PA launches fund for 'disadvantaged' businesses based on race, economic status

On Tuesday, Pennsylvania launched a business grant and assistance fund that is meant for businesses in "historically disadvantaged communities" based on race, economic status, and other factors. Similar programs have been hit with lawsuits for alleged discrimination.

Pennsylvania's Department of Community & Economic Developemnt is offering a business assistance program that could raise eyebrows with similar discrimination concerns. The program stems from Democratic Governor Josh Shapiro's 2024-2025 budget that "includes funding for small, diverse businesses that have historically been denied access to social or economic opportunity, including minority-owned businesses, through the Historically Disadvantaged Business Assistance Program."

The president of the African American Chamber of Commerce of Western Pennsylvania, Barãta Bay, claimed that the program will have a positive "ripple effect" across Pennsylvania. The program would include funding to create and support "business assistance service centers" as well as microgrants programs for funds to cover start-up and expansion costs meant for "historically disadvantaged businesses."

According to the program website requirements, a "historically disadvantaged business" is defined as a "for-profit business enterprise that is owned or controlled by one or more socially or economically disadvantaged persons who are residents of this Commonwealth. The disadvantage, regardless of sex or marital status, may arise from cultural, racial, chronic economic circumstances or background or other similar cause. Such persons include, but are not limited to: African Americans, Hispanic Americans, Asian Americans, and Native Americans."

Frank Gamrat, executive director of the Allegheny Institute for Public Policy, a nonprofit institute that researches economic policy impacts in Pittsburgh, told The Center Square that he agrees Pennsylvania should make it easier for small businesses to succeed and create jobs, but this program is “that whole picking winner and losers thing all over again. The state has a horrible, horrible record of doing that, at least on the side of the state.”

Gamrat told the outlet that the state would be better off addressing regulatory barriers that discourage entrepreneurs. He said, “Let’s look at those and start knocking them down and make it simpler for someone to start. I don’t disagree with that sentiment but let's cut the red tape.”

He also opposes Democratic Governor Josh Shapiro’s plan to designate and fund eligible minority organizations, such as educational institutions and nonprofit community groups focused on economic development, to act as technical assistance centers in different parts of the state that would then create “micro-grants” to help those hoping to start or expand their business.