The Black Caucus Foundation of Michigan in Detroit has formed a collaboration with DRI Fund, ProFinCo, and Crowdz to launch the Capital and Cash Flow Program, a $40 million initiative targeted at strengthening Black businesses with low-cost access to capital, $10 million of which is immediately available to city of Detroit contractors.
Black businesses have historically been locked out of accessing low-cost capital, but this partnership seeks to address what has traditionally been the biggest inhibitor to growing sustainable Black businesses in public works and infrastructure projects.
“There have been hundreds of announcements regarding access to capital for Black businesses since the murder of George Floyd,” says Sen. Marshall Bullock (D-Detroit), chair of the Michigan Legislative Black Caucus and president of the Black Caucus Foundation of Michigan.
“Yet the needle has not moved on the number of Black contractors in infrastructure or capital availability to create their access. There is no better place to change that than in Detroit, and there is no better opportunity for success than in Michigan.”
The program is designed to strengthen the capacity of small, minority, and disadvantaged businesses to compete for and successfully execute large public works projects for the state of Michigan and beyond.
It is designed to eliminate cashflow disruption or mounting debt accumulated from loans acquired to offset receivables. Specifically, this program advances pay of up to 80 percent of all invoices associated with city of Detroit contracts — helping businesses that are sometimes forced to wait up to 120 days or more for payment.
It also targets additional technical support to prospective contractors that have skill sets that make them viable candidates for larger public works and infrastructure opportunities with the state. The program will move quickly to service vendors of the Detroit Community School District and other organizations that have the potential to spur an expanded infrastructure contractor base in Michigan.
With an estimated $2 billion in anticipated contracting from the city of Detroit and Detroit Community School District about to commence, the collaboration also seeks to use the Capital and Cash Flow Program to advance certified disadvantaged and minority businesses into larger contract opportunities with the Michigan Department of Transportation.
“MDOT applauds the creators of this new Capital & Cash Flow Program, which we believe will enable more minority owned businesses to enter the public sector infrastructure market and grow their businesses,” says Tony Kratofil, COO for MDOT. “The Bipartisan Infrastructure Law has created unprecedented levels of investment that represent opportunities for minority-owned contractors to participate in building up our communities and the infrastructure they rely on.”
Those leading this effort state the need for such an initiative is greater than ever before, with 93 percent of all supply-chain participants being small and medium enterprises (SMEs), and half of them suffering cashflow shortages, often waiting extended periods to be paid. Those leading the effort also point to the exploitive fees charged by hard money and merchant lenders that destroy a company’s profits.
The Capital and Cash Flow Program is a component of the African American Commerce Initiatives’ Bridges to Capital. Early enrollment to the program is underway and contractors may apply immediately for funding.
The Capital and Cash Flow Program can be accessed here, or via the Black Caucus Foundation of Michigan at 313-285-9234.