It is not easy for Black-owned general contractors to break into the construction industry.
The industry is highly competitive, built on relationship referrals and largely consists of white-owned fi rms. Those companies that have broken through have typically not lasted longer than a decade, lacking the business networks, consistent workload and access to capital to be successful.
Over the past 13 years, JCP Construction has defied the odds and made a name for itself in Milwaukee. Started by brothers James, Clifton and Jalin Phelps, JCP originally focused on residential renovations but has grown steadily and expanded into commercial, health care and larger corporate projects. In recent years JCP has contributed to projects that have dramatically changed Milwaukee’s built environment (Northwestern Mutual’s downtown tower and Fiserv Forum) while also helping improve the Harambee neighborhood in which the brothers grew up (Bader Philanthropies and Pete’s Fruit Market).
The past two years have been trying for JCP, but the brothers are ready to take their business to the next level, thanks in part to a $1.54 million loan from the Greater Milwaukee Foundation’s impact investing program. The program provides loans and equity investments that generate both a financial and social return; it is designed to help build stronger equitable economic opportunities in Milwaukee.
Investing in the future “It allows us to put more money into the business as opposed to paying the bank,” said James Phelps, JCP’s president. The company was in conversations with a bank, but Phelps said the Foundation’s offer was more attractive, given the interest rate and amortization schedule. The brothers closed on the loan, which has a fixed rate of 2 percent, in March 2022.
The Foundation chose impact investing as one of its main campaign priorities knowing that while our community is brimming with talent and assets, in too many places, the lack of capital holds back economic opportunity.
That working capital is key for a firm like JCP, which the brothers started by pooling together $50,000 from their individual 401ks. While they have built up equity over time, external capital investment is important to sustain and grow their business, especially when community conditions change. In 2020, JCP won the general contracting bid for the Democratic National Convention, which eventually ended up becoming a largely virtual event. The firm had several projects planned in 2021 that did not materialize due in part to the pandemic.
JCP has more than $22 million in projects projected for 2022, including a role in ThriveOn King, the Foundation’s new headquarters at 2153 N. Martin Luther King Jr. Drive, and hopes to expand its reach outside of Milwaukee. In addition to building capacity by hiring additional office staff and field workers, JCP will use the loan to finance equipment for concrete projects, which make up 40 percent of its business.
“This loan gives us the opportunity to operate from a position of strength,” said JCP co-owner Clifton Phelps. “It allows us to sharpen our talent pool in the office and increase our capacity — which equals more jobs, which equals more paycheck dollars going to disenfranchised folks in the city of Milwaukee through our Black and Brown workforce.”
JCP’s track record, plans for growth and dedication to developing a workforce that reflects the community it serves were key motivators for the Foundation, said Kermiath McClendon, impact investment manager.
And while it is one of the Foundation’s largest loans, McClendon says the potential for impact far outweighs any risk.
“There are a lot of challenges for minority-owned companies to grow because lack of access to capital and systemic racism. JCP has the potential of being one of the largest minority-owned companies, not just in Milwaukee but in the Midwest,” McClendon said.
“We need to make more risk-type deals than average fi nancial institutions in order to make the impact we want to see.”