WHAT BANKS LOOK FOR IN CONTRACTORS.
Most construction subcontractors go into a credit application hoping for the best without knowing what the banker is evaluating. Understanding what banks look for, and being ready for those questions before the meeting, changes approval rates and terms significantly.
A banker reviewing your file is reading six things, and five of them were decided before you walked in. Current ratio, working capital, debt service coverage, AR aging and concentration, the revenue trend, and a WIP schedule that reconciles to the balance sheet. None of those get fixed inside a meeting. They get fixed across the two or three quarters ahead of the application, which is why the right time to sit down with a bank is while you still don't need the money.
WHAT IT MEANS.
Debt service coverage ratio, DSCR, is net operating income divided by total annual debt service, meaning the principal and interest payments the business owes across a year.
WHERE IT GOES WRONG.
You applied without knowing what they were looking for
A banker reviewing a construction subcontractor's credit application is reading a specific set of ratios and documents. If you don't know what they are, you can't be ready for them. Walking in with last year's tax return and hoping for the best is a coin flip with your line of credit riding on it.
Your financial statements don't tell the right story
Construction financial statements confuse bankers who don't work in the industry. Overbillings read like unexplained liabilities. Underbillings read like questionable assets. Retainage receivable reads as unusual. If you don't explain those items up front, the banker fills the space with concern, and concern gets priced into your terms.
You applied when you needed money urgently
The worst time to apply for a line of credit is the week you urgently need one. Bankers approve credit for businesses they know and trust, not for businesses presenting financials they have never seen before in a meeting driven by urgency. Urgency is itself a data point, and it's not a good one.
THE SIX THINGS, AND THE FILE THAT ANSWERS THEM.
Current ratio, current assets divided by current liabilities, where banks target above 1.5. Working capital, the dollar amount of current assets minus current liabilities. Debt service coverage, net operating income divided by total debt service, where banks target above 1.25. AR aging, with no single customer over 30 to 40% of total AR and no significant balances over 90 days. Revenue trend, a 2 to 3 year history that reads as stable or growing. And the WIP schedule, which has to reconcile to the balance sheet, show no systemic overbilling, and support future revenue out of backlog.
SPM builds a banker presentation package: current financial statements with a short narrative on the construction specific items, meaning overbillings, underbillings, and retainage, plus the current WIP schedule reconciled to the balance sheet, AR aging with concentration analysis, a backlog summary, and a 12 month revenue trend. The package answers the banker's questions before they get asked, which is the whole point of building it in advance.
The financial profile that gets construction credit approved, meaning clean books, a current WIP, healthy ratios, and documented backlog, is what SPM builds and maintains for every client. When your banker calls for a quarterly update, the numbers are current and the story is clean. That's what turns a credit application into a formality instead of an audition.
FLAT MONTHLY FEE. NO SURPRISES.
Three tiers, priced by your trailing twelve month revenue. Which one you're in depends on how much of the work you want off your desk. No hourly billing, no payroll, and no add-ons.
| Last 12 months revenue | Monthly fee |
|---|---|
| Up to $1M | $1,900 to $2,900 |
| $1M to $3.5M | $2,600 to $3,900 |
| $3.5M to $6.5M | $3,800 to $5,700 |
| $6.5M to $9.5M | $5,100 to $7,100 |
| $9.5M to $12.5M | $6,100 to $8,500 |
| $12.5M to $15.5M | $7,400 to $11,000 |
| $15.5M to $18.5M | $9,400 to $13,500 |
| $18.5M+ | Quoted individually |
Range reflects the three tiers below. Which one you're in depends on how much of the work you want off your desk. No payroll. No hidden line items.
You stop guessing.
You get the CFO work. Job costing built against the way you estimate, a 13 week cash forecast, monthly WIP, and a meeting every month that ends in decisions rather than a report.
Your bookkeeper keeps doing the books.
You stop touching the books.
Everything in Core, and we run the bookkeeping and the controllership as well. Nobody in your office is answering coding questions or chasing a reconciliation at month end.
We do the books. No payroll.
Every job shows its margin while it's still running.
Everything in Executive, plus the job costing and WIP platform set up, loaded with your cost codes, and managed for you every month. You never have to learn it.
We do the job costing.
FREQUENTLY ASKED.
