Business Funding Question - Business - Contractor Talk

Business Funding Question

 
Thread Tools Search this Thread Display Modes
Old 05-12-2011, 03:48 PM   #1
Pro
 
jakejorgenson's Avatar
 
Trade: GC/Carpentry
Join Date: Mar 2009
Location: Midway, Utah
Posts: 117
Rewards Points: 107

Business Funding Question


We are growing and need to get some money to help support the growth. We would like to get an unsecured loan if we can but are open to secured if we need. We have great credit and have a decent cash flow for last year. We've talked to a few places but they are pretty closed minded and don't want to lend much at all. We need money to hire another person as we have been awarded a few full home jobs and a few larger remodels and I can't handle all of it alone anymore. I do have laborers but I need more of an office person to help on that end more or a person to help manage the jobs. While we get these jobs going, cash flow will be a little tight until they are up and running so a loan would be very helpful. Anyway...where are you going for funding when you need it? Banks? Credit unions? Investors? Online banks?

Thanks and let us know what you have found helpful.
jakejorgenson is offline  

Warning: The topics covered on this site include activities in which there exists the potential for serious injury or death. ContractorTalk.com DOES NOT guarantee the accuracy or completeness of any information contained on this site. Always use proper safety precaution and reference reliable outside sources before attempting any construction or remodeling task!

   

Advertisement

 

Old 05-12-2011, 04:22 PM   #2
Roofing Contractor
 
Jason-F's Avatar
 
Trade: Roofing
Join Date: Jul 2009
Location: Red Deer Alberta Canada
Posts: 260
Rewards Points: 264

Re: Business Funding Question


Is this a situation where Money-Mart isn't gona cut it?

I usually ask my family, and for worst case have friends to fall back on. Unless you can show the bank 3+ years (some require 5) of solid contracting revenues for them to base thier decission on, you arn't going to get far. Contractors are 2 high risk for the most part.

Advertisement

Jason-F is offline  
Old 05-12-2011, 05:36 PM   #3
Pro
 
BamBamm5144's Avatar
 
Trade: Everything Exterior, Mostly Roofing.
Join Date: Jul 2008
Location: Wisconsin
Posts: 7,181
Rewards Points: 2,786

Re: Business Funding Question


It doesn't sound like you are in a situation where you need a loan...
BamBamm5144 is offline  
Sponsored Links
Advertisement
 
Old 05-12-2011, 06:22 PM   #4
Pro
 
RhodesHardwood's Avatar
 
Trade: Hardwood Floors
Join Date: Jun 2010
Location: Minneapolis
Posts: 1,146
Rewards Points: 594

Re: Business Funding Question


I do all of my banking at a smaller local bank. I personally have had better luck with loans from these type of places.
RhodesHardwood is offline  
Old 05-12-2011, 07:16 PM   #5
Pro
 
Bob Kovacs's Avatar
 
Trade: Consultant
Join Date: May 2005
Location: Holly Springs, GA
Posts: 1,221
Rewards Points: 500

Re: Business Funding Question


Your chances of getting an unsecured loan are basically nil, and even getting a secured loan will be near impossible- banks aren't lending to construction companies. Your best bet is the three F's- friends, family and fools.
Bob Kovacs is offline  
Old 05-12-2011, 07:49 PM   #6
Pro
 
DaVinciRemodel's Avatar
 
Trade: Design/Build Remodeler
Join Date: Oct 2009
Location: Denver
Posts: 6,115
Rewards Points: 1,258

Re: Business Funding Question


Quote:
Originally Posted by Bob Kovacs View Post
Your chances of getting an unsecured loan are basically nil, and even getting a secured loan will be near impossible- banks aren't lending to construction companies. Your best bet is the three F's- friends, family and fools.
I'm with Bob! But if you are going to try, you meant you are looking for funds for capital investment not labor ---- right? You are going to use the $ to buy a $80,000 tool and use your available funds to hire labor ---- right? Banks don't like to invest in labor - They quit or get fired - tools/property have value. Unfortunately there is little value in tools or property in this economy either.

