Rising Black Entrepreneurs

December 13, 1990

Maryland leads the nation in black-owned businesses. That is impressive. According to U.S. Census Bureau figures, 8.9 percent of Maryland businesses are black-owned, nearly triple the national average of 3.1 percent. Department of Economic and Employment Development secretary J. Randall Evans attributes the phenomenon to "a favorable business climate."

Yet there are other reasons that better explain this development. Maryland's black population is twice the national benchmark. Also at work is the role government contracting plays in Maryland's economy. The vast preponderance of these enterprises are government contractors located in Prince George's County, which is close to federal procurement agencies, and in Baltimore City, which has a long-standing base of contract-related companies. A growing number are single proprietorships that do not provide jobs. Many have far fewer sales than comparable white-owned firms.

Despite the accolades heaped on Maryland, black businesses here are operating in an difficult environment. Decades of exclusion from traditional financing have forced non-white entrepreneurs into separate, unequal capital markets dominated by piecemeal, mostly public funding sources. The overwhelming majority of the state's black businesses owe their seed capital to the Development Credit Fund, Maryland Small Business Development Financing Authority or the embattled Council for Equal Business Opportunities.

Because of limited financing opportunities, a disproportionate number of black enterprises compete in the artificial arena of government set-asides, which like politics these days, tends to be skewed heavily in favor of entrenched applicants.

Entrepreneurial growth in the black community requires participation in diverse industries with less dependance on government and more on the private sector. There are promising strides in this direction with some banks beginning to view black entrepreneurs as mainstream customers. But their numbers are far too few. Successful black ventures benefit not only the black community, but the state's economy. The number of black businesses in Maryland, while high on a comparative basis, is a reminder of how much remains to be done.

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