Supply chain resilience has become one of the defining economic priorities of this decade. From pandemic-era disruptions to geopolitical uncertainty and infrastructure modernization efforts, governments and corporations alike are reassessing how to build more durable, diversified, and inclusive supply chains.
At the center of this conversation is an often-overlooked opportunity: growth-stage small businesses and underserved suppliers.
Despite changes in supplier diversity, inclusive procurement, and small-business finance, supplier capital access remains fragmented and insufficiently connected to procurement demand—particularly for socially and economically disadvantaged individuals and lower middle-market businesses facing a “missing middle” capital gap.
These firms require financing that is often too large for microfinance but remain too undercapitalized to qualify for traditional bank lending or support large procurement contracts. Through the Milken Institute’s Initiative for Inclusive Entrepreneurship (IIE), leaders across finance, procurement, philanthropy, and supplier development are working to address this gap and build pathways from capital to contracts.
Why the “Missing Middle” Matters
Small and medium-sized enterprises (SMEs) account for more than 90 percent of businesses worldwide and approximately 50 percent of global employment, according to the World Bank. SMEs also represent a substantial share of supply-chain activity across manufacturing, infrastructure, logistics, and professional services.
Yet many growth-stage firms struggle to secure the financing needed to scale operations, hire workers, purchase equipment, or fulfill larger contracts. A recent Mastercard survey of US middle-market businesses found a substantial gap between what these firms need and the financial tools available to them.
For the purposes of this article and the work of the Milken Institute’s IIE program, the “missing middle” capital gap refers to lower-middle-market businesses needing more than $100,000 in financing but less than approximately $5 million—an amount often too large for microloans yet too small for conventional commercial lending.
These firms are critical to local economies because they create jobs, drive innovation, and contribute significantly to gross domestic product. However, many remain undercapitalized, under-networked, and disconnected from procurement opportunities.
The Capitalization Challenge
One of the central barriers facing underserved suppliers is access to flexible growth capital. This is where IIE implementation partners Founders First Capital Partners (FFCP) and Mission Driven Finance (MDF) are making a difference.
FFCP has secured more than $200 million in committed capital for B2B and contract revenue-generating businesses in underserved communities. Its Supplier Innovative Finance Program helps suppliers bridge the gap between capital readiness and procurement readiness by combining flexible financing with business support services.
Similarly, MDF focuses on growth-stage businesses that have demonstrated traction—proven revenues, embedded impact, and a clear path to a known milestone—but remain in a gap between what banks will lend and what they need to scale. Through missing-middle lending strategies, MDF is helping deploy responsible capital to underserved suppliers that might otherwise not qualify for conventional financing, delivering the right capital at the right time in the right size.
This challenge is particularly important because supply-chain opportunities often require suppliers to scale quickly. Contract fulfillment may require additional workforce capacity, inventory purchases, insurance, bonding, or operational investments before revenue is realized. Without access to flexible financing, many suppliers are unable to compete for larger procurement opportunities.
Connecting Capital to Procurement Demand
Access to capital alone is insufficient. Procurement leaders often struggle to identify qualified suppliers, while small businesses struggle to navigate procurement systems or access contracting pipelines. To address this issue, technology platforms are increasingly helping bridge that divide. Procurement technology and ecosystem partnerships can help suppliers connect to revenue-generating contract opportunities across local, state, federal, and corporate procurement pipelines.
Data and procurement intelligence platforms can also help capital providers identify where financing demand aligns with future procurement opportunities. This creates a more strategic approach to supplier financing—one where capital deployment is informed by real market demand.
The Public Procurement Opportunity
The US federal government is the world's largest purchaser of goods and services. In fiscal year 2025, the federal government awarded approximately $833 billion in contracts, of which $194 billion were awarded to small businesses.
Yet many underserved suppliers continue to face barriers accessing public procurement opportunities, including:
- complex procurement requirements;
- bonding and insurance thresholds;
- limited awareness of contracting opportunities;
- administrative burdens; and
- insufficient working capital.
To address these challenges, agencies like the United States Department of Agriculture and the Small Business Administration are working to increase supplier participation and expand contracting opportunities. Procurement leaders must better understand the operational and capital realities facing underserved suppliers if public procurement systems are to become more accessible and effective.
Workforce Readiness and Supply Chain Resilience
Workforce readiness is another challenge for suppliers. Corporations increasingly expect suppliers to meet sustainability, digitalization, and operational performance standards. Many SMEs, however, lack access to workforce development resources that would allow them to meet evolving supply chain requirements.
To address this matter, philanthropic organizations such as the Ares Charitable Foundation are launching initiatives designed to strengthen supply chains through workforce reskilling. With SME workers comprising an estimated 70 percent of the global workforce, such initiatives recognize that supply chain resilience depends not only on logistics or procurement systems, but also on investments in people.
The Role of Ecosystem Connectors
No single organization can solve this challenge alone. Supplier ecosystems require intentional coordination across capital providers, procurement leaders, workforce initiatives, and technical assistance organizations.
The Milken Institute’s Initiative for Inclusive Entrepreneurship is positioning itself as a national ecosystem connector—bringing together public and private stakeholders to align capital deployment with procurement demand and supplier readiness. Through public-private partnerships, ecosystem convenings, and collaborations with State Small Business Credit Initiative stakeholders, the initiative seeks to ensure that underserved suppliers are not only capitalized but also connected to real opportunities for long-term business growth. In addition to implementation partners FFCP and MDF, other IIE partners include Next Street, Accelerator for America, Aspen Institute Business Ownership Initiative, and Scale Link.
To learn more about solutions to capitalize underserved suppliers and address the missing middle, join us at the next IIE national webinar on June 24, 2026.
Webinar Name: From Capital to Contacts: Capitalizing Underserved Suppliers and the Missing Middle to Strengthen Supply Chains
Date: June 24, 2026
Time: 12:00 p.m. to 1:30 p.m. ET
Registration: IIE national webinar registration
