A $176 billion market for small businesses, and downtown Gloucester has an edge

Federal agencies spent about $176 billion with small businesses in the budget year that ended Sept. 30, 2025, according to USAspending.gov, the government's public spending site. Massachusetts state agencies spent hundreds of millions more.

Gloucester businesses have barely touched that money. Only 16 Gloucester businesses won federal contract dollars from October 2020 through September 2026, about $3.3 million in all.

Downtown Gloucester also has an edge most towns do not. Much of downtown is a HUBZone. That stands for Historically Underutilized Business Zone, a federal program that steers government work to small businesses in places with lower incomes. Over five budget years combined, 2021 to 2025, federal agencies spent about $83 billion with HUBZone businesses, the U.S. Small Business Administration says. That is about $16.6 billion a year. It is the only HUBZone on Cape Ann. No part of Rockport, Essex or Manchester-by-the-Sea qualifies.

Here is what the government buys, what Gloucester businesses already do, and how a business can get started. For more on Cape Ann jobs, wages and businesses, see our Business section and Economy page.

Where the zone is

The HUBZone covers much of downtown Gloucester, from Grant Circle and the Washington Street area down to the harbor, and east toward East Gloucester. Rockport, Essex and Manchester-by-the-Sea have no HUBZone areas.

The market for work Gloucester already does

The federal government buys the same kinds of work many Gloucester businesses already do. The chart below shows what agencies spent in the 2025 budget year, by type of work and by program. It starts with all small businesses and HUBZone businesses. Add other programs to compare them.

*Owned by veterans with a disability from their service. Programs overlap, so one business can count in more than one program. Source: USAspending.gov, federal contract dollars in the budget year from Oct. 1, 2024 to Sept. 30, 2025, pulled Oct. 9, 2026. "Done in Mass." is small business work performed in Massachusetts.

Closer to home, small businesses did $266 million of federal work in Essex County in that year.

Seafood is a small slice of the national market, but most of it lands in Massachusetts. From 2021 to 2025, the U.S. Department of Agriculture bought $212 million of fish processed in Massachusetts. All of it went to three companies in Braintree and New Bedford. None went to Cape Ann. Our Economy page shows how the port of Gloucester compares with other fishing ports.

The programs, in plain words

The federal government sets aside some work for small businesses, and some for certain kinds of small businesses. Each program has its own rules and its own sign up.

What is a set-aside?

When the federal government needs something done, like a roof fixed or a computer system run, it usually lets any company bid. The best offer wins. Big national companies win a lot of those contests.

A set-aside changes who is allowed to bid. The government "sets aside" a job so only certain small businesses can compete for it. Think of a road race where only runners from one town can enter.

Set-asides are just one way in. HUBZone businesses can also win in open bidding, where they get a price edge over large companies.

The HUBZone market: about $83 billion in five years

The federal government has a goal of spending 3% of its contract dollars with HUBZone businesses each year. It has fallen short every year since at least 2020. Here is what it spent.

*The SBA did not publish a dollar amount for 2025. We figured it from the SBA's 2.66% share and its total of $179 billion spent with small businesses, which was 27.58% of contract dollars. Source: SBA small business scorecards and HUBZone reports, as reported by the SBA, the Congressional Research Service and federal contracting news sites. Federal budget years run Oct. 1 to Sept. 30.

Who buys from HUBZone businesses, and what they buy

To see where the money goes, we used USAspending.gov, the government's public spending site. It counts contracts a little differently than the SBA, so its five year total is lower: $69.5 billion. We use it only to show how the money splits up.

The Defense Department buys the most. It accounts for about half of all HUBZone contract dollars.

Most of the work is services and building.

The single biggest job type was building and repairing government buildings, at $11.9 billion. Computer services were next, at $10 billion.

Source: USAspending.gov, contract obligations to businesses flagged as HUBZone firms, budget years 2021 to 2025, pulled Oct. 9, 2026. Dollars are rounded.

HUBZone-only jobs got smaller this year

In the budget year that ended Sept. 30, agencies kept handing out HUBZone-only jobs. But the jobs were worth much less.

Two things happened. First, the federal government shut down for 43 days, from Oct. 1 to Nov. 12, 2025. Very little contract work got done.

Second, the Trump administration rewrote the federal rules for buying from small businesses. The new rules came out Sept. 26, 2025. Under the old rules, government buyers had to consider a HUBZone-only job before opening a job to all small businesses. Now they do not have to. Buyers also get to choose whether to save orders under big, long-term contracts for small businesses.

Even leaving out the shutdown months, money spent through HUBZone set-asides from December to June was down about 30% from the year before.

Total money going to HUBZone businesses held about steady. From October to June it was $7.46 billion, down about 1% from the year before. HUBZone businesses are still winning work. Less of it comes from HUBZone-only contests.

These numbers are early. Agencies are still reporting summer contracts, and the Defense Department reports three months late. The SBA's official numbers for 2026 are expected in mid-2027.

Source: USAspending.gov, contracts set aside for HUBZone businesses or given directly to one, pulled Oct. 9, 2026. We compare October to June because summer reports are not complete. We count jobs by the date they were signed.

Few Massachusetts businesses win HUBZone work

The number of these firms getting new dollars fell from 22 in 2021 to 16 in 2025.

Four firms received $131 million, or 82% of the Massachusetts total. Most of the money went to construction.

