New York City has introduced a $10 million Bond Collateral Assistance Fund for minority and women-owned businesses (M/WBEs) and small businesses, the city says in a news release.
The fund supports M/WBEs and small businesses facing obstacles accessing surety bonds, bonds that offer collateral to ensure businesses can successfully perform on city construction contracts. The program allows eligible businesses to apply for surety bonds (collateral assistance) of as much as to $500,000 or 50 percent of the contract amount, whichever is lesser, in order to meet cash collateral bond requirements. No contributions are required of contractors.
NYC mayor Bill de Blasio also announced that the city is ahead of its OneNYC target of awarding $16 billion to M/WBEs by 2025, having awarded $5 billion to M/WBEs since the goal was announced in 2015.
“Not only are we expanding the number of easily accessible capital programs to help minority and women-owned businesses, but we are also seeing record investments going towards these businesses,” de Blasio said in a statement. “We are, in turn, removing historical barriers to capital and creating new pathways to economic opportunity, while investing in local communities for a more prosperous New York City.”
The announcements were made at the 11th Annual Procurement Fair at the Bank of New York Mellon, to connect New York City minority and women-owned businesses to public and private contracting opportunities and other resources.
In order to be eligible, businesses must be operating construction businesses that are bidding or planning to bid as a prime or subcontractor on a contract with a city agency or NYCEDC that requires bonding. Interested firms may fill out an inquiry form at nyc.gov/bondfund.
The Bond Collateral Assistance Fund is the third capital loan program launched recently, the mayor’s office said in the announcement.
In March, the de Blasio Administration launched the Contract Financing Loan Fund to help M/WBEs secure affordable access to capital to help perform on city contracts. Businesses may apply for loans of up to $500,000. The loans feature flexible repayment schedules that are timed to align with city contract payment schedules, helping businesses improve their cash flow. These loans may be used to help small businesses purchase equipment and hire employees.
The city has deployed $1.125 million since its launch on March 23.
The mayor also launched a $10 million of capital to pilot the Emerging Developer Loan Fund at the NYC Economic Development Corporation (NYCEDC). The fund provides low-interest loans to NYC-based real estate projects including mixed-income housing, mixed-use, industrial and commercial projects, and projects with development costs under $30 million.
Separately, the de Blasio Administration, along with State Sen. Marisol Alcantara and Assembly Member Alicia Hyndman, are leading an urgent push to pass state legislation that would benefit city-certified M/WBEs. The State bills, S6513 and A08508, would grant NYC the flexibility to utilize the same economic development tools which the state itself uses to help M/WBEs and small businesses enter the market for public procurement.
These policy instruments include allowing the city to raise the discretionary threshold to $150,000 to closely match the state’s $200,000 threshold and to use best value in awarding points for M/WBEs. Currently, the city is authorized to award contracts of up to $35,000 for construction work and $20,000 for goods and services without having to go through a competitive bidding process, a process that can at times be burdensome for M/WBEs. This legislation would increase discretionary spending to $150,000 for goods and services purchased from city-certified M/WBEs. The legislation would also allow the city to use a firm’s status as an M/WBE as criterion when awarding a contract.
The State Senate passed S6513 unanimously 63-0 on June 20.