Supreme Court makes shock ruling in small business program for minorities

September 8, 2023

The Small Business Administration’s 8(a) Business Development program to help minorities was struck down by a federal judge this week.

The ruling could put thousands of minority business owners in a difficult position as they seek to deal with the new change.

The issue

"[I]n July, a federal judge in Tennessee struck down a provision of the program that equated race with social disadvantage," the Washington Post reported.

"The decision — one of the first to affect the private sector in the wake of the Supreme Court’s June decision upending race-conscious college admissions — throws into disarray an SBA program that has served minority-owned small businesses for about five decades. Legal experts said it could signal trouble for other programs meant to help underrepresented groups win federal contracts, including veterans and women," it added.

Now what?

"The Ultima decision is important for several reasons. First, Ultima only challenged the SBA’s use of the rebuttable presumption of social disadvantage for the 8(a) program, not the entire 8(a) program itself. Therefore, the 8(a) program is still intact," JD Supra reported.

"Second, to comply with the Ultima Court’s decision, SBA has issued a press release, interim guidance, and temporarily suspended new 8(a) application submissions," it continued.

Following the Supreme Court

The change follows a Supreme Court ruling this year that ended college admissions based on race. The move now appears to be impacting other areas as well, including small businesses.

The move is significant, as it pushes back on the growing DEI movement in recent years connecting race with corporations and various rankings to make workplaces more "inclusive."

While the movement won't end over the court ruling, businesses will need to be more careful to base their decisions on factors other than race.

Additional court cases could soon arise from the situation, along with a potential reduction in diversity emphasis in corporate America.

Instead of basing decisions on minority status alone, the recent case shows that the Constitution requires an emphasis that treats people equally regardless of racial background.

" A free people [claim] their rights, as derived from the laws of nature."
Thomas Jefferson
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