question to business owners?

[whiteworks]

I have the chance to bid on a very large project "to me", the problem is I do not have sufficient operating capitol for a project of this size. is there a way to establish a line of credit based on the particulars of the project? I really don't want to leverage my personal assets, I don't think that would cover it anyways. I cannot walk away from this until every option has been explored. this project is going to happen with or without me and I need to step up and make this happen. btw the way the way some of the proceeds from this job will be used for a new boat so this is directly boating related:D .

[burtandnancy2]

I was going to offer to back you, until you said you'd use some of your earnings to buy a boat. Bad idea...

[whiteworks]

I was going to offer to back you, until you said you'd use some of your earnings to buy a boat. Bad idea...
you dont like boats? :D

[squirt'nmyload]

I was going to offer to back you, until you said you'd use some of your earnings to buy a boat. Bad idea...
unless it's the lucky strike :D .....whatever happens i wish you the best of luck dylan :)

[whiteworks]

unless it's the lucky strike :D .....whatever happens i wish you the best of luck dylan :)
funny you mention the luckystrike that is exactly what I had in mind:D :D

[ChumpChange]

I have the chance to bid on a very large project "to me", the problem is I do not have sufficient operating capitol for a project of this size. is there a way to establish a line of credit based on the particulars of the project? I really don't want to leverage my personal assets, I don't think that would cover it anyways. I cannot walk away from this until every option has been explored. this project is going to happen with or without me and I need to step up and make this happen. btw the way the way some of the proceeds from this job will be used for a new boat so this is directly boating related:D .
There are companies that will finance contracts. Getting one to do it without a personal guarantee is a whole different story though. Depends on the business you are in and plenty of other variables.

[Big Inch]

A contract can be seen as an asset that can be leveraged against. Of course you would first need to obtain the contract. If it was me I would not let that stop me from bidding on the job. As chump change stated you probably would still need to be a guarantor on the loan. In my prior business I never let something like this stop me. The only time I wasn't able to get it done on my own I just subcontracted the work to a larger company that was capable of handling it for a negotiated price.

[TCHB]

Like others hav said you can use a strong contract to pull in cash for short term needs.

[YeLLowBoaT]

All depends on how your set up... If your set up as a corp ( 90% of the time you should be) its normally not a prob. All depends on the contract.

[scooooter7]

Who's got a contract on who? Oops, wrong thread, sorry.

[whiteworks]

so as you guys can tell I am out of my comfort zone on this deal. usually I can fake it pretty well but this is big. I am pretty sure that I should have the contract and possibly the proposal drawn up professionally. any recommendations on a good contract law attorney in socal area?

[Cole]

If I can ask, what kind of business is it? You might want to speak to a factor and get an Idea what they will charge ...It is generally VERY expensive about 3% per month which is equivalent to 36% per year, however this might be your only option. Like Chump change said you will probably need to provide a "personal guarantee".
Good luck

[whiteworks]

construction related, I really cant see the finance period running more than 90 days. I guess it will depend on payment schedule.

[HighRoller]

Yime for 'ol Hr to play Devils' advocate. When considering this deal, the FIRST thing you should think about is your exit strategy if everything goes in the crapper. The last thing you want is to be left with a huge note that is tied to you through a personal guarantee. And don't be fooled, unless you are an established Corp, you WILL be signing your name somewhere on the loan papers. That means if the contract evaporates you and all your personal effects will be on the menu for the creditors while you litigate. If you don't have the cash to operate for 6 months in the beginning of this deal, WALK AWAY. There are no guarantees in business, even on paper.
How to avoid this? Well, get a huge advance from the company you are contracting with. Think of it as a down payment that they would not want to walk away from. Second, if you are not comfortable with the scope of this transaction, WALK AWAY. A secure businessman does not walk into a deal that he feels is biting off more than he can chew in hopes that things work out "right". They rarely do! Third: ask the company to take on the financial risk and contract you to be supervise "their" operation. If you have the technical chops but lack the deep pockets this is the best option. If they refuse, they are probably looking for a fall guy to eat the loss on a high risk endeavor.
Remember, risk is inverse to reward. A HUGE contract has HUGE financial pitfalls. Are you willing to bet your future on it??????????The best way to get rich quick...is to get rich slow:idea:

[Cole]

construction related, I really cant see the finance period running more than 90 days. I guess it will depend on payment schedule.
If it is materials for construction what about home depot credit 6-12 months credit deferred....

