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Message
Funding Sources
Posted on 6/20/15 at 10:12 am
Posted on 6/20/15 at 10:12 am
OK, so I have a thriving construction business with a huge receivable and a nice backlog of contracted business.
My personal credit score is not great, though I've never had any bankruptcies, repossessions, or derogatory filings.
Nonetheless, obtaining an LOC seems impossible. If you can prove to the bank that you've never needed money, don't now and will not ever in the future for any reason need money then they'll loan it to you, otherwise...
MY company is profitable and has a huge potential for growth and even greater profits but I need to be able to carry large projects through 45 and 60 day pay cycles.
Any thoughts from the Money Mavens?
My personal credit score is not great, though I've never had any bankruptcies, repossessions, or derogatory filings.
Nonetheless, obtaining an LOC seems impossible. If you can prove to the bank that you've never needed money, don't now and will not ever in the future for any reason need money then they'll loan it to you, otherwise...
MY company is profitable and has a huge potential for growth and even greater profits but I need to be able to carry large projects through 45 and 60 day pay cycles.
Any thoughts from the Money Mavens?
6
Posted on 6/20/15 at 10:32 am to More&Les
Check out Creditera.com
Posted on 6/20/15 at 10:45 am to More&Les
You should be able to locate a bank that does factoring. They will give you x amount of your receivables. With your construction company you should be able to progress bill. If you can't locate a bank there is several factoring companies you should be able to contact. They usually require your receivables to be mailed to them.
Posted on 6/20/15 at 10:54 am to More&Les
Try contacting a local or state wide bank. They will typically offer you a line of credit with a maximum up to 80% of your receivables. You will need to prepare interim financial statements each quarter and submit yearly financial statements. Depending on your situation they will most likely secure the LOC with a IDOT (Indemnity Deed of Trust) on your house and personal assets which will be reflected on the personal financial statement you will need to submit to the bank.
Posted on 6/20/15 at 5:39 pm to More&Les
How long have you had the business? We obtained a LOC for our company earlier this year. We did have to submit a personal financial statement but the LOC was issued on the merit of the company. Two years tax returns and a YTD P&L were required.
Best of luck to you.
Best of luck to you.
Posted on 6/20/15 at 6:17 pm to More&Les
Maybe consider taking in an investor or two
Posted on 6/20/15 at 7:41 pm to yellowfin
Ehhhhh give up equity when all he needs is funding? I would do that as a last resort.
Posted on 6/20/15 at 7:53 pm to More&Les
You wanting to sell receivables or just take out of a LOC?
Posted on 6/20/15 at 8:03 pm to Jabstep
Sounds like he's down to last resort if he can't get approved for funding.
Posted on 6/20/15 at 8:26 pm to yellowfin
I'm not sure he's tried. If he can't and the business is as solid as he indicated he may need to look at how his books are done. If you want money from a bank you need to run the company finances properly.
Posted on 6/21/15 at 6:13 pm to VABuckeye
Thanks for everyone's insight...
I have tried traditional sources and don't think I'm going to get a bank on board.
I don't want to factor (expensive and negative image to clients) and I probably don't want to give up equity. (Would consider under the right circumstances but I would hesitate to give up a lot for short term cash...)
The company is profitable and I have a solid book of contracted business. The challenge is that the business (6 years old) was a single owner until I joined last year and she only did about 300/400k year, last year we did 2.9 and we will double that this year.
Generally we do fine with Cash flow but I just finished a slow paying huge project and have two more large projects rolling.
Ultimately, I just need an LOC to help finance large projects on the front end but that seems to be hard to come by...
I have tried traditional sources and don't think I'm going to get a bank on board.
I don't want to factor (expensive and negative image to clients) and I probably don't want to give up equity. (Would consider under the right circumstances but I would hesitate to give up a lot for short term cash...)
The company is profitable and I have a solid book of contracted business. The challenge is that the business (6 years old) was a single owner until I joined last year and she only did about 300/400k year, last year we did 2.9 and we will double that this year.
Generally we do fine with Cash flow but I just finished a slow paying huge project and have two more large projects rolling.
Ultimately, I just need an LOC to help finance large projects on the front end but that seems to be hard to come by...
Posted on 6/21/15 at 6:17 pm to More&Les
Work with your suppliers. If you share numbers they might offer better terms.
After another year or two that LOC should be easy to get. I operated for five years at a moderate growth rate before I took the plunge.
After another year or two that LOC should be easy to get. I operated for five years at a moderate growth rate before I took the plunge.
Posted on 6/21/15 at 6:23 pm to VABuckeye
yea, I've got pretty good terms and most of my suppliers will JCA and 'wait' with me for large projects.
I was just trying to figure out how to get a little short term flow without selling the farm...
Thanks again.
I was just trying to figure out how to get a little short term flow without selling the farm...
Thanks again.
Posted on 6/21/15 at 7:12 pm to More&Les
Maybe offer trade discounts on receivables? I mean, if you're down to last resorts....
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