A new $10 million fund that aims to provide low-interest loans and technology and business consulting services to 20 entrepreneurs was launched Tuesday at a press conference in Detroit.
The Motor City Contractor Fund is a pilot program, supported by the Gilbert Family Foundation and the Rocket Community Fund in conjunction with several nonprofits, that aims to ensure that Black, Indigenous, and other people of color who are contractors have fair access to technical support. and capital.
With more projects underway in the city, the goal is to provide tools for these contractors to better compete for contracts for “rehabilitation, home repair, new construction, demolition and other public/private projects”, the authorities said. partners in a press release.
The pilot program, the partners said, will begin with a $1 million investment from the Rocket Community Fund and is only open to Detroit-based entrepreneurs.
“Like all of our philanthropic initiatives, we are here to address the long-term systemic problem,” Rock Holdings Vice Chairman Bill Emerson said at the press conference held at the State Savings Building. Bank in Detroit.
“The problem is that minority-owned entrepreneurs have always been turned away from traditional lending institutions,” Emerson continued. “When they receive loans, they are often at higher interest rates, which prevents them from growing and succeeding. Typically, they receive smaller equity investments, and as a result, they have less of wealth to reinvest in their businesses.”
Emerson also said minority-owned businesses that are smaller tend not to have access to a digital presence.
Other nonprofits contributing to the fund are Barton Malow Builders, Community Reinvestment Fund (CRF), and Invest Detroit.
CRF serves as the main coordinator of the pilot program, including the management of the pilot website. In the first phase, according to the press release, the CRF will carry “$8 million on its balance sheet to ensure that participants in the first cohort have access to essential funding”.
Invest Detroit will serve as loan originator, according to the press release.
keep money in town
Of 66 contractors in the city of Detroit, 48 belong to minorities.
“Only 5% of Metro Detroit contractors are based in Detroit,” Emerson said, “and the more than $5 billion in annual commercial construction that occurs in Detroit is wealth leaving the city. and the black community.”
Entrepreneurs participating in the pilot project will initially have access to a financial literacy program and a $5,000 grant. Lifeline Global Consulting Services will also provide technical assistance training and each of the participating companies will have access to a loan of up to $300,000.
“By reviewing the projects, we can see where the needs are from a funding perspective, and then we’ll disperse accordingly on a project-by-project basis,” said Jason Barnett, senior vice president of lending for Invest Detroit.
Krysta Pate, vice president of economic and social justice for CRF USA, said supply chain shortages and inflation are affecting contractors in the city, so the goal is for these businesses to be able to increase opportunities. residential and commercial with these loans.
“We listened to small business entrepreneurs, and they told us they needed more resources for expansion and growth,” Pate said. “It also means that small business entrepreneurs need more than capital. They deserve access to the kind of technical support that big businesses rely on for growth.”
A full fund will be launched within a year, Pate said. It is expected to include 300-400 companies as a sustainable model for the program is created over the next few years.
For more information, potential participants can visit the program website at https://motorcitycontractorfund.org.