[YeLLowBoaT]

FYI If its a public works job, financing is a cake walk.
If it has anything to do with housing, Its going to be very hard to get financing. Comm'l is about the same at this point.( unless its for a very big corperation)

[YeLLowBoaT]

If it is materials for construction what about home depot credit 6-12 months credit deferred....
have you ever looked at thier prices compared to other vendors? ( or thier intrest rate if its not paid off by them... its 28% I get an offer atleast once a month from them)Thier prices really do suck.

[Cole]

have you ever looked at thier prices compared to other vendors? ( or thier intrest rate if its not paid off by them... its 28% I get an offer atleast once a month from them)Thier prices really do suck.
Im not in the construction business, so I am not familiar with "retail" pricing of home depot...I dont know the magnatude of the job so I was throwing out ideas. But you are right, if its a major contract he could definetly find better financing!

[whiteworks]

the actual task at hand is somthing that I am completly comfortable performing and do it daily on a much smaller basis. the shear volume of product to be purchased 100% up front is the problem. its all about the cash flow
HR- I am definatly hearing you on this,

[WishIknew]

Yime for 'ol Hr to play Devils' advocate. When considering this deal, the FIRST thing you should think about is your exit strategy if everything goes in the crapper. The last thing you want is to be left with a huge note that is tied to you through a personal guarantee. And don't be fooled, unless you are an established Corp, you WILL be signing your name somewhere on the loan papers. That means if the contract evaporates you and all your personal effects will be on the menu for the creditors while you litigate. If you don't have the cash to operate for 6 months in the beginning of this deal, WALK AWAY. There are no guarantees in business, even on paper.
How to avoid this? Well, get a huge advance from the company you are contracting with. Think of it as a down payment that they would not want to walk away from. Second, if you are not comfortable with the scope of this transaction, WALK AWAY. A secure businessman does not walk into a deal that he feels is biting off more than he can chew in hopes that things work out "right". They rarely do! Third: ask the company to take on the financial risk and contract you to be supervise "their" operation. If you have the technical chops but lack the deep pockets this is the best option. If they refuse, they are probably looking for a fall guy to eat the loss on a high risk endeavor.
Remember, risk is inverse to reward. A HUGE contract has HUGE financial pitfalls. Are you willing to bet your future on it??????????The best way to get rich quick...is to get rich slow:idea:
NOTE what he said about the 6 month rule!!!! there are a lot of general contractors out there that say 1000 licences are issued every month that gives them a lot of choices. Most of them have their own contracts not letting you make your own just your proposal and EXEMTIONS besure exemt not left out. And last but not least a lot of people try to get you to bid the job for less than its worth and then when you can't man the job they bring in other contractors to help out on your dime. Cover your a** everybody want something cheaper than its worth and they will tell you what you want to hear to get you signed up so good luck. :D :D :D

[WishIknew]

By the way getting material from home depot is a major pain:( :( :(

[LGCDEVIL]

If the GC did not pay you a dime on this project.....ever, would you be able to personally pay your suppliers and labor? If not, walk.

[Fire Angler]

I have the chance to bid on a very large project "to me", the problem is I do not have sufficient operating capitol for a project of this size. is there a way to establish a line of credit based on the particulars of the project? I really don't want to leverage my personal assets, I don't think that would cover it anyways. I cannot walk away from this until every option has been explored. this project is going to happen with or without me and I need to step up and make this happen. btw the way the way some of the proceeds from this job will be used for a new boat so this is directly boating related:D .
Looks like you might be too busy to start/finish my project? :idea:

[BILLET]

Another option you might want to consider is mile stone payments. Ask for a resonable domwn payment or deposite to start the project, when you hit the 25% completion mark, another payment is due, and so on. This allows you to get started, and if somthing gose wrong in the middle your not out for the whole cost of the project. I've worked on several projects with this type of arangment and it seems to work well for both parties.

[YeLLowBoaT]

legally he can only ask for a grand up front, but after 5 days after work started he can get the balance. Prob is if you need to buy 100% of materials up front your skrewed.( unless you put it in the contract that they supply the materials.... which most people will not do)

[whiteworks]

Looks like you might be too busy to start/finish my project? :idea:
no worry's Al this if this job happens its like 8-10 months out.

