Yes! How the Trump Administration Cuts in 2025 are Disrupting Black Business Growth
While President Donald Trump has previously promoted support for Black entrepreneurship, such as the creation of Opportunity Zones during his first term, his second-term policies are drawing sharp criticism for dismantling the very institutions that historically helped Black businesses grow.
In March 2025, president Trump signed an executive order eliminating two key federal support programs:
- The Minority Business Development Agency (MBDA)
- The Community Development Financial Institutions (CDFI) Fund
These agencies were foundational in helping Black entrepreneurs access capital, mentorship, and federal contracts.
This article examines the policy shift, its impact on real Black-owned businesses, and the ecosystem now at risk — from local banks to national investment funds like the Black Economic Development Fund (BEDF).
MBDA: A Federal Agency Built for Minority-Owned Businesses
MBDA, created to promote the growth of minority-owned businesses, was shut down completely. In fiscal year 2020 alone, it helped Black-owned businesses secure $5.27 billion in capital and contracts, representing 66% of the total $8 billion facilitated across 16,000 minority-owned firms. (Source: MBDA.gov)
Real-World Example:
Dover Staffing, an Atlanta-based staffing agency, used MBDA programs to grow from $1 million to $8 million. CEO Sanquinetta Dover credits MBDA’s coaching and access-to-capital programs for helping scale her business and create jobs in her community. She warned that “defunding MBDA means future minority businesses won’t receive the guidance or financing needed to scale.” (Source: DiversityProfessional.com)
With the MBDA now shuttered, thousands of Black-owned businesses lose access to mentorship, contracting pathways, and financing tailored to their needs. With MBDA business centers closed, vital mentorship, technical assistance, and networking programs have been stripped away.
CDFI Fund: A Vital Pipeline for Underserved Entrepreneurs
The CDFI Fund supported mission-driven lenders that served businesses often shut out by traditional banks. Certified CDFIs held over $25 billion in small business and microloans as of 2021. (Source: CDFI Fund)
- Black businesses were twice as likely to receive all their requested funding at a CDFI compared to a large bank.
- In fact, 28% of Black business owners who applied to CDFIs received the full amount requested — a better outcome than from banks, credit unions, or online lenders. (Source: Third Way)
By eliminating the CDFI Fund, the Trump administration has effectively cut off a critical source of affordable capital for thousands of Black-owned firms.
How These Cuts Undermine the Black Economic Development Fund (BEDF)
The Black Economic Development Fund (BEDF), though privately funded, depends on an ecosystem strengthened by federal support. Its success in deploying $250 million to Black-led banks, real estate developers, and businesses has been deeply connected to CDFI-backed lending and MBDA infrastructure. MBDA provided technical assistance and contract opportunities that helped Black-owned businesses grow, making them stronger candidates for BEDF investments.
Here’s how the Trump administration’s elimination of the CDFI Fund and MBDA affects BEDF:
Examples of BEDF Investments Now at Risk:
Black-owned banks – $17 million in deposit
BEDF places deposits in Black-owned banks, which rely on CDFI Fund grants and low-cost capital to extend more loans to Black businesses and homeowners.
- Optus Bank (Columbia, SC): A 100-year-old institution that received $14 million; 90% of its loans support minority and women-owned businesses.
- Unity National Bank (Houston, TX): $3 million investment; Texas’ only Black-owned bank.
- Carver Federal Savings Bank (New York, NY): $5 million investment to serve underserved urban communities.
(Sources: LISC, PRNewswire, McKinsey & Company)
With the CDFI Fund eliminated, these banks lose a critical source of funding. Even with BEDF deposits, they cannot close the lending gap.
Black-owned businesses – $28.6 million
BEDF invested $28.6 million directly into Black-owned businesses, some of which relied on CDFI-backed loans to grow before securing BEDF funding. Without CDFI-backed business loans, fewer Black-owned businesses will be ready for the kind of capital that BEDF provides, shrinking the investment pipeline.
Black-led real estate – $166.2 million
Black-led real estate developers working on community projects often pair BEDF capital with public-sector support. Cuts to MBDA and CDFI will reduce financing options and slow community revitalization.
BEDF Portfolio by Investment Type
| BEDF Investment Type | Tied to CDFI/MBDA? | Impact |
|---|---|---|
| Black-owned banks ($17M) | ✅ | Loss of CDFI support limits lending power |
| Black-owned businesses ($28.6M) | ✅ | Fewer qualify for capital without MBDA/CDFI preparation |
| Black-led real estate ($166.2M) | ✅ | Public-private deals harder without federal backing |
Small Business Development Centers (SBDCs) Also Impacted
In January 2025, the Trump administration froze all federal grants and contracts, disrupting operations of local Small Business Development Centers (SBDCs), which provide free mentoring, business planning, and financial guidance.
- In 2023, 317,480 clients were served by SBDCs nationwide.
- 47.7% of those clients were minorities, including over 150,000 Black entrepreneurs. (Source: SBDCImpact.org)
- In New York State, 41% of businesses supported were minority-owned. (Source: SUNY.edu)
Recent funding disruptions have led to reductions in service availability, making it harder for Black-owned businesses to get the support they need to grow.
Final Takeaway
Though Opportunity Zones from Trump’s first term were intended to attract investment into underserved areas, critics argue they often benefited outside investors more than the communities they were meant to serve.
In contrast, the MBDA and CDFI Fund — programs specifically designed to support and empower Black-owned businesses — have now been completely dismantled. Their elimination removes key federal pathways to capital, mentorship, and contract opportunities that helped thousands of Black entrepreneurs grow and scale.
Without these public-sector supports, fewer Black-owned businesses will qualify for private capital, and economic revitalization in Black communities may slow or reverse.
However, recent commitments to preserve the Small Business Administration (SBA) could allow some essential programs, such as SBDCs, to continue supporting entrepreneurs.
Going forward, the path to long-term sustainability may require the creation of a robust private-sector pipeline for Black-owned businesses. One that cannot be dismantled by shifting administrations or targeted by anti-DEI policies. This means investing in independent, community-driven systems that foster Black economic growth and resilience, regardless of political winds.