Aiding minority business: administration defends its record
Boston — America needs its black businesses, says Victor M. Rivera, President Reagan's director of the Minority Business Development Agency (MBDA). But cuts in the MBDA's budget cast doubts on just how committed the White House is to encouraging minority businesses, black entrepreneurs say. As he tours the country, Mr. Rivera is challenged by minority businessmen to cite examples of administration initiatives to help minority enterprises.
The skepticism remains despite signs of economic recovery. Sales for the top 100 black enterprises reached a record $2.17 billion last year, up 14.1 percent from 1981, according to Black Enterprise magazine.
In December Mr. Reagan announced four major goals for the MBDA and the Small Business Administration (SBA) in a ''vigorous minority business effort'' for the 1980s.
The President sought to establish 60,000 new minority businesses and expand at least 60,000 minority businesses (10 percent of the nation's 600,000) in the next 10 years. He asked for federal purchase of $15 billion in goods and services from minority firms, in addition to more than $6 billion in grants and agreements in the next three years. And he sought to establish a reservoir of $1 .5 billion in credit and $300 million in management and technical assistance to promote minority business development in the next three years.
The goal of MBDA under Reagan is basic. ''We don't guarantee success to minority enterprises; we guarantee the opportunity to compete,'' says Roy Betts of the national office.
The agency's prime innovation is its acquisition program aimed at helping minorities take over firms, often white-owned, rather than start new businesses, which historically have a very high failure rate. In Boston recently, Rivera pointed to the new Boston Bank of Commerce as an example of how the MBDA has helped black entrepreneurs. This firm took over a failing bank, Unity Bank and Trust Company, and set up downtown offices and two branch units without closing a single day. ''And not one depositor lost a penny,'' Rivera said.
MBDA officials say the agency's key achievements include:
* Technical aid to improve management. The Chicago office helped the Industrial National Bank of East Chicago, Ind., raise new equity capital to survive and assisted Mid-America Foods Inc. in creating a cost-accounting system that helped it grow into a $4 million business with 120 employees. The New York region turned L&H Bindery Inc. from a failing firm into a successful growth business.
* Start-up operations. The Chicago office helped the Racine Telecasting Company of Milwaukee build a new television station; the Waters Broadcasting Corporation of Muskegon, Mich., open a new radio station; and an Omaha, Neb., group open a McDonald's franchise.
''You have support in Washington, but you can't be afraid to ask for more. We expect our network of centers to open doors that historically have been closed to the minority entrepreneur. And the MBDA is your advocate,'' Rivera said.
Still, some black businessmen wonder how much support the agency enjoys in Washington. The MBDA's budget has been cut from a 1981 peak of $59.6 million to an estimated $47.7 million in 1983. But MBDA spokesman Betts says the 1983 budget reflects only taxpayers' funds for the MBDA.
Betts points to other sources of aid for minority businesses:
* Of the $70 billion anticipated from the federal 5-cent-a-gallon gasoline tax, 10 percent is committed to minority business.
* The federal government did more business with minority firms - $4.3 billion worth in 1982 - than had been projected in its procurement goal of $3.8 billion. In 1982 federal deposits in minority banks increased 52 percent over 1981, and use of minority consultants by the federal government increased 16 percent.
* Federal procurement rose from $3.1 billion in 1980 to $4.1 billion in 1981, and $4.3 billion in 1982.
Still, some minority entrepreneurs are critical. ''The MBDA program to upgrade us based on dollar income offers us no follow-up afterward,'' explains Tom Farrington, president of Input-Output, a Boston-based high-tech firm, and cochairman of a national NAACP (National Association for the Advancement of Colored People) program to monitor black economic development. ''How can a minority firm with limited capital and reserve funds compete on a parity with a major Fortune 500 corporation in the bidding process?''