


June 8, 2021
Construction Industry Experiencing COVID-19 Side Effects?
District Bonding Publications Is the Construction Industry Experiencing…

At some point in a construction business’ lifecycle, the need for credit is inevitable, be it a simple equipment purchase, a line of credit to support cash flow needs, or a loan to purchase and develop the company’s headquarters.
But when do business owners know its time, and how do they know their making the right decision for the company’s overall financial health and growth needs?
Just like in the article, Building Bonding Capacity from a CPA’s Perspective, while banking and bonding are similar, they aren’t looking at the same ratios. However, a good commercial banker and surety bond agent knows the balance between good/bad debt, and when to use debt to your advantage.
Below are some common questions from contractors surrounding their financials and building their bonding/banking capacity.
A: There’s a saying that it’s easier to get money when you don’t need it and harder when you do. While it may be over said, it is still highly recommended that business owners get to know their banker as soon as possible, even if they don’t have a credit need immediately. The relationship can start with a simple business checking account. This “character” aspect will go a long way in developing a working relationship with a banker.
A: Much like the surety business, bankers look at the five Cs of credit to determine the risk of an applicant. The five Cs are as follows: character, capacity or cash flow, capital, conditions and collateral.
District Bonding Publications Is the Construction Industry Experiencing…