New Orleans is launching a new fund aimed at providing loans to small businesses. The BuildNOLA Mobilization Fund will specifically help those local small businesses and contractors that have demonstrated the technical capacity to perform work for the City but do not have the cash on-hand required to handle unpredictable payment schedules of public sector work.
Several cities have made a big push into procurement reform in order to make bidding easier. As CivSource reported earlier this month, Long Beach, California is working with Citymart a civic startup that lets cities revamp the RFP process for individual contracts. Other cities including New York, Philadelphia and Miami have also run pilots with Citymart to bring in more small businesses.
In New Orleans, procurement rules allow for bids under the Disadvantaged Business Enterprises (DBE) classification, but there are still challenges to compete.
The fund is part of an ongoing effort by the city to open more public contracts up to small business owners. In October 2015, The Network for Economic Opportunity, through the City’s Office of Supplier Diversity, launched BuildNOLA, an eight-week training program to help prepare local small and disadvantaged businesses to more effectively compete for public and private contracts. The outcomes of that program were twofold – local businesses gained access to bidding opportunities and the city was able to expand its pool of possible vendors.
To date, four cohorts of small and disadvantaged businesses have successfully completed the BuildNOLA training program to participate for city-sponsored projects through the city’s Capital Projects Administration, the city’s Department of Public Works and Sewerage and Water Board of New Orleans.
The loan fund is the second part of that plan, offering a sort of bridge financing for these new vendors in order to help them manage cash flow.
Phase 1 of the BuildNOLA Mobilization Fund involves a $1.5 million mini-mobilization pilot loan fund to participant businesses. Two non-profit organizations will provide the financing. Living Cities will invest $1.25 million in loan funds and NewCorp will invest $250,000 in remaining Small Business Assistance Funds. The fund will begin accepting applications Nov. 1 and pre-qualify firms for contract financing.
If the pilot loan fund is successful, the City, in partnership with Living Cities and Foundation for Louisiana, will raise capital for a $10 million loan fund, of which $8 million will be from private banks and $2 million will be from City and philanthropic funds.
“We’re committed to connecting our disadvantaged job seekers and local small business to real jobs and strategic opportunities by creating pathways to prosperity,” said Mayor Mitch Landrieu in a statement on the fund launch. “The prosperity being enjoyed by some must be available to all because we can’t leave anyone behind.”