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

Moreover, amid overall federal budget cutting, SBA programs, administered by the agency's Minority Small Business and Capital Ownership Development office, are budgeting $30.8 million in fiscal 1994, down .65% or .7% from 1993 appropriations. Watkins, acting deputy associate administrator, estimates that the SBA's total budget for 1994 should be below expenditures for 1993.

Meanwhile, the will of the private sector to support minority businesses remains weak. According to the National Minority Supplier Development Council, U.S. corporations spent $17.9 billion with minority-owned businesses in 1991, the last year for which data are available. Although that is up from $15.2 billion in 1990, it is still only about 1% of total corporate spending on suppliers, a percentage which has been unchanged for years. The council notes that minorities account for 25% of the U.S. population, 9% of business ownership and 4% of gross receipts of all American companies.

Also delayed by President Clinton's budget problems with Congress is his plan for national health care insurance - a perennial concern of small and minority-owned businesses. The plan would impose a hefty tax on cigarettes, and some form of mandatory participation funded by employers - "a tax, in essence," notes Gaskins.

In addition to his leadership of the National Coalition for Black Economic Development, Gaskins owns MBG Contractors Co., a $5-million construction-management company in Upper Marlboro, Md. His 10 employees pay for their own health insurance, although they receive a group rate. Gaskins can't afford to supply coverage unless the workers carry the costs. If Uncle Sam mandates coverage, Gaskins says, his workers will shoulder part of the burden. "If you try to tax the employer for that package, you would end up with a decrease somewhere else," he says. "If you don't have the money to pay out, you can't pay out. So it will only bring the hourly wages down, or the salary (of employees) down, or the total payroll down."

Small-business advocates have Voiced this argument to Clinton's health care task force, but h flies in the face of Clinton's desire to provide universal coverage. With the matter unresolved as this article went to press, most black businesspeople are taking a wait-and-see attitude.

Life Goes On

Despite the inability of the government to act swiftly on minority-business concerns, as well as the lingering effects of recession, "Life goes on here," notes Duane McKnight, a partner in Syndicated Communications Venture Partners II, LP of Silver Spring, Md. "I don't see the (federal) budget having a significant effect one way or the other in terms of black business," says the venture capitalist, whose firm invests solely in minority communications companies. "What it still comes down to is that black business needs access to more capital."

Be polled minority- and small-business experts to identify the hottest areas for growth. There was wide agreement on five industries: health care, communications, technology, the environment and services. In most cases, the cost of entry is low, being limited to a home office and lots of targeted marketing at prospective clients.