Chicago announced Wednesday a $25 million fund to help women- and minority-owned contractors access loans from the federal Paycheck Protection Program and other small business financing programs.
The loan assistance program is part of a broader effort to level the playing field for women and people of color in the city’s vendor program. The city also is looking at ways to quickly pay vendors and will require diversity reporting from contractors.
The $25 million vendor impact fund is meant to give women, minorities, veterans and people with disabilities preferential access to affordable financing. That includes helping city-certified vendors apply for PPP loans and other Small Business Administration loans.
Goldman Sachs and the Community Reinvestment Fund, a Minneapolis-based nonprofit community lender, funded a combined total of $24 million and the city provided $1.2 million, which will be used to provide technical assistance and help facilitate the program.
Vendors who seek a PPP loan must complete an application with the Community Reinvestment Fund before March 31 and can apply at www.chicagoimpactfund.com. Applicants are urged to file before March 19 because the loan program closes at the end of this month. There is no deadline to apply for the other SBA loans.
Eligible businesses must have an active city contract and have been in business for at least two years. Preference will be given to vendors who are located in a qualified investment area of Chicago, or who have a high number of employees living in disadvantaged areas of the city.
In addition, Mayor Lori Lightfoot issued an executive order that requires contractors to submit quarterly reports on how often they use women- and minority-owned vendors to fulfill their city contracts. The order also requires contractors to provide an annual diversity plan on how they do business outside their contracts with vendors owned by women and people of color.
“This transparency will give us, for the first time, a glimpse of who we are doing business with and whether they share our values of building an equitable and inclusive economy. In sum, we want companies to go beyond statements and put their money where their mouth is,” Lightfoot said at a news conference Wednesday.
The city also created a working group to look at ways to improve payment processes for vendors. That includes the possibility of paying vendors upfront, the city said..
Chicago has a reputation for slow payments to contractors, Lightfoot said. The issue dates back to her days serving as interim first deputy procurement officer in 2005, she said.
“No small or medium size business can afford to carry a debt 60, 90 (days) or longer when they have to continue meeting payroll and buying materials to get an existing job done,” Lightfoot said. “The city’s mantra must be when you deliver the work on time, it’s only right that you get paid on time.”
Some of the issues involving payments could be fixed if the city hired more accountants and other workers to process payments, said Beth Doria, the executive director of the Federation of Women Contractors, a Chicago-based organization that advocates for women-owned businesses and female executives in the construction industry.
“All of the programs in the world won’t help them (women- and minority-owned contractors) if they aren’t getting paid in a timely manner,” Doria said.
In some cases, vendors have reported receiving payments two years after completing a contract, Doria said. The issues, she said, mostly comes from delays in getting final approval from the city when vendors submit extra costs for a project.
“It’s not fair because contractors are working on good faith and they abide by the contract rules. Yet, they are the ones being hung out to dry,” she said.