Good luck!
__________________
I love what I do and I'm very good at it!

Da Vinci on the web or Da Vinci On Facebook
DaVinciRemodel is offline  
Old 05-12-2011, 08:40 PM   #7
Design + Remodeling
 
BRAVI's Avatar
 
Trade: Interior Design and Remodeling
Join Date: Jun 2010
Location: San Antonio, TX
Posts: 363
Rewards Points: 250

Re: Business Funding Question


Not going to happen. You will need to find another way.
__________________
BRAVI 15900 La Cantera Parkway, Ste 19225, San Antonio, TX 78256 (210) 690-4663

San Antonio Remodeling | Interior Design San Antonio | Facebook | Twitter
BRAVI is offline  
Old 05-12-2011, 08:55 PM   #8
Pro
 
MarkNoV's Avatar
 
Trade: Fire Alarm Systems, Fire Extinguishing Systems.
Join Date: Apr 2006
Location: Montreal
Posts: 370
Rewards Points: 360

Re: Business Funding Question


The customer, and no, I am not being facetious.

Mark
__________________
"Mine is the only economy that matters"
MarkNoV is offline  
Old 05-12-2011, 09:04 PM   #9
Every now and then poster
 
ohiohomedoctor's Avatar
 
Trade: Home Remodeling Professional
Join Date: Dec 2010
Location: Dayton, Ohio
Posts: 13,436
Rewards Points: 3,544

Re: Business Funding Question


If you need a loan to hire one office employee then you probably should not hire that person. Suck it up for a few more projects then you will have plenty of money by the sounds of it. Worse case you get a loan, hire people, then projects do not pan out exactly like you plan. Now your good credit suffers and you really, really, regret not dealing with the paperwork and phones calls for a little while longer.

http://www.ohiohomedoctorremodeling.com
ohiohomedoctor is offline  
Old 05-14-2011, 09:02 AM   #10
Pro
 
jakejorgenson's Avatar
 
Trade: GC/Carpentry
Join Date: Mar 2009
Location: Midway, Utah
Posts: 117
Rewards Points: 107

Re: Business Funding Question


Tough to just suck it up a little longer. I'm working about 16 hours a day every single day just to keep up and barely pay the bills and it has been that way for about 2 years or more. I can't take on any more volume because I literally can't do it. The other issue is that in order to get any work in our area right now you have to bid it so low you can't afford help unless you bid everything low enough to get the job. My thoughts are to bid a little lower and get the volume but high enough to pay another person to help. Otherwise, you work 16 hour days all the time and don't make and progress as a business. About 3/4 of the GC's in our area have gone on to totally different industries to work and have said they won't ever go back. Good due to less competition but bad because this happened due to such a poor market in our area. Anyway...after doing some research, it seems that the best route is through the bank we use as they gave the best rate and because our truck and trailer are paid off they will just use those as security. We can then get a line of credit loan against this where we only have to use it if we need.
jakejorgenson is offline  
Old 05-14-2011, 10:18 AM   #11
Pro
 
BamBamm5144's Avatar
 
Trade: Everything Exterior, Mostly Roofing.
Join Date: Jul 2008
Location: Wisconsin
Posts: 7,181
Rewards Points: 2,786

Re: Business Funding Question


Quote:
Originally Posted by jakejorgenson View Post
Tough to just suck it up a little longer. I'm working about 16 hours a day every single day just to keep up and barely pay the bills and it has been that way for about 2 years or more. I can't take on any more volume because I literally can't do it. The other issue is that in order to get any work in our area right now you have to bid it so low you can't afford help unless you bid everything low enough to get the job. My thoughts are to bid a little lower and get the volume but high enough to pay another person to help. Otherwise, you work 16 hour days all the time and don't make and progress as a business. About 3/4 of the GC's in our area have gone on to totally different industries to work and have said they won't ever go back. Good due to less competition but bad because this happened due to such a poor market in our area. Anyway...after doing some research, it seems that the best route is through the bank we use as they gave the best rate and because our truck and trailer are paid off they will just use those as security. We can then get a line of credit loan against this where we only have to use it if we need.
YIKES! After what you just wrote, you should go work for someone else. Your problems are much deeper than not having money my friend. If you are working 16 hours a day, booked steady and aren't making enough money then something is wrong. IF YOU NEED MONEY FROM THE BANK TO HIRE MORE HELP, YOU AREN'T READY TO GROW!!


