LAWA LAUNCHES FINANCIAL ASSISTANCE PROGRAM FOR CONTRACTORS
05/20/2021 02:45 PM
FOR IMMEDIATE RELEASE
May 20, 2021
LAX Public Relations
LAWA LAUNCHES FINANCIAL ASSISTANCE PROGRAM FOR CONTRACTORS
Pilot program addresses funding gap affecting
underserved small construction firms
Crews work to lay the foundation of the Intermodal Transportation Facility-West site in December 2019. The Contract Financing Assistance Program allows small firms working on LAWA projects to apply for loans to cover a variety of contract expenses as needed.
(Los Angeles, CA) With the launch of a pilot program to provide better access to capital assistance, small firms looking to do business with Los Angeles World Airports (LAWA) can overcome one of the most common barriers to competing for airport contracts — lack of financing.
LAWA's new Contract Financing Assistance Program (CFAP) offers loans to small construction contractors to be used for meeting construction contract funding requirements. This new program aims to address the financing gap that affects many small, local and diverse construction contracting firms, which historically have been underserved by conventional lending institutions.
"LAWA strives to build airports that reflect the diversity of our city. And as a public platform, the benefits from improving LAX should be consistent with that diversity, which includes increasing opportunities at our construction sites," said Commissioner Karim Webb, Los Angeles Board of Airport Commissioners. "This program enables small and diverse companies to compete for lucrative airport contracts, allowing a greater proportion of our community to prosper from building the future of our airports."
"LAWA's Contract Financing Assistance Program will help small and diverse construction firms that historically have had limited access to funding get the financial backing they need to compete for contracts at our airports," said Justin Erbacci, Chief Executive Officer, LAWA. "Otherwise qualified and talented firms should not have to miss out on opportunities because of a lack of financing and we are proud to offer a resource that will allow them to help drive LAX's modernization."
The assistance program is designed to increase contractor diversity and ensure wider access to opportunities at LAX and Van Nuys (VNY) airports.
CFAP funding offers benefits for both contractors and LAWA. For contractors, the program provides an alternative to taking out personal loans or using high interest credit cards and can reduce reliance on conventional lending services. Contractors receiving CFAP funds not only will build capacity to strengthen their businesses, but can also use the funds to establish or enhance credit history, making them more eligible for commercial lending. For LAWA, the program aims to increase the number of qualified firms that are able to pursue contracting opportunities.
"Access to contract financing is a game-changer for small contractors in the public works arena," said Ingrid Merriwether, President and Chief Executive Officer, Merriwether & Williams, Program Administrator. "The CFAP program directly aligns a funding source parallel to a contractor's cost of performing the work, ensuring peace of mind for both the client and contractor."
Contractors applying for CFAP funds begin with an assessment of their capacity to meet a bid's requirements before bidding on it. The assessment identifies what the contract cash flow requirements will be for contract costs such as project labor, materials and other areas specific to the contract, with a pre-approval for funds issued upon the assessment's successful completion. CFAP loans are ultimately approved following a winning bid, with funds released for contract expenses as needed.
Loans are issued at a fixed 6.25 percent annual percentage rate (APR), plus a 1 percent origination fee. Amounts are up to $250,000 plus interest.
"Providing the region with contract funding support in partnership with LAWA and the Contractor Development and Bonding Program is a product of Public-Private Partnership innovation to help remedy the systemic lack of capital access to small and minority contractors," said Kerry Doi, President and Chief Executive Officer, PACE Finance Corporation.
The CFAP is a partnership among LAWA, PACE Finance Corporation and Merriwether & Williams Insurance Services. PACE Finance Corporation provides funding for the program and Merriwether & Williams administers the program with LAWA.
LAX, the third-busiest airport in the world and second busiest in the United States in 2019, is in the midst of a $14.5-billion capital improvement program that will touch on all nine passenger terminals and build new facilities, including an Automated People Mover (APM) train, Consolidated Rent-A-Car (ConRAC) facility and a 12- to 15-gate Bradley West Gates addition to the Tom Bradley International Terminal.
In 2019, LAX served nearly 88.1 million passengers and offered an average of 700 daily nonstop flights to 113 destinations in the U.S. and 1,200 weekly nonstop flights to 91 markets in 46 countries on 72 commercial airlines.
LAX generates 620,600 jobs in Southern California, with labor income of $37.3 billion and economic output (business revenues) of more than $126.6 billion, according to an economic study based on 2014 operations. This activity added $6.2 billion to local and state revenues and $8.7 billion in federal tax revenues. The study also reported that LAX's ongoing capital improvement program creates an additional 121,640 annual jobs with labor income of $7.6 billion and economic output of $20.3 billion; $966 million in state and local taxes; and $1.6 billion in federal tax revenues.
LAX is part of a system of two Southern California airports – along with Van Nuys general aviation – that are owned and operated by Los Angeles World Airports (LAWA), a proprietary department of the City of Los Angeles that receives no funding from the City's general fund.
LAWA is leading the aviation industry in sustainability practices, with initiatives related to water management, energy (electricity) management, air quality, recycling and natural resources management. In 2019, LAX received Level III ACI Airport Carbon Accreditation from Airport Councils International-Europe.
LAWA is also a leader in inclusivity, operating eight programs that provide opportunities for business enterprises including local, small, minority-owned, veteran-owned and disadvantaged firms, and working together with community partners to offer the HireLAX Apprenticeship Readiness Program, which targets local workers to make them ready for rewarding careers in the construction trades, and the Build LAX Academy, designed to prepare small contracting businesses for success when working on projects at LAX.
LAX was named a top-10 U.S. airport by SKYTRAX in 2018, and was honored as the "Most Innovative Airport for Passenger Experience" in 2019 by the American Association of Airport Executives. LAX is the second-most popular airport in the world to appear on Instagram, according to wego.com. Other recent honors have included selection as the No. 9 Best Airport (Wall Street Journal); No. 7 Best On-Time Performance for a Mega-Hub Airport (OAG); one of "The World's Best Airports for Business Travelers" (GlobeHunters); Public-Private Partnership of the Year (P3 Bulletin); Urth Caffe, Best Airport Coffee Concession of the Year (Global FAB Awards); Innovation of the Year, Consolidated Rent-A-Car Facility (ARTBA); Best Project, United Airlines Terminal 7 and 8 Redevelopment Program (Engineering News Record California); North American Public-Private Partnership Deal of the Year (IJ Global); and Innovative Transportation Solution of the Year, Automated People Mover (WTS LA).
As a covered entity under Title II of the Americans with Disabilities Act, the City of Los Angeles does not discriminate on the basis of disability and, upon request, will provide reasonable accommodation to ensure equal access to its programs, services, and activities. Alternative formats in large print, braille, audio, and other forms (if possible) will be provided upon request.