CEO Edward DeAngelis of Amerifi, LLC delivering big results by securing and funding a $2,000,000 asset based hybrid facility to a West Coast, fast growing Construction firm. This funding consisted of 75% Interest only Line of credit and 25% Term loan. While securing more traditional financing is very challenging for the Construction industry, Amerifi stands out from the crowd with it’s vast resources and always finds a way! Full story below….
The tale of this full-service, California based private $9 million revenue construction company started in 2017, when they first sought out funding behind their current $1 mil bank-line. There year over year growth projections ($18 million) for 2019 were halted by a major cash flow issue, which the current bank funding could not resolve. Banks, being conservative to begin with are not able to take on much risk at all, especially with a fast growing construction company in high risk industry to begin with.
Cash flow problems often occur from growth, seasonality, disruption in the market, a slow month, higher cost debt and more. Most companies cannot rely on savings for cash infusions because that takes years to build! Instead they need to borrow the money quickly to meet the needs of an influx of new business. Between stocking inventory, paying employees, and other variable expenses, on-hand capital is critical to operate. If a bank line of credit is maxed out or a business does not qualify for a bank loan, for whatever reason, turning to Amerifi and the alternative lending industry is the next best option.
The construction industry spent almost $1.5 trillion in 2018 according to Trading Economics Industry. Currently, the construction industry is booming and smart companies are capitalizing on all the available jobs. Generally, to be awarded a construction job, one must bid lower than the opposing competitors, while providing the same work. However, the general expenses for a job paying the workers (engineers, architects, laborers, etc.), buying manufactured parts, buying permits and much more, which are constant expenses for any construction business. Those who can lower the expense cost can lower their overall bidding price without lowering profits. One method to lower expenses is to pay for them upfront to ensure workers and suppliers they will get paid.
The main issue for construction companies come from the progressive payment schedule they often operate under. This means construction business are paid as the job progress to certain benchmarks ( like 25% completed, 50% completed, and so on). Well without on-hand working capital from savings or a bank line of credit, many businesses suffer a cash flow problem because they cannot pay off expenses upfront, like materials, labor & more. This can extremely hinder quality and progress of the job or lead to losing the job bid overall.
The solution? Alternative lending services that will provide affordable cash infusions to those in need. That is why the California based construction company turned to Amerifi when cashflow suddenly became a problem.
Needing funds immediately they fell into a costly daily/weekly payment loan for a previous $500,000 borrowed. Still they were able to produce just over $9 million in revenues at the year end 2018, but the daily payments were draining cash flow. They came to Amerifi seeking help to restructure and consolidate their existing loans. Amerifi then went to work to position an existing client for a bright future. A hybrid $2-million-dollar package was created through Amerifi’s ability to work with a range of trusted lenders and most important structuring a line that works “For the Businesses needs”. The package consisted of $1.5 million, interest only operating line of credit and $500,000 multi year term loan to consolidate existing debt & lowering payments.
Now positioned with one balance that consist of monthly payments and over a million in working capital, this California Construction Company is forecasting $18 million for 2019, doubling 2018.. This line was secured using existing A/R, real estate and also financing the clients “Booked New Projects”. Their new line of credit is allowing them to pay general contractors in advance and secure good help at a great rate. This is great bonus to construction companies because finding workers, let alone trusted workers, is extremely hard in today’s market.
According Ken Simonsen, economist at AGC, reported employment in the construction industry is down 10%. If one-tenth of the labor pool is down construction businesses are not only competing to secure jobs but also to find good help! Financing with Amerifi’s solutions may add an extra expense to the balance sheet, but it allows for breathing room to secure new business, find good help and execute a great product. For 2019, our client is now positioned to apply for traditional bank funding the next time their cash flow problems occur.
Using money to make money is part of the path to success, but those who use it wisely succeed.
Let Amerifi Drive your business!
Amerifi starting off the new year like gang busters securing more than $48,000,000.00 in the last 18 months & funding $7.2 million in the first 10 days of the new year in January and more than $11million in the last 5 weeks to America’s Businesses! We are excited for a big year in 2019 and plenty more success stories to come!
Learn more about Amerifi’s solutions and let us help you strategically position your business for a better and brighter future.