A Pathway to Victory for Small Businesses and the CalAsian Chamber: SB 781 Offers a Path Toward Equitable Growth in California

 At a time when many small businesses are still finding their footing after the disruption of the COVID-19 pandemic, SB 781 represents a significant step forward in restoring equity and opportunity for business owners across California—especially for our members here at the California Asian Pacific Chamber of Commerce (CalAsian Chamber).

Passed unanimously by the Senate Committee on Local Government, this important bill lays the groundwork for stronger local economies by giving small businesses the tools they need to thrive. We were proud to join Senator Eloise Gómez Reyes and fellow small business advocates in supporting this legislation and celebrating its early success.

Why SB 781 Matters

SB 781 is a pivotal California bill designed to boost small business participation in local government contracting. The bill creates the “Small Business Utilization Act,” empowering local agencies to establish Small Business Utilization Programs (SBUPs) that expand procurement opportunities for small businesses and help level the playing field in public contracting.

More than 4 million small businesses in California—those with fewer than 500 employees—power over half of the state’s private sector workforce. From neighborhood contractors and family-run restaurants to home care providers and tech startups, these businesses are the backbone of our communities and the lifeblood of innovation.

Access to capital remains one of the most significant barriers for small businesses—especially for entrepreneurs of color. National data shows that while 1 in 4 (25%) small business owners have received less financing than they applied for, that figure jumps to 32% for business owners of color, compared to 18% for white business owners. The disparity is just as stark when it comes to loan denials: 32% of entrepreneurs of color have been denied a loan, nearly double the 17% denial rate for white entrepreneurs. On top of these challenges, state and federal policy realignments have created further uncertainty for organizations trying to support small business growth, particularly those focused on underserved and diverse communities. 

SB 781 addresses these inequities by helping small businesses, particularly those from underserved communities, gain access to public contracting opportunities that can provide the financial stability and long-term growth often out of reach through traditional capital channels. “SB 781 addresses a long-standing disconnect between state-level funding requirements and the real-world limitations local governments face in supporting small businesses,” said Chris Bollinger, VP of Public Policy, CalAsian Chamber. “By eliminating the federal match requirement and authorizing local Small Business Utilization Plans, this bill not only removes bureaucratic barriers but actively empowers cities and counties to invest in small business ecosystems. It’s a game-changer for equitable procurement and long-term small business growth.”

Key Provisions of SB 781

This bill proposes a comprehensive framework to help local governments develop Small Business Utilization Plans, which aim to:

• Set a minimum 25% small business procurement participation goal
• Offer procurement incentives and local contracting preferences
• Provide flexibility in solicitation requirements
• Train local government staff to implement programs effectively

In addition, SB 781 authorizes the California Office of the Small Business Advocate to mentor local governments in growing these initiatives—ensuring that communities have both the guidance and infrastructure needed to execute effectively.

Critically, the bill also removes the requirement for small business grant programs to secure federal matching dollars, freeing them from the unpredictable swings of national policy. This change is significant for programs that uplift disadvantaged business enterprises (DBEs).

What This Means for Small Businesses in California 

For our members and all small businesses around the state, SB 781 is more than just a policy win—it’s an economic lifeline. “SB 781 is a major win for our members and small businesses across California,” said Pat Fong Kushida, President & CEO, CalAsian Chamber. “This legislation opens the door to meaningful local contracting opportunities and creates a sustainable model for supporting entrepreneurs in communities that have historically been left out. It’s about ensuring that the small, family-run businesses we represent—from restaurants and retail to healthcare and construction—have a fair shot at public contracts and the resources to grow and thrive.”

Whether you’re a food truck owner in Sacramento, a home health provider in San Diego, or a micro-retailer in Stockton, this bill:

• Opens up new public contracting opportunities
• Levels the playing field for small and diverse businesses
• Supports capacity-building through local partnerships and training
• Reduces dependency on volatile federal funding requirements

With SB 781, the state is making it clear: local economies matter, and small businesses deserve a fair shot at growth.

Looking Ahead

We are proud to have joined under Senator Reyes’ leadership and our co-authors—California Hispanic Chambers of Commerce, California African American Chamber of Commerce, and other advocacy partners—in championing this important legislation.

This win reflects what’s possible when we work together across sectors and communities. We’ll continue to monitor SB 781 as it moves through the legislative process, and we encourage our members to stay engaged and raise their voices in support.

Together, we can build a California where all small businesses—not just the big ones—have the resources and recognition to succeed.