Sen. Elizabeth Warren introduced a plan on Friday to boost minority entrepreneurs with a new program that will offer federal grants to aid the launch of new businesses.
“A lot of successful minority entrepreneurs have been able to overcome these (structural) hurdles to create thriving businesses,” Warren writes in a Medium post explaining the proposal. “But this disparity in startup capital is the single biggest reason that promising Black-owned businesses on average are less profitable and bring on fewer employees than white-owned businesses.”
The $7 billion program, called the Small Business Equity Fund, would operate under the umbrella of her proposed Department of Economic Development. Grants awarded by the SBEF would need to clear certain federal standards, Warren says, but would work “through states and municipalities” in order to keep the key decision-making close to the communities.
Warren’s new plan is the latest in a series she’s describing as her “economic patriotism agenda,” which she first rolled out last week with a wide-ranging proposal to consolidate a number of agencies into a new department, which would also lead the implementation of her vision of a “Green New Deal.” Friday’s pitch is aimed more directly at voters of color, whom Warren has assiduously courted throughout her campaign, and comes on the eve of the Black Economic Alliance’s presidential forum in Charleston, South Carolina.
The trip south – and this new plan – come with Warren surging in a number of recent polls, which have shown her either nearly tied with or slightly ahead of Sen. Bernie Sanders, as the progressive pair now jockeys for second place behind the early frontrunner, former Vice President Joe Biden. The Warren campaign’s near constant churn of policy proposals has grabbed the attention of liberals and given rise to a new catchphrase that the candidate has embraced and worked into her stump speech: “I’ve got a plan for that.”
In her post, Warren makes a point of noting that the new funding will go toward grants – and not loans or loan guarantees – as part of a broader effort to infuse more capital into the minority business community, while cutting down on debt obligations.
“Loans aren’t as good as no-strings-attached equity because they leave businesses with debt when they’re trying to grow,” Warren says. “Equity helps businesses thrive from the beginning without having to worry about ongoing financial obligations or the risk of default.”
Warren arrived at the $7 billion figure, she says, because her number-crunchers believe it is the figure required to level the playing field, over the next decade, between “Black, Latinx, and Native American entrepreneurs (if they) started businesses at the same rate as white entrepreneurs.”
It would be paid for, according to the proposal, with new revenue from her “Ultra-Millionaire Tax,” a levy on wealth – as opposed to earnings – Warren introduced in January that would impose a 2% tax on Americans’ net worth that exceeds $50 million, with an additional 1% tax on wealth greater than $1 billion.
“That means supporting 100,000 new minority-owned businesses,” she writes, “which together would be expected to provide 1.1 million jobs.”
Warren in her post also takes a shot at the Trump administration’s efforts to reduce funding to the Minority Business Development Agency, saying she would seek to triple its budget.