Alternative Funding

An often-overlooked option for funding your company’s recovery is the U.S. Small Business Administration. Although best known for help with new business startups and low-interest disaster loans, the SBA also offers programs that can help smaller contractors boost cash flow. Some examples:

• America’s Recovery Capital (ARC) Loan Program — ARC loans provide up to $35,000 in short-term relief for viable small businesses, with payments deferred up to 12 months. ARC loans are interest-free to the borrower, have no SBA fees associated with them, and can be used specifically to make up to six months of principal and interest payments on other qualified loans.
• CAPLines — Designed to help small businesses meet short-term working-capital needs, a CAPLines loan can be for any amount up to the SBA limit of $2 million. One product, the Builders Line, is designed specifically to help small contractors.
• CDC/504 Loan Program — This program provides long-term, fixed-rate financing for major fixed assets such as land and buildings. Although it cannot be used for refinancing or working capital, it can be helpful in selling your building to a new generation of owners – a step many owners are now considering. Low rates, SBA guarantee and a 10 percent down payment requirement make it attractive.
• Surety Bond Guarantee Program — The SBA guarantees bonds for contracts up to $2 million, covering bid, performance and payment bonds for small and emerging contractors.

Eligibility requirements for SBA programs vary, so the first step is to check with your SBA lender or a qualified SBA consultant to see if your company qualifies.

Stimulus Projects in the Pipeline

A key feature of the American Recovery and Reinvestment Act of 2009 (ARRA) is funding for “shovel ready” projects that could put Americans to work fast. Here are some ways you can participate.

• The U.S. Department of Housing and Urban Development is offering about $4 billion for improvements to public housing units. Check with your local public housing authority if you haven’t already.
• ARRA authorized the General Services Administration (GSA) to invest $5.6 billion in federal public buildings. Visit http://gsa.gov/recovery for more information. If your company doesn’t qualify as a GSA contractor, visit http://www.gsaelibrary.gsa.gov to identify “Multiple Award Schedule” contractors you can approach for subcontracting opportunities.
• Of the $4.6 billion allocated to the U.S. Army Corps of Engineers, $2 billion will go to civil construction projects. Visit http://usace.army.mil/recovery.
• The $3 billion allocated to the Department of the Interior includes funding for National Park Service buildings, monuments, trails and infrastructure, as well as school, housing, road and bridge projects for the Bureau of Indian Affairs. For state-by-state break¬downs, visit http://recovery.doi.gov. The Associated General Contractors of America has been tracking ARRA-funded opportunities. Click here to see the results.

Bear in mind that ARRA’s “Buy American” provisions require iron, steel or relevant manufactured goods be produced in the United States, among other requirements, that should be considered when bidding.

Porter Keadle Moore, LLP is a founding member of ProfitCrew, an association of accountants and business advisors dedicated to helping construction companies build profitable businesses. For information, contact Adam Polakov at apolakov@pkm.com or visit www.pkm.com.