Economic & Community Development Institute, in partnership with JPMorgan Chase & Co., recently launched a new program that aims to address the financing gap minority-owned construction subcontractors are faced with when submitting bids for large-scale construction contracts.
As mentioned in a previous article on The Metropreneur, while development projects in Central Ohio are flourishing, the amount of subcontractors has steadily decreased since 2000 due to the lack of short-term working capital to take on large-scale projects. This barrier has had a disproportionate impact on small, minority-owned firms as bank financing is often out of their reach.
“We’ve seen the amount of local [subcontractor] companies decline at an alarming rate over the last 15 years,” said Nancy Tidwell, owner of NRT & Associates, a public affairs and consulting firm that specializes in assisting construction managers and owners in maximizing the inclusion of minority, female and disadvantaged businesses on major public and private construction projects throughout Central Ohio. “They are not receiving the equal opportunity to perform on these projects and very rarely is it due to the company’s ability to do the work.”
ECDI and other agencies conducted a survey to assess the problem at the local level. The group found that small contractors, in particular minority contractors, are unable to withstand delays on payments from General Contractors (GCs), limiting their ability to achieve market sustainability.
More than 50 percent of minority contractors surveyed reported the need for advance payments to bridge the time gap between the start of construction work and payment for the work. Approximately 66 percent of contractors expressed concerns about starting a construction job without the availability of an advance payment. This problem was only exacerbated by the fact that of those surveyed, over 70 percent claim they had been denied financing from traditional lenders.
With $290,000 pledged to support the program from JPMorgan Chase & Co., ECDI’s “Capital For Construction” program is expected to create more than 100 construction jobs per year in Franklin County. Qualified minority contractors will have access to low-interest advance payments of $5,000 to $150,000 through ECDI’s lending program. Subcontractors enrolled in the program will also be able to take advantage of industry-specific training, incubation services, and mentorship opportunities, provided through ECDI’s comprehensive suite of services and programs.
“We are thrilled to partner with JPMorgan Chase to provide essential resources to minority-owned businesses in Central Ohio,” said Inna Kinney, Founder & CEO of ECDI. “This partnership strengthens ECDI’s commitment to address financing gaps for new and existing MBE businesses, creating new jobs while establishing stronger business sustainability for an often neglected entrepreneur population.”
Jesse Mark, ECDI relationship manager who will oversee this program during its pilot phase, can be contacted for additional information at [email protected].
Since 2004, ECDI has assisted Ohio’s entrepreneurs through their one-stop-shop business services model, suited to meet the needs of all entrepreneurs, regardless of what business stage they’re in. From providing capital to entrepreneurs looking to expand their businesses, to providing focused, business-specific educational opportunities to enhance entrepreneurial skill sets, ECDI works with their clients to meet their specific needs. Whether you merely have a business idea or are opening up your fifth location, ECDI’s “never say no” approach has allowed over ten thousand entrepreneurs to take advantage of the services they provide. Visit www.ecdi.org today to learn more.