The Mississippi Development Authority (MDA) is working with groups outside the state to solve bonding problems for small, minority and women-owned businesses.
“Bonding is a critical issue for all businesses,” says Richard Speights, director of MDA’s Minority & Small Business Development. “After 9/11, the bonding industry became very tight, and it became hard for small and minority businesses to get bonding. The bonding company that was issuing bonds pulled out of Mississippi and left a void.”
In his travels for MDA, Speights made contacts with the National Black Chamber of Commerce and the Surety and Fidelity Association of America, a trade association. Representatives of the groups put their heads together and came up with a plan to help Mississippi businesses with bonding.
“The chemistry was right and the need was here,” says Speights, who had been wrestling with the problem since he came to MDA in June 2004. “We had been searching nationwide to find surety companies. My division has been working hard over the last few years to find bonding.”
The three organizations first met October 2006, and a few months later they announced a memorandum of understanding as a step beyond the state-backed Minority Surety Bond Guaranty program. Under that program, the state guarantees a business’ bond up to $250,000 or 90 %, whichever is greater.
“Even with that guarantee we could not find bonding companies to step up,” Speights said. “Bonding companies look for history. They don’t want to fool with small businesses because it’s the same effort for them that they have for larger bonds. The industry, however, recognized we need to do more to help small businesses.”
The industry took another look and teamed with the state and the National Black Chamber of Commerce to help small businesses gain access to higher levels of bonding and financing, which will enable them to successfully compete for larger contracts and create more jobs. MDA believes those opportunities exist. Speights points to the new courthouse facility being built in Jackson that would like to use 18% minority businesses. There’s also the new SeverCorr plant in Lowndes County and the recently-announced Toyota plant in Lee County who are looking for minority-owned businesses.
“It’s not formalized yet, but we’re getting the word out through businesses we have relationships with, news articles and the Web site. We held a kickoff with 150 businesses in February and they’re excited about it,” he said. “We have a course of instruction with eight modules that include estimating, bidding, claims and disputes. We’re working to get these businesses on their own.”
Since the construction industry is the fastest-growing industry for minorities, much of the emphasis is on that segment. Speights says the new climate is engaging general contractors and the surety industry.
“The contractors will gain information and education, and they won’t have to hunt for bonding,” he said. “The surety and fidelity industry is not doing this out of the goodness of their hearts. The association president will be back in Jackson for the first class, which we think will be in the April/May timeframe.”
He says all parties involved must get the bugs worked out in the pilot class and then replicate the class in other parts of the state. Businesses must commit time for class, but if there is any cost, it will be small. MDA is talking to bonding companies who are waiting for the state to put the program in place. It dovetails with other programs MDA has in place for business development, procurement and technical assistance.
“We hope these businesses can stand on their own without the state guarantee. We’re working with the Small Business Administration for the guarantees,” he said. “We first try to get businesses bonded on the standard market. If we can’t, then the state steps in.”
The amount of bonding depends on each business and each contract. The surety companies will dictate the level of guarantee they need to feel comfortable.
“This is a high priority thing with MDA,” Speights said. “Small businesses create most of the jobs in Mississippi and in America, so it makes good sense to do everything we can to keep them stay healthy and productive.”
He added that MDA has many ways to help, assist and certify minority and women-owned businesses. That includes a detailed certification process and procurement offices around the state to help businesses find government contracts and opportunities.
In making the bonding announcement, Harry Alford, president of the National Black Chamber of Commerce, said,
“Mississippi is taking a leadership position in the nation in the development of its minority and small business program. I am very encouraged by these efforts and am looking forward to working with the state.”
Contact MBJ contributing Lynn Lofton at email@example.com.