Detroit Regional Chamber > Chamber > Nonprofit establishes $10 million loan fund for Black-owned contractors, with $30 million more expected

Nonprofit establishes $10 million loan fund for Black-owned contractors, with $30 million more expected

April 28, 2022
Crain’s Detroit Business
Apr. 26, 2022
Nick Manes

Another fund has popped up aiming to support minority-owned contractors doing business in Detroit.

The Detroit-based Black Caucus Foundation, along with three financial partners, said the new Capital and Cash Flow Program — a $40 million initiative, with $10 million available immediately — to provide “low-cost capital” to Black-owned contracting companies in the city of Detroit, according to a news release.

The initiative seeks to address the systemic issue of a lack of capital available to minority businesses and “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,” the release stated.

“It is designed to eliminate cashflow disruption or mounting debt accumulated from loans acquired to offset receivables,” the release stated. “Specifically, this program advances pay of up to 80 percent of all invoices associated with City of Detroit contracts — a huge help to businesses that are sometimes forced to wait up to 120 days or more for payment.”

The news of the new fund follows an announcement in early April of another $10 million fund, the Motor City Contractor Fund, a collaboration between the Rocket Community Fund, the Community Reinvestment Fund USA, Invest Detroit and Southfield-based general contracting company Barton Malow Builders.

Partners in the Capital and Cash Flow project with the nonprofit Black Caucus Foundation are DRI Fund, a Community Development Financial Institution with offices in Southfield and West Palm Beach, Fla., as well as Detroit-based Project Finance Company LLC, a lender for businesses with cash flow issues.

Crowdz, a California financial technology firm that provides invoicing software for small and medium-size businesses, is also a partner in the initiative, according to the release.

KB Stallworth, chairman of the Black Caucus Foundation, told Crain’s in an email that the initial $10 million now available comes from DRI and the planned additional $30 million will come from Crowdz, with a target date of being available by June 1.

The overall lending initiative is needed to help Black-owned contracting companies compete as public works projects ramp up, Stallworth said.

“The coming infrastructure spending will be transformational for this nation, and if Corporate America is serious about Black participation, it will create or support programs like ours that actually help solve the fundamental impediment to Black Business success: access to affordable capital,” Stallworth said in the release.

Tony Kratofil, COO for the Michigan Department of Transportation, echoed that sentiment.

“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,” Kratofil said.

Stallworth told Crain’s that any contractor doing business with the city of Detroit may apply to access funds from the program. Any Detroit contractor with outstanding receivables is eligible for up to 80 percent of the amount. Contractors that are about to begin service on a project or want to speed up their payments may enroll as well, he said.

For those companies seeking funding, loans of up to $5,000 will carry an interest rate of 1.5 percent, 1 percent on loans up to $100,000 and 0.75 percent on any loans over $100,000.

With the initial tranche of funding, Stallworth said the initiative hopes to fund 10-50 advances per month. Asset-based lending, in which a lender provides financing to a business upfront in exchange for being paid on the full receivable later, such as what the Black Caucus Foundation is establishing, has been picking up steam.

Such financing is needed, according to Michelle Sourie Robinson, CEO of the Michigan Minority Supplier Development Council.

“Statistics and our first-hand insight reveal the importance and impact of timely payments to small businesses, and especially small to medium sized minority businesses,” Robinson said in a statement. “Economic conditions notwithstanding, access to liquidity is imperative to growth and operational sustainability. Participation in a program that ensures early, timely and predictable payments to these businesses is a win-win for all involved.”

Contractors may apply for Capital and Cash Flow Program funding at

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