency and integrity within the 8(a) program, including regular audits, evaluations, and reporting requirements.
  2. Enhance access to capital and technical assistance for 8(a) participants to support their long-term sustainability and growth beyond government contracts.
  3. Expand outreach and support initiatives to reach underserved communities and ensure equitable access to the benefits of the 8(a) program.
  4. Foster collaboration and partnership between government agencies, non-profit organizations, and private sector stakeholders to maximize the impact of the 8(a) program and promote inclusive economic development.

I believe by implementing these recommendations and leveraging the lessons learned from the 8(a) program, we can continue to advance our collective mission of creating economic opportunity for all entrepreneurs, regardless of background or circumstance. Together, we can build a more vibrant, resilient, and inclusive economy that empowers individuals and communities to thrive.

Thank you for the opportunity to share my experience and testimony.

Natalie Madeira Cofield, President and CEO,
Association for Enterprise Opportunity