The Commerce Department yesterday introduced its revamped minority business program to aid previously ignored medium-sized minority firms, a move likely to rankle small business advocates.
Dismissing as unfounded complaints by some black small business leaders that the new plan would neglect small business at the expense of larger firms, the department made public its program planned to help bring minority business into the corporate mainstream.
Commerce Undersecretary Luther H. Hodges Jr. said that for the present the new agency would keep the same $58 million funding level of the Office of Minority Business Enterprise and the Interagency Council for Minority Business, which it replaces, without cutting funding or attention to small business.
Dr. Berkeley G. Burrell, president of the National Business League, a small business association had charged that the plan would ignore 98 percent of the country's minority firms.
But Allan A. Stephenson, acting director of OMBE, bristled yesterday when asked if small business leaders had pressured any changes in the program.
"This is a personal view," Stephenson said. "My major concern is not in organizations and their livelihoods as such, but in programs that are beneficial to minority businesses. Of course we're going to be concerned about various organizations, but that's not a high priority. Those organizations should be able to compete" in the business community.
Burrell could not be reached for comment yesterday.
The new plan is the same as a draft circulated to business leaders earlier this year but with a name change, Hodges said. Both proposals are the partial result of a Commerce Department study which concluded that government programs to aid minority firms have hindered minorities in developing healthy businesses because of unfocused leadership and programs, misallocation of resources, confusion and misplaced emphasis on small "Mom and Pop" firms with low potential for growth, profits and employment of others.
The report also cited infighting between minority aid groups such as the Small Business Administration and Commerce over who would have ultimate authority over such programs. Hodges said yesterday, however, that the new agency will not create a "turf battle, between the two agencies. "We feel we can complement SBA," Hodges said.
The agency would try to develop medium-sized firms, those with revenues of about $1 million, Stephenson said. There will be no limit, however, on the revenues of a minority firm for it to get help from the agency, he added.The program would start in November, and would basically provide technical assistance rather than funds for capital formation. It would also help firms shy away from retail, "Mom and Pop" concerns and into manufacturing, energy, wholesaling, transportation and other growth fields. Stephenson and Hodges said they had set no ratios on the amount of resources used to help medium-sized as opposed to small businesses.
When asked about provisions for Hispanics, Hodges admitted, "Commerce has one of the weakest records in federal government in recruiting and hiring Hispanics." But he noted that one of the key positions in the agency would be held by an Hispanic.
Longer-range plans include direct and indirect financing to larger minority businesses and those with high growth potential. Particular attention will be placed on acquisitions and expansions with financing coming from banks and venture capital firms.