Tags: Business Loans

If you are looking for your path to success as a small business, you need to know how to find the right funding solutions to carry your operation from draw to draw.

That’s why we have been putting together research and insights like this case study that show you how you can strategize with us to create a plan for your company that lets you ride out the period between draws so that you have the working capital you need to keep your operation growing.

Working out that plan means getting the chance to place government bids for contract opportunities without having to worry about the down time before your project actually begins.

The Situation at Hand

Dennis is one of our customers who managed to build a business on the back of government contract opportunities and a sound financial plan. He is an electrical contractor, and he specializes in large, commercial jobs.

These jobs tend to be fairly lucrative for experienced contractors like Dennis, but their pay days are widely spaced apart, so working capital tends to be an issue. He works with a number of general contractors to find jobs, so he does not need to hunt down many government contract opportunities for himself because his business has been built on word of mouth. 

Despite his success, though, Dennis does have a challenge. When he accepts these referrals, he has to agree to payment terms that often keep him waiting for 60 to 90 days after the completion of a job before he gets paid.

This wide window is what makes it possible for general contractors to work with qualified subcontractors like Dennis, but it presents a very large problem for his cash flow as he attempts to run a business and household.

The Solution to Dennis’s Problem

What Dennis needed was a financial partner who realized that his loan needs were not a one-time investment and that his business cycle was sustainable. That’s where Express Capital Funding came in. We set Dennis up with a working credit line that allows him to pay out his payroll and materials expenses while he waits for the larger payments for each job to come in.

This credit line took the place of periodic working capital loans, allowing him an easy way to access the funds he needed each time he needed them and providing him with a discounted insurance rate at repayment.

Measuring the Success of Working Capital Loans

When you run a business that requires you to wait a long time between payouts, the best way to measure your success is to measure the capital available to you when you need to borrow. That’s because most companies will use their credit lines to fund new projects so that their cash reserves remain stable.

Our customers are no exception, and Dennis saw his line grow from $25,000 at the outset to over $125,000 after seven successful loans and repayments. Our review of his progress as he applied for each subsequent loan was able to see clearly how having a smooth path to paying out his people made Dennis a success.

Applying Lessons Outward

A working credit line from Express Capital Funding can provide contractors in any specialty with the flexibility they need to be able to successfully build their businesses. Even if your particular approach uses a different method for generating job leads, there are ways that our credit lines can work easily for you.

In fact, for those who have to rely on multiple avenues of advertising for their incoming work, these loans can be even more effective, because they can buy you the time you need to put in government bids and get the contracts that will raise your profile.

This is possible because your credit line can keep you working and keep the lights on while you focus on writing those bids and visiting potential job sites or clients to discuss the work at hand.

That means you can buy the time you need to employ various strategies proven to get you work, including:

  • Advertising locally through mainstream brick and mortar channels, including billboards and print advertising.
  • Building leads through word of mouth referrals by establishing a large professional network among area contractors and in your community.
  • Actively participating in government at the local, state, and federal level so that you are aware of any opportunities to place bids in your areas of expertise.
  • Employing digital marketing help to make sure you rank highly for relevant local contractor searches.

All of these strategies require working capital to get off the ground, and they all require the time to put into place.

Whether you give them that time yourself or hire outside contractors to help build your business, you will need to have the cash to cover expenses during that time. If you are doing the work to drum up your own leads, that means you will need to cover for that loss of productive time, so you may wind up hiring help anyway.

Either way, having the right financing is the key to your success, because it means you will be better positioned to get the jobs when you bid.

How to Increase Your Odds When Bidding

Whether you are putting in government bids or you’re working to impress private customers and other contractors with your ability to deliver, there are a few key ways you can make sure you are prepared.

  • Know Your Business: You’ve got to be able to deliver details on demand when you talk to clients, because you need to know your business better than anyone to get ahead.
  • Be Aware of Your Advantages: If you are trying to build your business, your operation has some advantages over larger operators, and you need to know when to bid and how to bid to use the versatility that comes with your smaller economic footprint.
  • Be Read for Paperwork: When you work with governments and large corporations, there will be a lot of paperwork to cover.
  • Be Prepared: Make the smart choice to obtain a working capital loan to help cover expenses.

When you put these principles together with a sound financial strategy and access to the right credit sources, success is just around the corner.


Additional Resources

5 Revenue Building Tips Every Contractor Should Know

5 Facts to Consider When Bidding on a Construction Project in 2017


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