[ChumpChange]

All depends on how your set up... If your set up as a corp ( 90% of the time you should be) its normally not a prob. All depends on the contract.
This makes absolutely NO difference at all. I bet you call the number for the Nevada Corporation that advertises on the radio too. :D
FYI If its a public works job, financing is a cake walk.
If it has anything to do with housing, Its going to be very hard to get financing. Comm'l is about the same at this point.( unless its for a very big corperation)
Actually public works and government jobs are often more difficult to finance and cost more to do so when it comes to contract or factoring financing. That is because although it is almost guaranteed money, they almost always take longer to pay. Lenders don't like to go out much farther than 90 days so many times they won't do it and if they did, it will cost.
WW, give me a call as I'll be on the road today and not be able to surf HB all day. :D

[River Lynchmob]

I agree with HR totally. One thing is a bit funny here. Why do you have to purchase 100% upfront? If you do have to do this try to work with the general (if you are freindly with them) to pay this money to you once you have issued a PO. Another thing if you don't have a history with suppliers they WILL insist you sign a personal guarantee. When I first strarted this company every supplier I filled out a credit app with demanded I sign it.
If this is a general that you have not done work for or a general contractor that you have some kind of lengthy history with I would walk. At the end of the day the project may go well and you may make a dollar or two but it could go very bad and you could be left holding squat. Like someone said earlier there is no way to make a quick buck, get in it for the long haul and work it over time. At the end of the day if you could make this fly are you willing to take that risk? I know a lot of people who have and it has worked out for them but I know a lot more that have been bit in situations like this. I hope this helps.

[Sportin' Wood]

An opinion for what its worth,
If you do not have credit lines in place with your suppliers and possibly a credit line to cover payroll for the 90 days you can expect for payment from the time you bill, I would guess the job is over your head.
This opinion is based on the little information you have presented. If it is housing related in any way I would run the other way.......LOL thats what I have done.:D
Don't forget to check your liabilty insurance to make sure it meets the requirements. You'll wait even longer for payment if your certs are not in order. If the project has a wrap policy I would make sure you fully understand it before signing. I'm not a fan of wrap policies.
I would start building your business credit in anticipation for the next time something like this comes your way if you want to do bigger jobs. Look into opening job accounts at your supplier. A job account will give the supplier lein rights and they will be more likely to extend credit. The General will likely have to write two checks when you bill him, one for the material and one for the rest of the draw.
Again this is based on the limited information you have presented, and my experience as CEO of a large production plumbing construction company over the last 9 years. I sold my stock in the company 5 months ago........ Now I'm a bum.:D Good thing my shopping cart has an internet connection.

[whiteworks]

I am seriously considering only bidding on a portion of the work that I am currently set to handle. I will have a meeting with the CM next week to look at the build schedule and how they are planning on phasing the job, this will give me alot more insight as to my financial obligations, cashflow options and payment schedules that they are willing to work with.

[WishIknew]

You cant make money without risk just dont risk what you dont have or cant afford to lose!!!!!!!

[WishIknew]

Well Did you dive in or what?????????

[Faceaz]

Is it Public or Private, as a GC or Subcontractor? If private I'd be very cautious & as you said have an atty review the contract. If Public I wouldn't be too worried. Make sure you get your Schedule of Values set up & approved right away, then bill 3.5% immediately for mobilization & upfront costs (insurance, overhead, submittals, etc). Good luck.

[koyota93]

I have the chance to bid on a very large project "to me", the problem is I do not have sufficient operating capitol for a project of this size. is there a way to establish a line of credit based on the particulars of the project? I really don't want to leverage my personal assets, I don't think that would cover it anyways. I cannot walk away from this until every option has been explored. this project is going to happen with or without me and I need to step up and make this happen. btw the way the way some of the proceeds from this job will be used for a new boat so this is directly boating related:D .
I am a business development officer for a direct lender (factor). If you still need the financing, I will be able to assist you, either through my lender or through one of our many affiliate lenders.
Some of the benefits include:
More working capital to capitalize on tremendous business opportunities.
Setting you up with a construction oriented factor
Possibly No personal guarantees (recourse), meaning we assume the risk
Usually about 70% upfront, the 30% minus the discount rate upon payment from your customer.
Usually funds within a couple business days.
Your credit is not important, we mainly look at your customer's credit.
Possibly no personal financial statement.
All of these benefits vary a little depending on which factor your criteria fits into.
I would need to know more about your company to assist you further. Please PM or call me (949)394-3737 to discuss this further.