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New York’s minority, women-led businesses safeguarded in new laws

New York’s business community is supporting a legislative package Gov. Kathy Hochul signed into law to strengthen and safeguard the state’s minority and women business enterprises programs.

MWBE is a certification program that encourages business owners from disadvantaged populations to earn contracts with state and local governments. To qualify, a business must be majority owned by either an ethnic minority or female. The state has awarded almost $24 billion in contracts to eligible companies since 2011 and nearly $3 billion last year.

The program in New York had been under fire after a grand jury eight years ago found rampant fraud and abuse within a small cluster of construction contracts awarded to eligible entities. The report found more than $10 million in work went to contractors that were not legitimate MWBEs or used an MWBE as a pass-through to businesses that actually did the work.

Hochul signed three bills into law last Thursday, including Assembly Bill 9259-A and Senate Bill 3390-A. The new law will compel companies to complete certifications that MWBE contract recipients actually performed the work on the contract. It also requires the state to create an online database of certified companies, conduct routine inspections and revoke certifications for any business or individual convicted of misrepresentation.

S3390-A “establishes safeguards for the Minority- and Women-Owned Business Enterprise Program to prevent fraud and abuse,” said state Sen. Jamaal Bailey, D-Bronx, the Senate bill’s sponsor. “This bill will strengthen the Minority and Women-Owned Business Enterprise Fund and ensure the fund is running fairly and its opportunities remain accessible to these enterprises in New York.”

Hochul also signed A6420 and S571. That law will allow eligible businesses to use funds from the state’s lending program to refinance their existing debt. By getting a loan through the state’s microloan program, a business that may otherwise need to use a credit card to finance debt can save nearly $3,000 annually.

Those two bills had the support of The Business Council of New York State.

“Our MWBE legislative package was meant to assist struggling businesses postpandemic as a disproportionate number of shuttered businesses due to COVID were MWBE businesses,” said Heather Briccetti Mulligan, president and CEO of The Business Council, in a statement.

The third bill in the package Hochul signed, A10459 and S9351, doubles the size of contracts New York City can award to MWBEs through noncompetitive means to $1 million.

Assemblymember Rodneyse Bichotte Hermelyn, D-Brooklyn, who sponsored A10459 and A6420, said the new laws will help create equity for disadvantaged businesses.

New York City Mayor Eric Adams also supported the bill to double the amount for the noncompete awards. He called it “leveling the playing field” for the city’s Black and brown communities.

“Our MWBEs have suffered through the pandemic from slow rates of business formation and employment growth, in addition to a severe uptick in business closures,” the mayor said in a statement last Thursday. “Today, we are showing our MWBEs that we have their back.”

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