For two years you have been barely able to pay the bills? What bank do you think will give you money? I am not trying to be mean but borrowing money to hire more help is a foolish cycle to get into.

I have a great solution that will help cure your problems.

RAISE YOUR PRICES!!!!
You will get less work so you wouldn't have to work so many hours, you would make more money and you would be less stressed.

BamBamm5144 is offline  
Old 05-14-2011, 10:51 AM   #12
New Guy
 
Accurate's Avatar
 
Trade: Home Improvement & Repairs
Join Date: Apr 2011
Location: Central NJ
Posts: 25
Rewards Points: 10

Re: Business Funding Question


Quote:
Originally Posted by BamBamm5144 View Post
YIKES! After what you just wrote, you should go work for someone else. Your problems are much deeper than not having money my friend. If you are working 16 hours a day, booked steady and aren't making enough money then something is wrong. IF YOU NEED MONEY FROM THE BANK TO HIRE MORE HELP, YOU AREN'T READY TO GROW!!


For two years you have been barely able to pay the bills? What bank do you think will give you money? I am not trying to be mean but borrowing money to hire more help is a foolish cycle to get into.

I have a great solution that will help cure your problems.

RAISE YOUR PRICES!!!!
You will get less work so you wouldn't have to work so many hours, you would make more money and you would be less stressed.

I just started my business, so I'm hardly an expert....But listen to this advise. Taking a loan to pay employees is not a good plan. What happens when you cant pay the loan and the bank takes your truck?

If you said you wanted a loan to buy better equipment, to increase productivity... sounds like a plan to generate more income.

Taking a loan to pay more out in payroll, I don't see how it will improve your situation. You'll just go broke quicker. Hire an extra employee and you added an additional salary and any associated costs, plus the loan payment. What's that going to add to your overhead? How will it decrease your profits.

If a lot of the GC's have moved on to other things, maybe its for a good reason.

If you're working non stop for 2 years and barely afloat, something needs to change.
Accurate is offline  
Old 05-20-2011, 06:23 PM   #13
Pro
 
healthyhomes's Avatar
 
Trade: GC/Carpenter
Join Date: Mar 2008
Location: Winnipeg, Manitoba Canada
Posts: 120
Rewards Points: 75

Re: Business Funding Question


Quote:
Originally Posted by jakejorgenson View Post
Tough to just suck it up a little longer. I'm working about 16 hours a day every single day just to keep up and barely pay the bills and it has been that way for about 2 years or more. I can't take on any more volume because I literally can't do it. The other issue is that in order to get any work in our area right now you have to bid it so low you can't afford help unless you bid everything low enough to get the job. My thoughts are to bid a little lower and get the volume but high enough to pay another person to help. Otherwise, you work 16 hour days all the time and don't make and progress as a business. About 3/4 of the GC's in our area have gone on to totally different industries to work and have said they won't ever go back. Good due to less competition but bad because this happened due to such a poor market in our area. Anyway...after doing some research, it seems that the best route is through the bank we use as they gave the best rate and because our truck and trailer are paid off they will just use those as security. We can then get a line of credit loan against this where we only have to use it if we need.

