Q&A: Commerce Secretary Gary Locke

Commerce secretary discusses the recovery and minority participation

Dingle: How do you monitor that on the local level? Many minority businesses have been very enthusiastic about what the Obama Administration proposes, but the challenges that they have on the local level where you are dealing with different bureaucracies, different systems, different priorities, how do you reconcile that so that minority businesses gain the contracts that they deserve and that they grow their businesses?

Locke: Well, it all starts with data collection and monitoring all those contracts so that, for instance, the State of Washington gets a contract for road repair. We will be working with state officials to document where the money goes and to what extent minority firms were either prime contractors or subcontractors. And, of course, the Vice President is having very frequent telephone conversations, conference calls, with the country’s mayors and governors. This is one of his key issues.

Dingle: I think the real challenge for a number of firms is gaining financing. Without financing they can’t handle the contracts. Even though there’s been glimmers of hope, as the President has said, credit is still tight. It’s still a challenge in terms of getting financing.

How do you ensure that minority businesses gain financing they need to complete contracts and strengthen the infrastructure of their companies?

Locke: A very good and legitimate point because we are seeing that problem, access to capital, adequate capital for businesses of all sizes, all the way from GM and Chrysler, and you can imagine that it’s even tougher for small to medium sized businesses, especially minority businesses. Minority businesses are sometimes newer and don’t have quite the credit history as other well-established firms. That’s why, for instance, under the Recovery Act over $100 million was made available in terms of higher guarantee loans and funding available for small and medium sized companies, including minority firms. And even within the Small Business Administration they’re using some of this to offer up to 90% guaranteed loans. That is if you’re able to get a bank loan, the SBA and the federal government will guarantee to the bank that we will back it up, 90% of that loan. It still requires the bank to assume 10% of the risk, but by raising the guaranteed level, we’re making it a lot easier for minority firms to access that capital.

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