Banking on the man from Hope: small black-owned businesses are looking to the Clinton Administration to help open access to much-needed capital - B.E. Report on Small Business; includes related article on five industries with the greatest potential for growth: health care, communications, technology, environment and specialized services and; includes list of business service organizations

Black Enterprise, Nov, 1993

Clinton's Program For

Minority Businesses

African-American entrepreneurs are banking on Ron Brown's influence and commitment as a positive sign of the administration's support. Meanwhile, Brown's nomination for directorship of the troubled MBDA drags on. Established by President Nixon in 1969, and originally funded at $70 million, the agency's budget was a mere $38 million in fiscal 1993. Seeking an unspecified increase in funding, Brown plans to add six business assistance centers to the 107 currently in existence. The centers provide management and technical consulting to minority-owned firms throughout the nation.

Brown also proposes to beef up financial assistance to minority-owned firms, although specific sums haven't been announced. This increased funding would allow the MBDA and the Economic Development Administration to provide micro-loans, help establish joint ventures with larger companies, guarantee loans, work with states to provide revolving loans and strengthen compliance with the set-aside programs of federal agencies.

On the bright side, Brown has appointed several African-Americans to senior positions in his department, including James V. Hackney as counsellor to the secretary, and Larry Parks as senior advisor for economic development. Brown supports the creation of community development banks, a key element of candidate Clinton's commitment to minority business - their capital would be pledged to making loans in disadvantaged areas for home ownership and business development. Unfortunately, questions of capitalization and their relationship to existing minority banks have stalled this idea.

Under the watchful eye of successful entrepreneur and SBA director Erskine Bowles, Clinton has named two African-Americans to key SBA positions: Dayton J. Watkins, a former entrepreneur, and Cassandra Pulley- Robinson, a Washington, D.C., consultant. The deputy administrators are specifically charged with fixing the agency's biggest problems, most notably the troubled 8(a) program.

This program, which has received an onslaught of criticism for its cumbersome minority-business certification and loan process, remains snarled in red tape. Although certified 8(a) firms won contracts of $4.3 billion in fiscal 1992, up 10.3% from the previous year, the certification process itself has worsened. By law, the process must be completed in 90 days, but the SBA admits it actually takes 140.

Delays are also chronic in the SBA's guaranteed-loan program, which in the year ending Sept. 30, 1993, was responsible for funneling $6.3 billion to the nation's small businesses. However, since time is money to every entrepreneur, the time it takes to get SBA funding can kill a business.

"Theoretically, we shouldn't even be in business right now, thanks to the SBA," says an embittered Dana Greene, president and founder of Incontacare, a small medical-products distributor in Riverdale, Md. "They gave us just enough to fail." In 1989, Greene received $37,000 of a promised $150,000 loan. Caught up in the bureaucratic reorganization of the MESBIC program, the balance came three years later. Meanwhile, the business, which employs three other African-Americans and expects sales this year of $750,000, would have gone belly up except for a high-interest bank loan pledged against the SBA's promised low-interest note.