Photo: Kristin Wall/Flickr
The New York City Economic Development Corporation (NYCEDC) officially launched its $10 million Emerging Developer Loan Fund (EDLF) last week. The program is just one of the three programs the NYCEDC unveiled back in March aimed primarily at helping minority and women-owned firms get crucial pre-development funding.
For emerging developers, often banks will finance about 60 to 70 percent of the total project, and even if developers bring their own equity they still frequently fall short by approximately 10 percent. Predevelopment is seen as “high risk” by banks and larger developers usually have outside sources to obtain those needed funds, whereas the emerging developer will not. That is where the EDLF comes in, bridging the development cost gap.
The objective of the programs is to increase the capacity and impact of minority, women-owned and disadvantaged business enterprises (M/W/DBE).
In addition to the EDLF, Next Level Bronx and ConstructNYC were also announced in March to provide additional resources to M/W/DBEs firms. Next Level Bronx provides an MBA-style program to firms while ConstructNYC is program for pre-qualified contractors who will have exclusive access to bid on specific NYCEDC-related contracts.
“With additional funding opportunities, training and mentorship, M/W/DBEs will have a competitive edge and be able tackle complex work across the city,” said NYC Councilmember Ritchie Torres in a March press release.
The EDLF will provide affordable pre-development and land acquisition low-interest loans, ranging from $100,000 to $2.5 million. The fund wants to increase opportunities and facilitate the acquisition process for emerging developers, which includes many minority and women-owned firms, with annual revenues of less than $10 million.
For the EDLF, the NYCEDC defines an “emerging” developer as any firm that’s new to the business and has annual revenue under $10 million.
Loans will cover land acquisition and pre-development costs such as security deposits or environmental assessments.
The NYCEDC teamed up with Basis Management Group, a minority and woman-owned commercial real estate finance firm, to create the fund. Basis will make the final decision on which projects will receive funding.
“As a company that has benefitted from similar initiatives, we know first-hand the difference this program can make for emerging developers,” said Tammy K. Jones, President of Basis, in a press release.
NYCEDC President Maria Torres-Springer echoed Jones’ sentiments. “Through City-led initiatives like these, particularly those that support minority and women-owned businesses, we are making sure that every City dollar spent is an investment in opportunity,” she said in a NYCEDC press release.