Stepping Up $$$$$

ZeroTolerance

I have not posted to much on here but I find myself in a position where I need information. here is the situation, I have an inside line on a big project 100 plus kitchens worth of cabinets. I have a supplier that can handle that volume without batting an eye. I also have a pretty good group of guys to do the install. the problem that I am facing is a financial one. the credit lines that I currently have in place will not be able to handle this situation. I have an excellent relationship with my banker but when I have tried in the past to increase the credit lines I was told to hawk my personal assets "heloc" type product. how do I step up financially to get through this situation?

tgeb

Get some money up front.

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Tom

www.gebcon.com

plazaman

Money upfront,

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mdshunk

Either that, or get a down payment.

BreyerConstruct

Get a different lender...
But remember you're increasing the risk to take advantage of the opportunity.



~Matt

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ZeroTolerance

the product must be paid for 100% up front I am in CA. can you guys give me some examples of payment schedule that are legal an acceptable on this level?

GreenW00D

it wont help you in the short term but its not hard to build business credit without a personal guarantee over the course of a year. there is a forum called creditboards that has alot of information on how to build business credit, not that you should operate your business on credit but being able to utilize it to secure larger projects is smart business imho

you should knows your business credit standing just as your personal. If you have a thin file your not going to find many lenders willing to take a shot with you. bankers are risk adverse, with a little time though (this also depends on your time in business) you could have 250k-1mil in financing options avail.

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jensenconstruction

Zero,

100 kitchens qualifies as commercial so there are no restrictions on your down payment or progress payments. The restriction in California only apply to residential home improvement work.

I'm in the San Francisco area and very fluent in the California laws regarding Home improvements and payments. If you'd like more info or have specific questions you can PM me or post them here, or if you'd like to talk to me about it PM me and I'll send you my number.

Jeff

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Jensen Construction & Painting
San Francisco Bay area Remodeling
Bay area Painting

Luke

Are the kitchen installations going to be spaced out over a certain period of time? If so, get downpayments on a group and order the kitchens in smaller packages of maybe 5-10 at a time. Without knowing your payment schedule and cabinet costs it is difficult in this forum to help in any kind of detail but you should be able to calculate your lead time and order accordingly so that you only have the money out for the bare minimum of cabinets you need for a certain period of time. As you complete the installations, invoice and receive payments, part of the funds received are used to purchase the next group of cabinets. I also find it strange that your supplier will require 100% up front for the cabinets. All of our cabinet suppliers require 1/3 down and balance upon delivery and with high-end custom cabinets 50% down and balance on delivery. I don't count Home Depot or Lowes as one of my kitchen suppliers because I do believe they require 100% deposit and I won't play that game.

Mr. Corporate

I don't understand what the issue is. I never use any of my own money to finance jobs. Just get your supplier to extend credit. If the amount is huge, ask them to consider joint checking - a contract that your client signs, by which he agrees to issue all payments to your supplier, at which point your supplier will issue the balance to you. This essentially guarantees them payment. This shouldn't be necessary, but if you're looking to take on a job that's 5x your current max credit limit, it's a good way to make things work.

L. B. Condulet

I am unaware of the "100 kitchens is a commercial job" regulation, I highly doubt such a rule exists. And to be more specific about the "10% down or $1000, whichever is less" down payment rule in California, it is for Prime Home Improvement Contracts. If you are a sub contractor, you are not bound by this restriction...

jensenconstruction

L.B.

Your right there is no 100 kitchen rule per say. I assumed that 100 kitchens was either an apartment complex or possibly a new housing development and they both qualify under the law as commercial. the apartments because they are a for profit operation and the new housing because they are being built by a developer for sale and not for an individual home owner.

You are also correct that the 10% $1000 rule only applies to prime contractors and not subcontractors.

However I don't know many general contractors who are going to be handing out large deposits out of there own pocket, short of possibly some special order material. That $1000 barley covers the permit fees.

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San Francisco Bay area Remodeling
Bay area Painting