WILLIAM A. CLEMENTS TALK had been a litany of concern about the posture of the Reagan administration thus far toward minority businesses like his Byrsa Group, a banking firm that arranges financing for businesses. His conversation was peppered with worry about inflation and the high cost of money. Then the subject turned to the urban enterprise zone proposal, and the 41-year-old District of Columbia businessman brightened.
Not far away, Walter A. Threadgill, 35, president of the Minority Business Investment Co., echoed Clement's concern, fretting about the thin profit margins of most black businesses and their reluctance to merge with other firms or to acquire them. But as the topic turned to enterprise zones, he turned upbeat: "We need to track that very, very carefully. It's one of the best solutions that has come down the pike."
Such zones would be located in depressed urban areas, where businesses would be encouraged and the hiring of the poor fostered through tax advantages and financial incentives.
And it's not just minority businessmen who are intrigued by the idea that was first proposed last year by Reps. Jack Kemp (R-N.Y.) and Robert Garcia (D-N.Y.). A congressional coalition that ranges from black Democrats to conservative Republicans supports the idea. It's the one issue on which you can get the National Urban League's Vernon Jordan to agree with the conservative Heritage Foundation's Stuart Butler, the economist who first broached the idea to Kemp and Garcia.
The enterprise-zone idea attracts such wide support because it is a positive step -- an affirmation that the inner-city poor are not suffering from some incurable disease, just from the lack of a chance.
People feel the concept has potential even as they exercise caution, lest enterprise zones become a new form of segregation. And there's good reason to be skeptical. There have been very few instances where economic initiatives truly have been of lasting benefit to blacks. Government subsidies to minority businesses are evaporating -- the entire range of programs either slashed or eliminated by the proposals of the Reagan administration and Congress. These include some Small Business Administration loans and the Section 8 [a] government contracting set-aside program, and much of the Economic Development Agency with its financing for larger businesses.
These were aggressive programs put into place in the past dozen years to eradicate past wrongs, so for businessmen like Walter Threadgill and William Clement, the program slashes are hostile moves. Clement, a former assistant SBA administrator, feels the millions of dollars the government has invested in Section 8 [a], for example, could yield little or no return if federal support is now yanked and minorities are forced out of business.
But to a large degree, the Reagan administration wants out of the social issues business, and minorities definitely will be the losers.
So the enterprise zones seem to be the only positive step so far, but the question many minority entrepreneurs are asking is where this legislation leaves them.
At least some of the most troubling questions are answered in a modified bill introduced last week by Reps. Kemp and Garcia. Commerce Secretary Malcolm Baldridge said at the time that the Reagan administration considers the legislation "top priority" in this session of Congress.
Kemp's original proposal concentrated on strong tax breaks for any firm setting up business in an enterprise zone and hiring the poor as at least half of its work force. But opponents noted that a bill with a strong tax bill would help big businesses, not small firms. The issue for minority entrepreneurs is not taxes, but access to capital. Just as anyone else, such businessmen find it difficult to borrow money when the going interest rate is 20 percent.
So the new legislation would eliminate all capital gains taxes for those who invest in businesses within enterprise zones rather than investing in money markets, gold or some other venture.
Businesses in enterprise zones would be able to exclude half of their income from taxation as well as all interest earned on loans. And employers will get a 5 percent income tax credit for income they pay to low-income employes, thus encouraging them to hire the untrained poor. Employes who work in an enterprise zone would get a 5 percent refundable personal income tax credit of up to $1,500. To ensure that the enterprise zones benefit the poor, 40 percent of the employes must be classified as low income.
Still, the jury on the concept of enterprise zones is out. There are many questions: Why not strengthen businesses already in existence and facing extinction? How do we make sure that the benefits of enterprise zones get to the people who need them most? Will zones create jobs for the truly disadvantaged?
The enterprise zones could be an idea whose time has come, but they're not a total solution. And for men like Clement and Threadgill, the unfulfilled promises of the past and the difficulty of the present temper their hope for the future.