Passage 12
Federal efforts to aid minority businesses began in the1960‘s when the Small Business Administration （SBA）began making federally guaranteed loans and govern-ment-sponsored management and technical assistance（5） available to minority business enterprises. While thisprogram enabled many minority entrepreneurs toform new businesses， the results were disappointing，since managerial inexperience， unfavorable locations，and capital shortages led to high failure rates. Even 15（10） years after the program was implemented， minoritybusiness receipts were not quite two percent of the nationaleconomy’s total receipts.
Recently federal policymakers have adopted anapproach intended to accelerate development of the（15） minority business sector by moving away from directlyaiding small minority enterprises and toward supportinglarger， growth-oriented minority firms through interme-diary companies. In this approach， large corporationsparticipate in the development of successful and stable（20） minority businesses by making use of government-sponsored venture capital. The capital is used by aparticipating company to establish a Minority EnterpriseSmall Business Investment Company or MESBIC. TheMESBIC then provides capital and guidance to minority（25） businesses that have potential to become future suppliersor customers of the sponsoring company.
MESBIC‘s are the result of the belief that providingestablished firms with easier access to relevant manage-ment techniques and more job-specific experience， as（30） well as substantial amounts of capital， gives those firmsa greater opportunity to develop sound business founda-tions than does simply making general managementexperience and small amounts of capital available.
Further， since potential markets for the minority busi-（35） nesses already exist through the sponsoring companies， the minority businesses face considerably less risk interms of location and market fluctuation. Followingearly financial and operating problems， sponsoringcorporations began to capitalize MESBIC‘s far above（40） the legal minimum of $500，000 in order to generatesufficient income and to sustain the quality of manage-ment needed. MESBIC’c are now emerging as increas-ingly important financing sources for minority enter-prises.
（45）Ironically， MESBIC staffs， which usually consist ofHispanic and Black professionals， tend to approachinvestments in minority firms more pragmatically thando many MESBIC directors， who are usually seniormanagers from sponsoring corporations. The latter（50） often still think mainly in terms of the “social responsi-bility approach” and thus seem to prefer deals that areriskier and less attractive than normal investment criteria would warrant. Such differences in viewpoint have pro- duced uneasiness among many minority staff members，（55） who feel that minority entrepreneurs and businessesshould be judged by established business considerations.These staff members believe their point of view is closerto the original philosophy of MESBIC‘s and they areconcerned that， unless a more prudent course is fol-lowed， MESBIC directors may revert to policies likely to re-create the disappointing results of the original SBAapproach.
1. Which of the following best states the central idea of the passage？
（A） The use of MESBIC‘s for aiding minority entrepreneurs seems to have greater potential for success than does the original SBA approach.
（B） There is a crucial difference in point of view between the staff and directors of some MESBIC‘s.
（C） After initial problems with management andmarketing， minority businesses have begun toexpand at a steady rate.
（D） Minority entrepreneurs wishing to form newbusinesses now have several equally successfulfederal programs on which to rely.
（E） For the first time since 1960， large corporations aremaking significant contributions to the developmentof minority businesses.
2. According to the passage， the MESBIC approachdiffers from the SBA approach in that MESBIC‘s
（A） seek federal contracts to provide marketsfor minority businesses
（B） encourage minority businesses to provide markets for other minority businesses
（C） attempt to maintain a specified rate of growth in the minority business sector
（D） rely on the participation of large corporations to finance minority businesses
（E） select minority businesses on the basis of theirlocation
3. Which of the following does the author cite to support the conclusion that the results of the SBA program were disappointing？
（A） The small number of new minority enterprises formed as a result of the program
（B） The small number of minority enterprises that tookadvantage of the management and technicalassistance offiered under the program
（C） The small percentage of the nation‘s businessreceipts earned by minority enterprises followingthe programs， implementation.
（D） The small percentage of recipient minority enterprises that were able to repay federally guaranteed loans made under the program
（E） The small number of minority enterprises that chose to participate in the program
4. Which of the following statements about the SBA program can be inferred from the passage？
（A） The maximum term for loans made to recipient businesses was 15 years.
（B） Business loans were considered to be more useful torecipient businesses than was management andtechnical assistance.
（C） The anticipated failure rate for recipient businesses was significantly lower than the rate that actually resulted.
（D） Recipient businesses were encouraged to relocate to areas more favorable for business development.
（E） The capitalization needs of recipient businesses wereassessed and then provided for adequately.
5. Based on information in the passage， which of thefollowing would be indicative of the pragmatism ofMESBIC staff members？
Ⅰ.A reluctance to invest in minority businesses that show marginal expectations of return on the investments
Ⅱ. A desire to invest in minority businesses that produce goods and services likely to be of use to the sponsoring company
Ⅲ. A belief that the minority business sector is best served by investing primarily in newly established businesses
（A）Ⅰonly
（B） Ⅲ only
（C）Ⅰand Ⅱ only
（D）Ⅱ and Ⅲ only
（E）Ⅰ，Ⅱ and Ⅲ
6. The author refers to the “financial and operatingproblems”（line 38 ） encountered by MESBIC‘sprimarily in order to
（A） broaden the scope of the discussion to include the legal considerations of funding MESBIC‘S throughsponsoring companies
（B） call attention to the fact that MESBIC‘s must receive adequate funding in order to functioneffectively
（C） show that sponsoring companies were willing to invest only $500，000 of government-sponsoredventure capital in the original MESBIC‘s
（D） compare SBA and MESBIC limits on minimum funding
（E） refute suggestions that MESBIC‘s have been only marginally successful
7. The author‘s primary objective in the passage is to
（A） disprove the view that federal efforts to aid minority businesses have been ineffective
（B） explain how federal efforts to aid minority businesses have changed since the 1960‘s
（C） establish a direct link between the federal effortsto aid minority businesses made before the 1960‘s and those made in the 1980’s
（D） analyze the basis for the belief that job-specific experience is more useful to minority businesses than is general management experience
（E） argue that the “social responsibility approach” to aiding minority businesses is superior to any other approach
8. It can be inferred from the passage that the attitude ofsome MESBIC staff members toward the investmentspreferred by some MESBIC directors can best bedescribed as
（A） defensive
（B） resigned
（C） indifferent
（D） shocked
（E） disapproving
9. The passage provides information that would answerwhich of the following questions？
（A） What was the average annual amount， in dollars， of minority business receipts before the SBA strategy was implemented?
（B） What locations are considered to be unfavorable for minority businesses？
（C） What is the current success rate for minority businesses that are capitalized by MESBIC‘s？
（D） How has the use of federal funding for minority businesses changed since the 1960‘s？
（E） How do minority businesses apply to participate in a MESBIC program？
