How Much Stimulus Money Have Small Businesses Received?


How Much Stimulus Money Have Small Businesses Received?When the first federal stimulus dollars were distributed last year,  small businesses, including many minority-owned businesses wondered how much of the stimulus money they would be able to capture. Now that President Obama is seeking passage of a second stimulus bill focusing on infrastructure projects, it’s reasonable to ask what kind of effect the first stimulus had. A new report from the Kirwan Institute, an organization at Ohio State University that studies race and ethnicity, has some answers.

The Kirwan Institute tracked how much money minority-owned businesses have received from the federal stimulus program. According to the data, reported in the Washington Post, 34 percent of the $39 billion in direct federal contracts awarded in 2009 went to small businesses, 7.6 percent of them women-owned, 3.5 percent Hispanic-owned and 2.5 percent African-American owned.

The executive director of the Kirwan Institute, John Powell, says direct federal spending is still [too] low and contends that the stimulus money should be helping overcome shortfalls in how much contracting minority businesses receive.

Minority Business Development Agency director David Hinson says the agency spent $1 million last year and organized more than 100 events nationwide to provide minority-owned firms with information about getting stimulus-related contracts. Hinson says equitable distribution of contracts to minority-owned companies is a priority for President Obama.

Because of the rush to get stimulus money flowing, no “set-asides” (specific goals for what percentage of contracts should go to minority-owned businesses) were created for the stimulus money.

In addition, some 80 percent of the stimulus money has not been awarded directly by the federal government but has been distributed through state and local governments, which makes it more difficult to track. And different state and local governments have different minority set-asides.

The Kirwan Institute is working with the Miami Workers Center to track stimulus dollars in Florida, using that state as a case study. Later this month the Institute will release a report on how many jobs were created and how many contracts went to small and minority-owned businesses in Florida. Robert M. Spooney, president of the African American Chamber of Commerce of Central Florida, said the organization’s members have found it hard to get stimulus contracts and that the only company that has done so is one that already had worked with the government.

As an entrepreneur, I’ve learned that getting government contracts is more difficult than you might think if you’ve never done so. What have you found to be the case? Has your business benefited from stimulus money, either on the federal or local level? I would love to hear from you.



Rieva Lesonsky Rieva Lesonsky is a Columnist for Small Business Trends covering employment, retail trends and women in business. She is CEO of GrowBiz Media, a media company that helps entrepreneurs start and grow their businesses. Visit her blog, SmallBizDaily, to get the scoop on business trends and free TrendCast reports.