U aid to small businesses falters amid spending cuts

Patricia Drey

Money going toward small businesses run by minorities, women and disabled people went down about 32 percent between 2002 and 2003, along with general University expenditures, according to a report from the Office for Business and Community Economic Development.

The report will be presented to the Board of Regents’ Finance & Operations Committee on Thursday.

Because University expenditures went down overall, the percentage of total University spending going toward the targeted businesses went down by 1.39 percentage points, according to the report.

A policy from the regents mandates that the University “act aggressively” to promote using businesses owned and operated by minorities, women and people with disabilities.

The female-owned company Eagle Elevator is one such vendor. The company receives calls from the University to do repairs or upgrade equipment, said Kim Nordenstrom, vice president for the St. Paul-based company.

The company is listed as a targeted vendor on the office’s Web site.

Nordenstrom said giving preference to smaller companies makes sense because they can often provide better customer service, but she also said favoring female and minority-run businesses might have a downside.

“It’s probably not fair, but you’ve got to work within the system that you’re given,” Nordenstrom said.

Diversity Information Resources is one place where University buyers can go to find businesses that are owned by women and minorities.

The company is sponsored primarily by Fortune 500 companies that use the services to locate businesses, said Barbara Johnson, office manager for the Minneapolis-based company. Johnson said most major corporations allot a percentage of the money they spend to women and minority businesses.

Policies such the University’s, which also exist for state, local and federal governments, provide an incentive for large companies to use small businesses as subcontractors, said George Saumweber, public information

officer for the Minneapolis district office of the U.S. Small Business Administration.

Saumweber called small businesses the “backbone of our economy” and said it is important that they receive money from the government.

Without these types of policies, it is possible small businesses could receive little government money because it would be difficult for them to compete in a bidding process with a larger company, Saumweber said.

“That way, the government can see there’s a pass-through,” Saumweber said. “They want to make sure the small businesses get a piece of the pie.”