The abrupt suspension of Memphis and Shelby County’s decades-old minority business program has sent shockwaves through local government and business communities. Officials announced the program’s immediate halt last week, citing Tennessee’s new anti-DEI law as the primary reason.
For nearly 40 years, the Equal Business Opportunity Program helped minority and women-owned businesses secure government contracts. Its sudden termination has left many small business owners scrambling and local leaders divided.
“We’ve been forced to put an immediate pause on a program that has created opportunities for thousands of Black and female entrepreneurs,” said Memphis City Councilwoman Rhonda Logan during an emergency council session. “This isn’t just about contracts—it’s about livelihoods and community development.”
The suspension stems from Tennessee’s SB 2283, which took effect July 1st. The legislation prohibits state agencies and local governments from implementing diversity, equity, and inclusion initiatives that consider race, sex, or ethnicity in contracting decisions.
According to data from the Memphis Office of Business Diversity, minority-owned businesses received approximately $78 million in city contracts last year. Women-owned enterprises secured an additional $42 million. These figures represent roughly 23% of all municipal contracts awarded.
Local contractor Marcus Williams, who owns a small construction company, expressed frustration over the development. “My business grew because of this program. Now they’re pulling the rug out from under us with no warning or transition plan,” Williams said during a public comment period at City Hall.
The program’s suspension reflects wider tensions across Tennessee as new anti-DEI legislation reshapes public policy. Governor Bill Lee signed the controversial bill in April, describing it as an effort to “ensure fairness and merit-based opportunity” in government contracting.
Memphis Mayor Paul Young has instructed city attorneys to examine potential legal pathways to maintain some aspects of the program while complying with state law. “We’re committed to finding solutions that support our local business community while navigating these new legal constraints,” Young stated in a press release.
Analysis from the Federal Reserve Bank of Atlanta indicates that minority-owned businesses face significant barriers in securing capital and contracts. Their research shows these firms are three times more likely to be denied loans and typically receive smaller contract awards compared to similarly qualified competitors.
Community advocates argue the program’s termination could exacerbate economic disparities. The Memphis Urban League estimates local minority businesses may lose up to $100 million in potential contracts over the next fiscal year without the program’s protections.
“This program wasn’t about handouts—it was about creating a level playing field,” explained Dr. Kenneth Robinson, president of the United Way of the Mid-South. “Historical discrimination created barriers that don’t disappear overnight.”
Legal experts remain divided on whether the new law explicitly prohibits all minority business programs. Professor Daniel Kiel of the University of Memphis Law School noted that “the law’s language leaves room for interpretation regarding race-neutral measures that still aim to increase diversity.”
State Senator Brent Taylor, who co-sponsored the legislation, defended the law’s impact. “We believe in equal opportunity for all Tennesseans regardless of background. This law ensures contracts go to the most qualified bidders without government putting a thumb on the scale.”
The Memphis Chamber of Commerce has established an emergency task force to help affected businesses navigate the transition. They’ve announced plans for a series of workshops focused on competitive bidding strategies and alternative certification programs.
Some local businesses are exploring potential workarounds. The newly formed Memphis Business Equity Coalition is developing a private-sector initiative to connect minority-owned firms with corporate procurement opportunities outside government contracts.
City officials confirm they’re examining programs in other states that have faced similar challenges. Models from Michigan and Washington state, which implemented race-neutral small business programs following similar legal restrictions, are under consideration.
Councilman Edmund Ford Jr. expressed concern about the economic impact. “We’ve seen what happens in other cities when these programs end—minority business participation drops dramatically. That hurts our entire economic ecosystem.”
The city’s legal department expects to present options to the council by mid-August. Meanwhile, contracts already awarded under the program will continue, though no new certifications or set-asides will be processed.
As Memphis grapples with this transition, the situation highlights broader questions about how cities can address historical inequities within new legal constraints. The outcome may establish precedents for municipalities across Tennessee and beyond.
For Memphis business owners like Williams, the immediate concern is more practical. “I just want to know how I’m supposed to compete next month when the playing field suddenly looks completely different,” he said.
