JERRY DAVIS WAS a retired Army colJ onel when he and his wife set up a janitorial contracting company here 10 years ago. He had no collateral except his military paycheck, but he was encouraged to go into business because the Small Business Administration had made a commitment to help minority members like him.
Davis landed a $15,000 SBA loan, rented a tiny office, filled it with meager furnishings and part-time office staff and, during his first year in business, provided jobs for 17 janitors. In 1972, the SBA's minority set-aside program helped Davis get his first major contract, and the company, Unified Services Inc., began to grow -- in partnership with the federal government's special programs for minority businesses.
Three months ago, the firm moved into its own two-story brick office building at 2640 Reed St. NE, where a painting of Martin Luther King Jr. hangs on Davis' wall and a copy of the Harvard Business Review lies on the coffee table. The company did not have to apply for loans to finance this move. It has a rare luxury among minority businesses-- a significant line of credit at a bank. Unified Services nows boasts a roster of nearly 1,000 employes, including 900 janitors.
If the federal safety net for Jerry Davis' business is snatched away, 500 people would be fired instantly, he says. He could not go it alone. "It's hard to convince some people that there's racism that prevents minority business from profiting. They say if you work hard enough, market correctly and are professional long enough, you can get business like other white firms," Davis said. "I am willing to do all this. But it simply is not true."
Many blacks in business didn't have to wait for David Stockman's "loose talk" in the Atlantic Monthly to learn that "supply side" economics is really the old bogus "trickle down" theory that helps the rich get richer. The same kind of Trojan horse approach has been used for minority entrepreneurs, to whom the administration has voiced strong rhetorical support, while at the same time dismantling admittedly imperfect programs that have been lifelines for businessmen like Jerry Davis.
"This administration," the president declared two months ago, "is committed to expanded development and encouragement of minority business . . . As the minority business sector secures its position in the American marketplace, not only minority Americans but all of our citizens will benefit."
Reagan was saying this at the same time that the federal government was cutting support for minority trade associations, slashing funds for programs to help black businesses move into growth-oriented areas of industry and eliminating funds to assist in the expansion of minority firms.
"The administration seems to have abandoned its support for minority business enterprise," says Rep. Parren Mitchell (D-Md.), chairman of the House Small Business Committee. "Even worse, the administrator of the Small Business Administraton is instituting policy changes that could inflict grievous hurt on the minority business community . . . It is clear to me that the administration must act immediately to help minority business or there will be a collapse of far too many of these businesses and therefore an increase in black unemployment."
Mitchell was talking about SBA's proposal for the "forced graduation" of some minority firms from the set-aside program. SBA Administrator Michael Cardenas says businesses should mature in three to five years, but minority businessmen say it takes from six to 20 years for a black business to mature. The forced graduation program would eliminate half the firms from the program, according to testimony obtained during hearings around the country.
Mitchell's gloom is echoed at Black Enterprise Magazine. "We're seeing almost a total disregard for minority-owned business . . . They have been doing nothing more creative than dismantling programs," says publisher Earl Graves. The magazine's editor, Joel Dreyfuss, adds, "The economy has produced a tremendous failure rate for small businesses. The administration seems to be totally obsessed with revitalizing large corporations. There seems to be no sensitivity at all to small business and the fact that small businesses create the majority of new jobs in the country. Continuing high inflation and interest rates are killing small businesses."
The difficulties that black businesses are having under Reagan underscore the fact that success is a very tenuous proposition for Black America, and federal budget cuts are a two-edged sword. When the antipoverty program went out of business, a lot of middle-class blacks who worked in the program went out of the middle class. And if the federal government gets out of the business of helping black businesses, many of those firms will go out of business, as well. The federal role in many of the black success stories of the past two decades, including that of Jerry Davis, has been larger than often realized.
If the Reagan administration expects to be good for business, it ought to be good for black business, too.