The Black Caucus Foundation of Michigan (BCFM) has opened up millions of dollars to Black contractors, state funds previously unavailable to the community. The goal of the loan fund is to provide access to capital at a low cost to small Black-owned businesses — helping to give opportunities to vendors shut out from expansion due to finances.
While the BCFM — a nonprofit that describes its purpose as “develops public policy initiatives and direct service programs to improve the quality of life for African Americans” — is at the forefront of the move, the Capital and Cash Flow Program is made possible through a partnership with investment firm DRI Fund, management consulting company ProFinCo, and financing platform Crowdz. According to the organizations, this effort should not only increase capital sustainability for contractors but will further scale their businesses substantially.
“There have been hundreds of announcements regarding access to capital for Black businesses since the murder of George Floyd. Yet the needle has not moved on the number of Black contractors in infrastructure or capital availability to create their access,” Democratic state Sen. Marshall Bullock of Detroit stated.
“There is no better place to change that than in Detroit, and there is no better opportunity for success than in Michigan,” continued Bullock, who is the BCFM chairman.
There are an estimated $2 billion in contracts available with the city of Detroit and Detroit Community School District. The Capital and Cash Flow Program is in conversations with the Michigan Department of Transportation to advance certified disadvantaged and minority businesses into the conversations to receive contracts with that agency.
The program will give a pathway to Black businesses to a massive $40 million, with contractors in Bullock’s constituency having access to $10 million for their businesses in public works and infrastructure projects.
“We want to make sure that people know that there’s a tool and the Black Caucus Foundation has a resource, has a pathway to getting that compliance and access to capital to grow or create a business opportunity,” Bullock confirmed.
Another attractive feature of the program is that the partners created a user-friendly process where these entrepreneurs can access the funding within days, versus the three-to-four-month (120-day) process associated with other programs.
This is through a process called “Invoice Financing” where businesses sell their outstanding invoices to receive immediate payment from third parties, but in this case, it’s ProFinCo. Invoice financing gives businesses the opportunity to get cash immediately instead of waiting for client payments terms to mature.
The initiative is structured to strengthen the capacity of small, minority, and disadvantaged companies to compete for contracts for larger public works projects in the state and beyond. It also offers a mechanism to assist in eliminating cashflow disruption or accumulative debt from loans taken out to offset receivables or to help a business’ operations.
It is believed the program will be able to bump up the payment of approximately 80 percent of all invoices associated with Detroit contracts, D Business reports.
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, the COO of 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.”
A component of the African American Commerce Initiatives’ Bridges to Capital, the Capital and Cash Flow Program is already receiving applications for enrollment into the program. Funding is also immediately available and can be accessed here.