Cook County gets banks to pledge to make more loans to small businesses
BY LISA DONOVAN Cook County Reporter firstname.lastname@example.org June 13, 2012 2:00PM
Updated: June 13, 2012 6:06PM
At a time when businesses are having a hard time getting loans, Cook County officials are trying to make it easier for small minority- and women-owned companies to get the capital needed to compete for government projects.
County Board President Toni Preckwinkle said Wednesday she wants to help those businesses get loans so they can bid on jobs like fixing up the old Cook County Hospital on the Near West Side or on county highway or housing projects. She said she sat down with officials with some of the nation’s largest lending institutions, who have pledged to work with small businesses.
“Basically we’ve asked our banking community to give us a hand,” Preckwinkle said at a Wednesday news conference, surrounded largely by African-American executives from banks including Chase, Citibank and Wells Fargo.
“In order to participate in the work that the county is going to be doing they’re going to need to ramp up in terms of staffing, they’re going to need working capital and the institutions here have pledged to help us help them,” Preckwinkle said.
She said “roughly 25 percent” or $200 million of the county’s $800 million in planned capital projects will go to women- and minority-owned businesses in the next three to five years.
She said one of the most “significant hurdles” for the businesses is getting loans in the early stages of a project.
Local government didn’t help things, Preckwinkle acknowledged, because it often didn’t pay vendors quickly enough. Since she’s taken office in 2010, Preckwinkle has pushed to make sure prime contractors are paid within 30 days and subcontractors paid 15 days after that.
The county has “tried to create a circumstance which makes the companies that do business with us more creditworthy,” Preckwinkle said.
While Preckwinkle couldn’t say what the average delay in payment was for county projects, the former 4th Ward Alderman said it was a problem when she served on the City Council for 19 years.
“We had terrible problems because the payments were never timely,” she told reporters. “You waited 60, 90 days to get paid. For a very small business where there aren’t necessarily really deep pockets and lots of cash reserves, that’s a real problem.”
Preckwinkle assured that the county has levers in place to prevent the kind of fraud — namely sham vendors posing as a minority or woman-owned business — that has tainted these contracting deals with local government over time.
“What we’re doing is tracking the actual spending on the contracts, rather than the firms that are put forward when the bid is submitted, because we all know that sometimes bids are submitted and minority and women-owned firms are identified as contractors, but when you look at the payrolls and invoices … they’re not there or they’re not there in the same proportion as the initial contract committed to,” she said. “We’re being very vigilant about looking at actual payouts and making sure that the [minority] and [women business enterprise] commitments that were made are fulfilled.”
Helen Hammond Redding, a senior vice president and director of community development at Citigroup, said the agreement will help the local economy.
“Small businesses are the engines that drive growth and create jobs,” she said.