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23 DISADVANTAGED BUSINESS ENTERPRISE An applicant must have a transportation-related contract. BONDING ASSISTANCE An applicant must have current certification as a DBE by any agency applying U.S.DOT certification guide- The U.S.DOT OSDBU administers a bonding assistance pro- lines (49 CFR 26). gram through a number of selected surety bond providers. It is recommended that a business have at least a 3-year Elements of the U.S.DOT OSDBU bonding assistance pro- past performance history before applying to the program. gram are described as follows (http://osdbuweb.dot.gov.): The bonding program offers certified minority, women- The STLP is administered by the OSDBU through coop- owned, and DBEs an opportunity to obtain bid, pay- erative agreements with six regional banks. Loan documen- ment, and performance bonds for transportation-related tation and financing transactions are performed by the STLP projects. bank, which offers the line of credit. The maximum line of The program provides an 80% guarantee against losses credit is $750,000. Money borrowed under the lines of credit on contracts of up to $1,000,000 and approved surety is to meet the short-term costs of performing the contract(s) companies perform bond approval and issuance. being financed. Owing to the STLP structure and the short- Funding for the guarantee is provided by the U.S.DOT term nature of borrowings, funds are not available for OSDBU and is administered by local bond agents that are located in designated areas of the country. Contract mobilization, Bond applications may be obtained from designated Equipment purchases or other long-term uses, local bond agents or from the OSDBU. Refinancing of existing debt, Payment of noncurrent taxes, and Eight STAs indicated that they had an active DBE bonding Distributions or other payments to stockholders. assistance program. Of that group, only four affirmed that the bonding assistance program has reduced bonding difficulties. Eight STAs indicated that they had supportive services agree- Funds may be borrowed against each invoice of the con- ments or business development groups that aided DBE and tract(s) being financed. Repayment of the short-term loan small non-DBE firms to prepare for bonding submission. occurs when the project owner or prime contractor pays the subcontractor's invoice. Payments are made jointly to the bor- rower and to the STLP bank. Payments are sent to the bank, SHORT-TERM LOAN PROGRAM which repays the amount borrowed against the invoice and transmits the balance to the borrower. The line of credit nor- Undercapitalization has long been a problem for small busi- mally covers a 1-year period and one or more renewals may nesses. As shown in Figure 7, most STAs do not support be requested, with the maximum length of time in the program their own short-term loan programs (STLPs) for DBE or being 5 years. Contact information and other details can be non-DBE firms. obtained at the OSDBU website, http://osdbuweb.dot.gov/. The U.S.DOT OSDBU also developed a short-term lend- New York has alternate short-term working capital loan ing program to ease the cash flow problems that most small programs available to DBEs. The following description is contractors experience. However, this is not a program for from the STA website: new contractors. The basic qualification requirements are as follows: (1) A joint program of the New York State Department of Transportation [NYSDOT] and the AlbanyColonie Regional Chamber of Commerce. No Yes Response Goal: to provide access to capital for women and minority- 9% owned businesses in Albany, Schenectady and Rensselaer Coun- 3% ties that have secured NYSDOT contracts but are unable to obtain traditional working capital financing. Provides working capital loans of up to $25,000 to qualified business owners. Funds can be used to assist in the timely dis- bursement of employee wages and the purchase of supplies, allowing companies to complete current contracts and bid on more competitive jobs in the future. No (2) Transportation Loan Program: This program is administered 88% by NYSDOT and the Empire State Development Corporation. It offers financial assistance in the form of working capital loans to FIGURE 7 State-administered short- small business and certified minority-owned and woman-owned term loans. business enterprises participating on NYSDOT contracts.