Last fall, researchers found that would-be minority entreprenuers have a far more difficult time obtaining venture capital from the majority financial community than their white counterparts.
First, minorities are at a disadvantage when measured against each of the variables that attract investors -- such as starting capital, family background, educational background and business experience.
Then, they are doubly disadvantaged because of discriminatory lending and investment policies.
"We found that even with all other things being equal, lenders tended to overemphasize racial and ethnic background when assessing human capital," said William D. Bradford, professor of finance at the University of Maryland College Park.
A study conducted by Mr. Bradford and Timothy Bates of New York's New School for Social Research merely confirmed statistically what minorities already knew through painful personal experience.
Thus, an important source of start-up financing for minorities has been through specialized Small Business Investment Corporations -- once known as MESBICs.
Congress established the MESBIC program in 1972 with the specific intention of making debt and equity capital available to minority businesses.
But, there are no specialized SBIC's operating in the Baltimore area and some fear that the minority and financial communities here may be overlooking an important opportunity for economic development.
"There are tremendous economic opportunities," said Stanley Tucker, executive director of the Maryland Small Business Financing Authority.
"There are MESBICs out there that have proven extremely profitable. One company alone has financed 80 percent of all of the minority-owned communications companies in the country. But it is not happening here."
Added Mr. Bradford, "While it is true that MESBICs themselves can lend nation-wide, it also is true that if you have a firm closer to you, you can often receive more detailed attention.
"If you are concerned about the lack of venture capital in the Baltimore area," Mr. Bradford continued, "you can put together a MESBIC, begin investing in local projects, and the potential impact could be tremendous."
"The specialized SBIC program is being underutilized nationally," acknowledged Diane Thomas, vice president of the National Association of Investment Companies. "Our challenge is to get the word out that it is a healthy, profitable industry."
Ms. Thomas' organization represents 135 specialized SBICs in the country that have invested some $1 billion in minority-owned ventures since the early 1970s.
The federal Small Business Administration requires a minimum private capitalization of $1.5 million to obtain a SBIC license. The money can be raised from either private or institutional sources or a combination of both. The government will then match the start-up capital.