Detroit – A $ 10 million pilot project launched Tuesday by the Rocket Community Fund and several partners aims to address the inequality of minority contractors in the state’s largest city.
The Motor City Contractor Fund was created to increase minority lending and provide resources to help Detroit-based contractors compete for billions in annual commercial construction, Rock Holdings Vice President Bill Emerson said in a statement Tuesday in the State Savings Bank.
Detroit has no minority contractors. Of the approximately 1,300 Metro Detroit contractors, 66 are based in Detroit and 48 are in the minority, Emerson said.
“It’s simple, only 5% of Metro Detroit contractors are based in Detroit, and more than $ 5 billion in annual commercial construction in Detroit is wealth that leaves the city and leaves the black community,” Emerson said. adding the program will serve as a future model for greater economic mobility.
“Their success will result in hiring more Detroiters and inspiring the next generation of contractors to participate in the program and be equipped with all the tools they need to succeed.”
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The Rocket Community Fund has the first $ 1 million and is partnering with the Detroit-based Community Reinvestment Fund USA, Invest Detroit and Barton Malow Builders to provide an additional $ 9 million to 20 minority contractors.
In addition to loans, the program will help contractors access access to finance, partnerships, technology and business consulting.
The city “simply can not meet the demand” for restoration, repair and new construction that is constantly growing in the city, said Nicole Sherard-Freeman, executive director of Detroit workforce development. He said the co-operation would increase access to jobs for residents.
“We need contractors to do this work and there are no contractors we would rather work with than Detroit-based contractors, minorities, women-owned property to rebuild this city,” said Sherard-Freeman. “This takes a toll on one of the biggest problems we have in Detroit, which is access to free or low-cost funds, access to technical assistance … to contractors who have historically been excluded from opportunities available at city right now. “
Jason Barnett, senior vice president of lending at Invest Detroit, said minority contractors have typically moved away from traditional lenders. When they take out loans, they are often at higher interest rates, which hinders their ability to grow, he said. The Motor City Contractor Fund is tailored to work with contractors at every level, he said.
Each contractor is granted a loan of up to $ 300,000, which is not credit-based, with a 7% interest rate to be paid on construction projects within one year and repayable within two years. Each program participant will also receive a $ 5,000 grant from the Fund and technical assistance from LifeLine Global Consulting Services.
“Access to capital and education go hand in hand, and this program was created with that in mind,” Barnett said. “The disbursements will be linked only to the projects they have listed.”
The project starts with 20 contractors but hopes to serve 300 contractors within the next three years. Officials said $ 30 million to $ 60 million additional funding is required for a sustainable program without the extra services provided by nonprofits.
“We do not want to see small business contractors push their finances to the brink of growth,” said Krysta Pate, vice president of economic and social justice at Community Reinvestment Fund USA. “With MCCF, we can help contractors build a stronger financial base and position them to take advantage of all the business opportunities that exist today in the city of Detroit.”
Officials will select the 20 contractors based on the number of years the company has been active, the number of employees and the project for which the money will be used.
Dr Nicole Parker, CEO of LifeLine Global, said she has heard common issues from contractors. They need help to qualify for contracts, build new relationships with larger companies and, in general, a “cheat sheet” to move forward.
“Most entrepreneurs know how to start a business, but they do not know how to do business. It was me 16 years ago, when at that time, I was the only minority licensee for a car dealership in Detroit.” he said. “The training node includes training in accounts receivable, business and development planning, contract management, contractor qualifications, job management, construction legal aspects, proposal development, security training, social media providers and much more, in addition to access to funds.”
10% of the $ 500 million promise was made available
The program is part of an ongoing $ 500 million joint charitable commitment made last March between the Rocket Community Fund and the Gilbert Family Foundation. The Rocket Community Fund is the charitable arm of the Rocket Companies, while the Gilbert Family Foundation is the personal foundation of Dan and Jennifer Gilbert.
Of the $ 500 million, the Rocket Community Fund and Family Foundation have spent $ 50 million, double what they expected in the first year, Emerson said Tuesday.
“We’re just getting started,” Emerson said.
Over the past year, the fund has invested $ 23 million in Detroit, including $ 7.6 million in housing-based initiatives, $ 8.4 million in employment and $ 5.9 million in public life investments. The Gilbert Family Foundation invested $ 11 million in the Michigan State Apple Developer Acadamey and $ 15 million in the Detroit Tax Relief Fund.
In November, the Fund announced that it would work with consumer credit reporting company Experian to reduce door-to-door traffic, instead of telephoning 50,000 Detroits at risk of home foreclosures. He also paid real estate taxes on 4,500 Detroit homes with another 2,000 homes under construction.
“With every investment, we take the time to listen, learn and think,” Jennifer Gilbert said in a video played at the event. “I really believe that our best work is still ahead.”
Deana Neely, founder and CEO of Detroit Voltage, has been selected for the program. She said she will help her undertake multiple projects in parallel to escalate her company with guidance and access to capital. Detroit Voltage provides electrical installation, repair, remodeling and renovation services in residential and commercial installations.
“It is extremely difficult for minority contractors to compete for a large project without access to funds,” Neely said. “When my business started, I started using personal credit cards to cover jobs and business expenses. Unfortunately, financial difficulties followed and I just could not afford it … This will allow me to take on projects without using my personal save me to do it and access to on-demand training will be a key part of keeping me in my role ”.