Spring 2009

Contract Lending – A Lifeline for Contractors

In tough financial times, access to capital can be an obstacle for contractors bidding on jobs. Contract Lending provides an opportunity for business owners to borrow against contracts that have been accepted.

Having the confidence to bid on a project, knowing that funds will be available to pay for materials and manpower can increase the number of bids a contractor pursues, increasing the odds of success. Having access to a contract loan is also an excellent marketing tool for your business.

The availability of a contract loan for the sub-contractor adds a level of confidence for the construction manager, providing the security of lowered risk. Business owners seeking contract lending should know the amount of the bid, how they will use the funds (payroll, equipment, bonding, etc.) and meet with a loan officer in advance. The following documents are necessary to ensure the business meets the loan qualifications:

• Three years of personal and business tax returns
• First and second quarter Income/Profit & Loss Statements
• Year-end Balance Sheet
• Personal Financial Statement
• Copy of the awarded contract
  

Contract loans normally are up to 50% of the total contract. However, amounts can vary and depending on the size of the loan requested, the process can take from a few days to a week.

For more information about opportunities for contract lending, call the Ohio River Bridges Project’s KY DBE Program Manager at 502-499-9440.

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