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Why Construction?

As you are aware, funding the accounts receivable of a construction contractor is a difficult business that is avoided by most factors and asset based lenders? Only the largest and most stable of these firms qualify for bank funding. What about the other 90% of the firms operating in this industry? It makes no sense to us that skilled contractors in a booming industry are essentially "cut-off" from the type of asset-based facility that have been proven in other industries to help companies grow and prosper.

Why can't contractors obtain adequate funding?

Progress billing, mechanics liens, retention, bonding issues, detailed contractual agreements, liquidated damages, "pay-as-paid" practices...all of these unique industry practices create challenges that make it difficult to lend against accounts receivable. Most factoring companies just want to "buy paper", and they lack the specialized knowledge required to deal with the legal and constitutional issues that exist in construction.

How do we do it?

We have built our knowledge and experience over many years of servicing suppliers and contractors. Thanks to an emphasis on client service and a "relationship lending" approach, we have gained the benefit of valuable feedback from our clients and their customers about what "works" and what doesn't.

The result is an approach that combines collateral management with knowledge of the industry and coordination with our client's business plan. Our services are structured to net the client higher levels of available funding than they are likely to find from any other source.

What makes us different from our competition?

Other factors take a "sledgehammer" approach to construction loans. They will finance an invoice only with a signed "no offset" letter from each project manager. They do this on every invoice. Imagine the disruption this can cause, not to mention the "red flag" that is likely to catch the attention of the project owner.

We think this approach is absurd. We reject the heavy-handed verification techniques employed by these "invoice discounters". Our programs have the look and feel of a bank line of credit, only with far greater availability and flexibility.

What are the benefits?

There is a clear-cut need for working capital funding amongst construction contractors. These are labor-intensive businesses with weekly payroll demands, yet their receivables can drag beyond thirty and sixty days. With the threat of mechanics liens or contract default due to job interruption, stretching payables with sub-contractors or suppliers is not a viable option.

Our typical client is a sub-contractor who was forced to turn away from lucrative opportunities because of concerns about managing the burden of carrying the receivables. Our services grant these clients leverage to take on the extra work and increase profitability.

What are the costs?

Our services are typically structured as prime-based lines of credit with a collateral management fee component. Actual pricing depends on a number of factors including client credit profile and accounts receivable creditworthiness. We make every attempt to propose pricing that meets the needs of the client, with the goal of offering a service whose costs will be more than offset by the benefits and opportunities afforded. Typical funding charges run between 3-4% of the invoice amount.

Who will qualify?

We are looking for experienced, reputable firms with a defined industry specialization, a healthy backlog of work and the potential to grow. They must be capable of providing accurate financial and job status reporting. Ownership should have a clean background and good credit.

Because of the statutory concerns regarding construction receivables, application standards in this industry are higher than in traditional factoring. Companies with tax liens, extremely delinquent payables, or unresolved operational problems that are likely to result in continuing losses and negative cash flow may not qualify for this program.

Other benefits and services

We provide full accounts receivable bookkeeping, credit and collection management services and web-based reporting, all at no extra cost.