Governor Cuomo Announces the Creation of "Bridge to Success" Loan Program For Minority And Women Contractors
Last week, Governor Andrew M. Cuomo announced the creation of the “Bridge to Success” loan program which will invest at least $15 million to expand access to short-term bridge loans for Minority and Women-Owned Business Enterprises (MWBEs). The program will provide qualified MWBEs with the short-term resources they need to participate in the up to $1 billion in contracting opportunities with New York State.
“Our ‘Bridge to Success’ loan program builds on the State’s commitment and efforts to promote and increase participation by MWBEs in state contracting,” Governor Cuomo said. “The State has already identified more than $1 billion in contracting opportunities, and providing these short-term loans to smaller, disadvantaged MWBEs will give them the capital they need to secure a contract to do business with New York’s agencies and authorities. By helping our MWBEs succeed, we can create new jobs in our communities and grow the entire State of New York.”
Under the terms of the “Bridge to Success” program, Empire State Development (ESD) would provide up to $2.25 million in loan loss reserves to support the $15 million in short-term loans provided by participating lenders. Loans will typically be under $200,000 with terms under two years and would support $100 million in state contracts.
Once fully implemented, the program would provide qualified MWBEs the short-term working capital they need to hire staff, buy materials, or purchase equipment, giving them a better chance to secure and perform on the up to $1 billion that is currently available in State contracting opportunities. Click here to learn more.
These efforts complement the New York State Surety Bond Assistance Program, also launched under Governor Cuomo. That program provides training and financial support to help MWBEs and other small businesses access the surety bonding necessary to bid and perform on State construction contracts. Over $40 million in surety bonding has been secured by small firms to date through the New York State Surety Bond Assistance Program.
TACKLING A BARRIER TO SUCCESS
Having short-term working capital is often a major barrier for many small firms looking to work with the State. Many banks are reluctant to provide credit to these firms given the short-term nature of their capital need and the size and experience of many of these companies, despite a good idea or track record. Even if these companies utilize the financial and technical assistance to secure bonding through the Surety Bond Assistance Program, many still do not have access to loans to bridge what can be a long payment cycle.
By partnering with high capacity lenders around the state, the “Bridge to Success” loan program aims to remove this barrier to competition by providing short-term working capital loans to these small contractors. ESD would provide loan loss reserve funds to participating lenders to incentivize them to take on the increased risk of such loans and stimulate increased lending in this area.
ESD recently closed on a partnership with Carver Bank to provide $4.8 million in short-term loans to MWBE contractors performing work exclusively for the MTA. ESD is engaging other lenders around the state to provide such loans to certified MWBE firms working with any state agency or authority with the goal of securing $15 million for the overall program.
The “Bridge to Success” loan program and Surety Bond Assistance Program are just some initiatives that the State has launched to eliminate obstacles to business growth and success, as identified by firms and stakeholders. Other initiatives include an improved online reporting system, a streamlined certification process and increased outreach initiatives.
These efforts to engage entrepreneurs and provide opportunities in an easy and concise way have helped raise the contract utilization rate for MWBEs in New York State beyond the 20 percent goal that the Governor set in his first State of the State address, when the state utilization rate by MWBEs stood at nine percent.