Firm Charges SBA with Racial Discrimination A black venture capital firm is suing the Small Business Administration for racial discrimination because the agency rejected its application to become a small business investment company. Diamond Ventures, an Atlanta-based firm with a majority-black management, filed the lawsuit Aug. 21 in U.S. District Court in Washington. It alleges SBA is biased in its selection process and prejudiced in its application policies and procedures towards minority applicants. SBA has a policy of refusing to comment on pending lawsuits. Small business investment companies provide equity investment and loans to small firms, backed by government guarantees. SBA rejected Diamond Ventures’ application to join the program in February. The agency said the firm’s management team lacked “qualifications and ability to operate a Small Business Investment Company” and raised “significant concerns” about Diamond’s investment philosophy of investing in businesses owned by blacks, Asians, women, Hispanics, and Native Americans, according to the company. C. Earl Peek, Diamond’s managing partner, replied, “SBA’s comments are a pretext for discrimination.” Peek said he and other members of the management team have “more than 70 years of combined experience in all aspects of business finance, lending, operations, venture capital, and business valuations.” The lawsuit cites the small number of minority-controlled SBICs and the small proportion of SBIC loans and investments in minority-owned businesses as further evidence of discrimination. According to SBA figures, minority-owned firms accounted for 10% of SBIC loans and investments in fiscal 2002 but received only 4% of the total dollars. Black-owned businesses received less than 1% of SBIC dollars.