Detroit –A $10 million pilot program launched Tuesday by the Rocket Community Fund and several partners aims to level the playing field for minority entrepreneurs in the state’s largest city.

The Motor City Contractor Fund was created to increase lending to minorities and provide resources to help Detroit-based contractors compete, Bill Emerson, vice chairman of Bedrock Holdings, said during Tuesday’s announcement at the State Savings Bank.

Detroit lacks minority entrepreneurs. Of Metro Detroit’s 1,300 contractors, 66 are Detroit-based and 48 are minority-owned, Emerson said.

“It’s simple, only 5% of Metro Detroit’s contractors are based in Detroit and the more than $5 billion in annual commercial construction that happens in Detroit is wealth that leaves the city and leaves the black community,” said Emerson adding the program will serve as a future model for greater economic mobility.

“Their success will result in hiring more Detroiters and inspire the next generation of entrepreneurs to participate in the program and equip themselves with all the tools they need to succeed.”

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The Rocket Community Fund is presenting the first $1 million and has partnered with Community Reinvestment Fund USA, Invest Detroit and Detroit-based Barton Malow Builders to provide an additional $9 million to 20 minority entrepreneurs.

In addition to loans, the program will help entrepreneurs access financing, partnerships, technology and business advisory services.

The city “simply cannot meet the ever-growing demand” for rehabilitation, repair and new construction in the city, said Nicole Sherard-Freeman, executive director of workforce development for Detroit. She said the partnership will increase access to jobs for residents.

“We need contractors to do this work and there are no contractors we would rather work with than Detroit-based, minority-owned, women-owned contractors to rebuild this city,” said said Sherard-Freeman. “It puts a hammer on one of the biggest problems we have in Detroit, which is access to free or low-cost capital, access to technical assistance … to entrepreneurs who have always been closed to opportunities available in the city at this time.”

Jason Barnett, senior vice president of lending at Invest Detroit, said minority-owned entrepreneurs have generally been turned away from mainstream lenders. When they receive loans, they often enjoy higher interest rates, which prevents them from growing, he said. The Motor City Contractor Fund is designed to work with contractors at all levels, he said.

Jason Barnett, vice president of loans for Invest Detroit, speaks during a press conference for the Motor City Contractor Fund, which aims to support minority and women-owned entrepreneurs in Detroit on Tuesday, April 5, 2022 .

Each contractor is assigned a maximum loan of $300,000, which is not credit-based, at an interest rate of 7% which must be disbursed to construction projects within one year and repaid within a period of two years. Each program participant will also receive a $5,000 grant from the Fund and technical assistance from LifeLine Global Consulting Services.

“Access to capital and education go hand in hand and this program was created with that in mind,” Barnett said. “Disbursements will be tied only to the projects they have lined up.”

The program starts with 20 entrepreneurs, but hopes to serve 300 entrepreneurs over the next three years. Officials said $30-60 million additional funding is needed for a sustainable program without the additional services provided by non-profit organizations.

“We don’t want to see small business entrepreneurs stretch their finances to the limit of pursuing growth,” said Krysta Pate, vice president of economic and social justice at Community Reinvestment Fund USA. “With MCCF, we can help entrepreneurs get on a stronger financial footing and position them to take advantage of all the business opportunities present in the city of Detroit today.”

Officials will choose the 20 entrepreneurs based on how long the business has been in business, the number of employees and the project the money will be used for.

Dr. Nicole Parker, CEO of LifeLine Global, said she heard common themes from entrepreneurs. They need help qualifying for contracts, building new relationships with bigger companies, and overall “a cheat sheet” to get ahead.

“Most entrepreneurs know how to start their business, but don’t know how to do the business side of business. That was me 16 years ago, when at the time I was the only female franchisee owned by a minority for auto shops in Detroit,” she said. “The training center includes training on accounts receivable, business and growth planning, contract management, contractor qualification, labor management, construction legal, proposal development, security training, social media providers and more outside of access to capital.”

10% of the $500 million pledge allocated

The program is part of a joint $500 million philanthropic commitment made last March between the Rocket Community Fund and the Gilbert Family Foundation. The Rocket Community Fund is the philanthropic arm of Rocket Companies, while the Gilbert Family Foundation is the personal foundation of Dan and Jennifer Gilbert.

Of the $500 million, the Rocket Community Fund and Family Foundation spent $50 million, double what they expected in the first year, Emerson said Tuesday.

“We’re just getting started,” Emerson said.

The Motor City Contractor Fund is part of a joint $500 million philanthropic commitment made last March between the Rocket Community Fund and the Gilbert Family Foundation.  The Rocket Community Fund is the philanthropic arm of Rocket Companies, while the Gilbert Family Foundation is the personal foundation of Dan and Jennifer Gilbert.

Over the past year, the fund has invested $23 million in Detroit, including $7.6 million in housing initiatives, $8.4 million in jobs and $5.9 million in investments in public life. The Gilbert Family Foundation has invested $11 million in the Michigan State Apple Developer Academy and $15 million in the Detroit Tax Relief Fund.

In November, the Fund announced it would partner with consumer credit reporting firm Experian to reduce door-to-door canvassing, instead contacting 50,000 Detroit residents at risk of foreclosures by phone. He also paid the delinquent property taxes on 4,500 Detroit homes with another 2,000 homes in the works.

“With every investment, we take the time to listen, learn and reflect,” Jennifer Gilbert said in a video released at the event. “I truly believe that our best work is yet to come.”

Deana Neely, founder and CEO of Detroit Voltage, was chosen for the program. She said it would help her take on multiple projects in tandem to scale her business through mentorship and access to capital. Detroit Voltage provides residential and commercial electrical installation, repair, remodel and renovation services.

“It’s extremely difficult for minority entrepreneurs to compete for a major project without access to capital,” Neely said. “When my business started, I started it using personal credit cards to cover work and business expenses. Unfortunately, financial hardship followed and I just couldn’t afford it…It made me will allow me to undertake projects without using my personal savings to do so and access to on-demand training will be key to keeping me in my role.”

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