DONT DO IT! If your current situation cant support another employee, you are working 16 hour days, and you have all of these jobs sold, something else is wrong. Dig deeper, and find the REAL problem. If you require financing to hire someone with this type of volume, something is terribly wrong!
healthyhomes is offline  
Old 05-20-2011, 07:40 PM   #14
Celtic's #1 Fan
 
mahlere's Avatar
 
Trade: electrical
Join Date: Aug 2006
Posts: 2,582
Rewards Points: 2,000

Re: Business Funding Question


Lmao....not because he's in that situation....but because he doesn't see the problem...if you need a short term bump, look into factoring...it'll give you cash against your contracts, but not a loan....
mahlere is offline  
Old 05-22-2011, 04:42 PM   #15
Celtic's #1 Fan
 
mahlere's Avatar
 
Trade: electrical
Join Date: Aug 2006
Posts: 2,582
Rewards Points: 2,000

Re: Business Funding Question


Y'all scarce him away....good going Bob....
mahlere is offline  
Old 05-22-2011, 08:10 PM   #16
The Dude
 
smalpierre's Avatar
 
Trade: home improvement
Join Date: Jan 2011
Location: Sunny South Florida!
Posts: 2,019
Rewards Points: 1,946

Re: Business Funding Question


Thank you Bam! He was talking about bidding even lower to get jobs? Unprofitable jobs where you work 16 hours / day for nothing?

Then he's talking about making up for it in volume? It reminds me of that sig: "I lose money on every job, but I make up for it in volume"

The solution, is raise prices, and the problem isn't being short handed.
smalpierre is offline  
Old 05-22-2011, 08:16 PM   #17
Pro
 
jakejorgenson's Avatar
 
Trade: GC/Carpentry
Join Date: Mar 2009
Location: Midway, Utah
Posts: 117
Rewards Points: 107

Re: Business Funding Question


Ok. I've decided to not hire another employee to help out the situation but rather figure something else out to solve my current issues.

I agree that simply raising pricing should help (fewer jobs, better money, less time), but the issues in our market right now are much deeper than that. Nearly every client we meet with is bidding their project out to at least 6 different companies, minimum. People are so hungry that they bid the work where at the end of the day they are really losing a lot of money. They are building zero equity in the business and are in fact going negative. Those that aren't playing this game are not doing any work at all right now.

Just to give an example, we have a job we were supposed to get plans for in the next few days to bid the project. My wife was talking to the potential client as she works with him and he told her they were probably just going to go with this other builder because this other builder told them they would build their home for $250k. That builder has never done custom homes, only production homes, and has never built in the city he wants to build in. This home is about 4500 square feet! Because I know the CC&R's, have worked in this city (I live there) and have dealt with this particular area, I know they are WAY off. Problem is, they hard bid custom home jobs and give this sort of number. They don't know it yet, but they will lose a lot of money. All the spring/summer jobs in our small area are going their way because of this so they will have taken most of the work for our area. Meanwhile, all the other local contractors are going to work other jobs and shutting completely down because this builder and one other builder that is doing the same thing is pushing everybody else out of business. It will come back around when they don't perform and lose money on every job, but that might take a while for them to realize because they have very deep pockets.

For one of my CE classes I just went to they discussed higher frequency of trying new things, getting rid of them if they don't work, and keeping those that do work, all very quickly. I couldn't help but apply this to bidding projects as well. I think we should try and bid more work (better marketing efforts up front to get more chances to bid) and get fewer jobs but get jobs that actually make a little money.

Thanks for the thoughts everybody.

Advertisement

jakejorgenson is offline  


Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes Rate This Thread
Rate This Thread:

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Business Name for General Contractor cueball707 Business 13 04-16-2010 11:49 PM
Painting business start-up questions oneelwayfan_com Painting & Finish Work 56 02-02-2010 01:55 AM
Looking to start plumbing business chambers1208 New Member Introductions 4 09-07-2009 11:39 PM
How much will you pay for a business system? MOTB Technology 7 05-28-2009 09:49 AM

Join Now... It's Fast and FREE!

I am a professional contractor
I am a DIY Homeowner
Drywall Talk is for
PROFESSIONAL CONTRACTORS ONLY!

At DrywallTalk.com we cater exlusivly to professional contractors who make their living as a contractor. Knowing that many homeowners and DIYers are looking for a community to call home, we've created www.DIYChatroom.com DIY Chatroom is full of helpful advices and perfect for DIY homeowners.

Redirecing in 10 seconds
No Thanks
terms of service

Already Have an Account?