As a General Contractor, you would like to expand the number of projects you do with your key subcontractors.
However, many subcontractors hesitate to accept the additional projects due to capital constraints. You would like to help them out, but your cash flow constraints do not allow you to provide early payment on the amounts owed to them.
This begs the question, “Is there a non-bank funding solution that can help me provide them with the capital to take on additional profitable projects?”
Fortunately, the answer is “Yes!” An Early Pay solution is available for General Contractors to offer to their Subcontractors. It is designed to provide the Subcontractors with funding within days of the invoice submission while keeping the General Contractor’s payment date constant.
This funding program is provided by one of our non-bank lenders. They establish a facility through the General Contractor that can be offered to their SubContractors. The SubContractors can elect to participate in the Early Pay program or elect to continue with the traditional payment terms. The program facilities can range in size from $500,000 to $50 million.
If the SubContractor elects to participate in the Early Pay program, their invoice is paid in approximately two days minus a discount. The discount typically ranges from 1.00% to 1.75% per month.
Some General Contractors elect to incorporate a yield enhancement factor that is incorporated into the discount rate. This enhancement factor is shared with the General Contractor. If implemented the enhancement discount typically ranges from .25% to .50%.
General requirements for a General Contractor to be eligible to offer this Early Pay program include:
- Revenues greater than $250 million
- Profitable operations
- Utilization of a pay platform such as Textura
At Glengarry Capital Group, we seek to provide innovative financing solutions to help successful middle-market businesses grow. To this end, we have relationships with lenders that have developed specialized funding products and processes to support the construction industry. The above-referred Early Pay for Subs funding solution is one of those solutions.
Contact me at [email protected] to arrange a time to review your situation and explore the funding programs available to you and your construction business.