Lawrence had the most of these businesses, with five. Others were in Springfield, Lowell, Boston, Chelsea, Holyoke, Pittsfield, Woburn and Duxbury. None was on Cape Ann.

Source: USAspending.gov, budget years 2021 to 2025, pulled Oct. 9, 2026. Towns are the business addresses listed with the government. "What it does" is the business's largest type of federal work.

What about Gloucester businesses?

We counted the businesses inside the downtown HUBZone that do the kinds of work the government buys. We found about 70. The last column shows what federal agencies spent with all small businesses on that type of work in 2025. You can find these businesses on the business map on our Economy page.

Source: Cape Ann Current business listings, checked against the four census tracts that make up the zone, Oct. 9, 2026, and USAspending.gov. We sorted the listings by hand, so the counts are close, not exact. We left out law offices and shops that sell to the public, since the federal government rarely buys from them.

Across all of Gloucester, 281 businesses with paid workers are in the four biggest fields: 111 in construction, 72 in professional and technical work, 61 in support services and 37 in manufacturing. That count is from the U.S. Census Bureau for 2023. Our Economy page breaks down who is in business across Cape Ann, by size and by industry.

A note for manufacturers. Federal rules favor goods made in the United States. Through 2028, U.S. made parts must make up more than 65% of a product's cost for it to count as American made. That rises to 75% in 2029. The bar went up in steps under orders from both the Trump and Biden administrations.

Being in the zone does not make a business eligible for HUBZone work. It also has to be small, and at least 35% of its workers must live in a HUBZone. We did not check whether any single business qualifies.

State contracts, too

Massachusetts has its own program for small businesses. When state agencies buy goods or services worth $250,000 or less a year, they are supposed to look first at small Massachusetts businesses that have signed up. Construction is not part of it.

In the 2024 state budget year, agencies spent $629 million through the program, the state's Supplier Diversity Office reports. About 1,663 businesses were signed up.

To join, a business must be based in Massachusetts, have been open at least one year, have 50 or fewer full time workers and average $15 million or less in yearly sales. Businesses sign up through COMMBUYS, the state's online buying system.

The state also tracks spending with businesses owned by women, minorities, veterans, people with disabilities and LGBT people. That spending reached about $2.3 billion in 2024. The Supplier Diversity Office certifies those businesses.

What it can mean for a Gloucester business

A certified HUBZone business gets three main advantages when it bids on federal work:

• HUBZone-only jobs. Agencies can save some jobs so that only HUBZone businesses can bid. Since 2025, agencies get to choose whether to do this.
• Jobs with no contest. An agency can give a HUBZone business a job directly, up to $8.5 million for manufacturing and $5.5 million for other work.
• A price edge. When anyone can bid, a large company's price is counted as 10% higher when it is compared with a HUBZone business's price.

The kinds of work agencies buy most from HUBZone firms, like construction, building repair, IT and engineering, are trades Cape Ann already has.

How to get certified

1. Check your address. Enter your business address on the SBA's HUBZone map. Your main office must be inside a HUBZone. Your main office is where most of your workers do their jobs.
2. Check where your workers live. At least 35% of your employees must live in a HUBZone. It can be any HUBZone in the country, not just downtown Gloucester. A worker must have lived there at least 90 days.
3. Check your size and ownership. Your business must count as small under SBA rules for your type of work. U.S. citizens must own and control at least 51% of it. Some businesses owned by tribes, Alaska Native corporations and community development groups also qualify.
4. Register in SAM.gov. This is the federal system every contractor must use. It is free.
5. Apply online. Send the application and documents to the SBA through its website. The SBA aims to decide within 60 days after it gets a complete package.
6. Keep it up. You must recertify every three years.

The 35% rule is often the hardest part for a small business. If you have three workers, at least one must live in a HUBZone.

The 2028 deadline

HUBZones are based on income and poverty data. The SBA redraws the map every five years. The next update is in 2028.

By our estimate, two of the four downtown census tracts that make up Gloucester's zone are close to the cutoff. Part of the zone could drop off the map then. Businesses thinking about it have about two years to use it.

How the SBA describes the program

On its website, the SBA says the government limits some contracts to businesses in these zones and gives those businesses an edge when anyone can bid.

The SBA lists three benefits. HUBZone businesses can bid on jobs saved just for them. They get a 10% price advantage in open bidding. And they can still compete through other small business programs they qualify for.

The SBA says it redraws the map every five years "to ensure the program continues to serve the communities that are most in need of assistance."

Earlier coverage: Commonwealth of Massachusetts spending with diverse and small businesses more than doubles (Oct. 16), on state programs for diverse and small businesses, and what state agencies and departments pay Cape Ann vendors (Oct. 23), on Cape Ann's share of state contracts.

How we did this

We used the SBA's published HUBZone totals for the HUBZone market size, and USAspending.gov for spending with all small businesses and each program in the 2025 budget year. We grouped work by industry codes into the types shown. State figures are from the Supplier Diversity Office's 2024 annual report. We used USAspending.gov for the agency, job type and Massachusetts numbers. We counted contract dollars (obligations) in federal budget years 2021 through 2025. A business is counted if the government flagged it as a HUBZone firm on the contract. We confirmed the Gloucester zone on the SBA's official HUBZone map on Oct. 9, 2026. Our estimate of which downtown tracts are close to the cutoff uses U.S. Census Bureau income and poverty data and federal income limits for the Boston area.