$3 Billion for Diverse Community Lenders Announced by U.S. Treasury (Broad Based Business Development Thoughts)

The U.S. Department of the Treasury’s annual Freedman’s Bank Forum, the Economic Opportunity Coalition (EOC) announced $3 Billion for community development financial institutions (CDFIs). The goal is to maximize the benefits of supply chains and financial opportunities for a variety of businesses in underserved communities. You can read more about that  US Treasury Diverse Supplier Program 23'

Administrators have called on companies in semiconductor manufacturing, clean energy manufacturing, transportation, heavy industry, and biomanufacturing to diversify their supply chain to 15% with underserved communities and minorities. The mechanisms finance will be through loans, grants, and forbearance for small businesses.

A Few Thoughts: 

Research generally supports the idea that diversity provides positive benefits to companies and to communities alike. There is some indication that companies that expend 20% of their supply chain to diversity programs receive 15% of their annual sales from such sources. There can be as much as 133% return on diversity supplier programs according to an article MSU-Divers Supply Chains 23'

There as been some criticism that wealth is concentrated in fewer and fewer hands and that is limiting broad based growth. From a macro perspective this program may have some influence but certainly doesn't solve the whole problem. It does influence social signaling to businesses and it also helps develop different perspectives of business that can improve national innovation in the long run. 

While government is a big influencer, business is generally is a bigger influencer. What we want to see is an economy where such programs are not necessarily needed because the natural mechanics allow for new and emerging businesses to start from any location through market influences. That will require thinking about how the small business environment is not yet maximized for higher and diverse innovation that leads to higher national returns and adaptability.