Small Business BondsLeveraging construction, contractor opportunities for Louisiana firms
Amid an industrial construction boom, Louisiana government leaders have recognized a new window of small business opportunity. Two programs emerged this year to help Louisiana firms seize that opportunity. The Louisiana Business Connection matches minority-owned small businesses in the state with major construction companies needing suppliers and vendors. And the Bonding Assistance Program creates a safety net for smaller construction firms to secure bonding for their contracts.
Both the Louisiana Business Connection and the Bonding Assistance Program break down technological and financial barriers to help small and minority-owned businesses capture greater economic opportunity in Louisiana.
To launch Louisiana Business Connection, the state’s economic development agency harnessed local and federal partnerships to build an online platform that matches major contractors and small business vendors.
LED FastStart® – the workforce arm of Louisiana Economic Development – modeled its effort upon LouisianaJobConnection.com, a successful platform that has created more than 2.5 million matches of Louisiana employers and job seekers since its 2014 launch.
For Louisiana Business Connection, FastStart joined local partners in Southwest Louisiana with resources from the U.S. Department of Energy to create a pilot program intended for statewide rollout at a later date. Louisiana Business Connection represents an online database with bid opportunities from major engineering, procurement and construction – or EPC – companies. Disadvantaged business enterprises, which have a controlling minority ownership interest of 51 percent or more, may use the database to create a profile listing their qualifications, certifications and other information in an effort to win bids.
Upon registration, any gaps in required certifications will be identified and the businesses will be referred for appropriate training and business support programs. Leveraging Department of Energy resources, the pilot program is the first of its kind in the nation and is launching in Southwest Louisiana, in part, because more than $60 billion in industrial construction projects are underway there.
“The Department of Energy is excited to partner with LED in developing the Louisiana Job Connection and the Louisiana Business Connection website, which will help raise awareness about employment and business opportunities on Southwest Louisiana major projects,” says Karen Atkinson, team lead for the U.S. Department of Energy’s Southwest Louisiana Regional Partnership. “We commend LED Secretary Don Pierson for leading this effort, which will tremendously benefit diverse businesses by heightening their profile with major contractors and enable Louisiana businesses to better position themselves to bid on work contributing to the economic growth of the Southwest Louisiana community.”
A second LED initiative will strengthen bonds with the small business contractor community in Louisiana through the Bonding Assistance Program.
Rolled out July 1, the program helps small businesses secure quality bid, payment and performance bonds needed to win construction contracts. For both public and private sector jobs, the requirements for bonding capacity can deter small contractors who lack the experience, financial expertise or underwriting needed to win bids.
Through a partnership with the Louisiana Public Facilities Authority and the Louisiana Surety Association, LED offers a bond guarantee of 25 percent of the contract or $100,000, whichever is less. All firms certified through LED’s Small and Emerging Business Development Program can be eligible for the Bonding Assistance Program.
Although the program does not underwrite bonds, it offers a source of collateral for the companies that do. An initial foot in the door with smaller contracts can lead to greater opportunities, something Keith Tillage learned as a participant in a prior version of the program.
“Companies want to see experience, but you can’t get experience if you can’t get the bond,” Tillage explains. “However, LED believed in me. Through the program they backed me with a $25,000 bond for a $25,000 project that eventually grew to a $500,000 bond for a $500,000 project. Today, I’m doing $9 million projects, which would not be possible without this program.”
Keep an eye out for progress on both programs. Together, the Bonding Assistance Program and Louisiana Business Connection hold the potential to spur economic development on par with securing a large plant or refinery in Louisiana.