Minority and women contractors who can’t get traditional loans to expand their business in St. Louis have a new resource at their disposal: the Contractors Loan Fund.
Certified minority and women-owned business enterprises will be able to apply for a loan of up to $1 million from the fund, which has a pool of $10 million.
“This is a big deal,” St. Louis NAACP President Adolphus Pruitt said at a news conference announcing the loan fund. “It takes money to make money. It’s a plain and simple truth in business. Cash flow is like oxygen for a business. Without it, it will truly die. And that has been the case over the years—well over a couple of decades locally—for a lot of small minority and women-owned contracting businesses. And today is a great giant step towards dealing with the issue.”
Pruitt praised majority contractors, developers and banks for taking part in the coalition behind the fund, noting that advocacy groups such as the NAACP has criticized those groups in the past.
“We’ve criticized owners when we thought goals were not being met, and we’ve been critical of the financial community when we didn’t think they were making loans the way we desired. But they’ve stepped up to the plate,” Pruitt said.
The Associated General Contractors, SM Wilson, and Musick Construction are part of the fund coalition, as are six banks. Washington University, Saint Louis University and major corporations and agencies from Monsanto to the Metropolitan St. Louis Sewer District are also among the 30-plus partners in the coalition.
Stifel Bank & Trust CEO Chris Reichert is chairing the fund, which will grant loan applications under relaxed lending criteria and with below-market rates.
“Like any credit decision, we’re going to optimize. We’re trying to maximize the likelihood of repayment so we can make sure the Contractor Loan Fund is sustainable. However there isn’t a automatic requirement that every single loan has to be covered with sufficient collateral,” Reichert said. “There are other flexibilities that we’ve identified in our loan policy to be able to make sure that what we’re offering is financing that otherwise wouldn’t be available in the existing mainstream banking.”
According to Reichert, private partners in the fund coalition donated more than 90 percent of the $10 million in the fund, with the five senior investors (Stifel Bank & Trust, Midland States Bank, Enterprise Bank & Trust, Eagle Bank and Scotttrade Bank) contributing 70 percent of that total.
Reichert said the coalition had yet to agree on a numbered metric of success, but broadly speaking the fund will be considered a success if loan participants are able to transition to traditional banking relationships and if the “number, size and stability” of minority and women-owned contracting businesses increase.
Mayor Francis Slay lauded the private funding and leadership behind the Contractor Loan Fund at the news conference, saying that it will help the region build the capacity of minority and women contractors.
“You can set all the goals you want but if you don’t have the capacity it’s going to be hard to reach those goals,” Slay said.
Tens of Billions of dollars’ worth of construction projects, both public and private, are in the works over the next 15 years.
Companies with large projects underway, such as BJC HealthCare and the Metropolitan St. Louis Sewer District, have also pledged to make diversity a priority when awarding contracts.
Follow Camille Phillips on Twitter: @cmpcamille.