Navigating financial options for your business



Project Type

Experts in this video

John Burns
John Burns

Banks and other traditional lenders often consider the construction industry to be too risky to finance and when they do, their costs are often higher than other industries. So how can contractors like you get cash to pay for materials, equipment, and other project expenses?

In this webinar, we will explain the pros and cons of each option for contractor financing, including:

  • Lines of Credit
  • Factoring
  • Credit Cards
  • Materials Financing


Speaker 1 (00:01):
Hi everybody. My name’s John Burns. I am a financing expert here at Level Set. You know, obviously a Procore company where we empower people to get paid what they earn. So I’m have with me here today, uh, Kara and Rain, two of my favorite people here at Level Set. I wanna introduce yourselves.

Speaker 2 (00:27):
Hey everybody. I’m Rain. Uh, thank you for saying that. I’m one of your favorite people here. I appreciate that. Uh, you’re one of my favorite people here as well, John, by. So, uh, yeah, uh, working here with Level Set, uh, approved Tour company and, uh, spent 10 years in the banking world before, uh, coming on board here. So it’s been, been a fun ride, uh, all the way across, but happy to be here. Happy to, to get to know all of you a little bit better.

Speaker 3 (00:53):
Yeah, absolutely. Hi everyone, my name is Kara. Um, I also work at Level Set or Procore Company here with Rain and John. Um, I help support them whenever we want to do a informational, informative type of event such as this webinar. Uh, so we’re really excited to be here. I exactly what Rain said, we wanna learn more about you all and what you’re struggling with and what you’re going through so that we can do our best to help, um, throughout this webinar. If you have any questions, if you have any comments, please feel free to utilize either or the chat box or the q and a. They’re both, um, available to you. We made sure they were ready to rock and roll, and I love seeing all of the places you guys are calling in from. So, um, we’re just so happy to be here. And again, this is, um, this is our financial options webinar. It is going to be recorded. Be on the lookout for that recording as well as some additional resources, um, in the next couple of days. Alrighty, let’s do it.

Speaker 1 (01:53):
Let’s do it. So we have a lot of fun stuff to dive in to today. Um, first disclaimer, this is not financial advice, no financial advice here. Uh, but what we’re going to be doing is going, uh, over objective views from a multitude of options that contractors have at their disposable for financing. So with that being said, let’s, uh, let’s touch on a couple of them if we could.

Speaker 3 (02:27):
Okay. Uh,

Speaker 1 (02:30):
So this quote here is just a semblance of what we hear literally every day speaking to contractors all over the country. Now, most don’t have money up front for taking on a project purchasing materials. They need money for payroll labor to purchase a new vehicle. Uh, and there’s a lot of a cash gap in the construction industry that is separate from what every other industry faces. Um, we all know that economic downturns happen, but when they happen, guess who gets hurt the most. It’s construction. So having some options available to you, knowing what you have at your disposal so you can be flexible with your money and be smart with how your business is operating. That’s our main goal for here today. So with that, let’s go with the, uh, let’s go with the first one. I guess we should say. This would be the, uh, a line of credit is the big boy. You could say in any business, it’s what any business really should have, but not all of them can receive them. But in a, in a nutshell, you have a certain amount of money that you can borrow from a bank or similar financial institution, and you’re able to borrow that money at your disposal whenever necessary for any purchase that you need for your business. But you do have to pay that money back, obviously.

Speaker 3 (04:09):
And then some.

Speaker 1 (04:11):
Yeah, and then some. So, biggest pro, uh, we could say is that this money is super flexible. It can be used for any type of business purchase. You nee you need that money, you need to purchase a new vehicle, or you need to buy a shop, uh, or pay down on a shop. That money can just be drawn when it’s necessary. Best part about it’s that if you don’t use it doesn’t cost you necessarily anything. Cool thing though is that banks operate a lot on a, um, a reputation aspect. Rain. I’m sure you can, you can speak to that. What, when you had customers that used your bank for their line of credit, how did that affect their relationship with your bank?

Speaker 2 (05:03):
Yeah, I mean, uh, I, I guess it all depends on how that customer is, uh, using it. If they’re, uh, well using it or abusing it now that, that’s the easiest way to say that. Um, you know, if, if it’s being properly utilized, if it’s being put in a place where, you know, they do their draws, they’re coming through and, you know, keeping a proper utilization, I always recommend, uh, I maybe taking this too far, but, uh, reel me back in if I need to. Uh, if, if they’re utilizing 50% or less utilization and they’re, uh, not overextending themselves, so they’re making their payments back like that, that’s, that’s all stuff that I can build upon your relationship with the bank. Uh, however, as soon as you start to show VE signs with that, whether it be miss payments or, uh, over utilization, so going into the 80, 90% range of that, uh, line of credit, that that’s when it starts to really go south and, and hurt your relationship there. So

Speaker 1 (05:57):
It’s like a, a deck of cards in a way. Yeah. Build it up really nice, but just takes a little bit to, to ruin that. Yeah. Um, and that, that leads into, I guess, the cogs you could say it’s that the application process, from what I understand, rain is pretty dang complicated. What, what all do you need to apply for a line of credit at a, at a bank or credit union?

Speaker 2 (06:25):
Yeah, typically they’re gonna wanna see at least two years of your business tax returns, uh, more than likely your personal returns as well. Um, they’re gonna wanna see the last two years, uh, balance sheets, uh, for the business, the p and ls, the profit and law statements for the business as well. Um, and that, that’s probably on the minimal side of it, but those are the, the required documents that they’re gonna wanna see. And there may be even more, uh, past that as well. Uh, there may be even like good faith verification checks, things like that, that they may be, uh, drilling into with you as well. But, but it’s definitely, definitely a lot of documentation to provide. Um, as you’re trying to get those line of credit established,

Speaker 1 (07:07):
In your opinion, is it easier than going to the dmv? I think that’s a good standard <laugh> to look at

Speaker 2 (07:14):
That, that’s a rough standard. Uh, I don’t know. There’s not many things worse than going to the, uh, DMV unless you’re in a really good spot. Some, some places have great DMVs, so I’m not gonna say everywhere, but, uh, but it, it’s, it, it, it’s up there. It can be pretty difficult. Uh, and it’s all about relationships. If you don’t have that relationship with that bank, then yeah, it’s probably up there with that, uh, that DMV experience for sure. That’s,

Speaker 1 (07:35):
That’s what I figured. That’s what I figured here. Yeah. Uh, and, and that, that leads to a couple of other things. Like, it’s, it’s nice to be able to be able to just draw from that money, but like what rain said, if you are not making those payments back, that’s definitely going to affect your relationship with that bank, but more so it is going to affect you financially. That interest compounds, it builds up mm-hmm. <affirmative>. And when it comes to inflation, which we all know is the top discussion, anytime you put on the news, those rates will rise with inflation. They’re variable at that point. And to the point of, you know, you need two years of various documentation and all sorts of fun bells and whistles of paperwork, Small businesses don’t have a lot to go off of when it comes to qualifying for them.

So it can be pretty tricky. Not everybody can, not every business can get one, but it is beneficial to have one since it is so dang them flexible. Um, but yeah, kind of the, the use cases and, and rain chime in if you have any creative ones from your experience, but it, it’s, it’s primarily for cash flow optimization. You have expenses, you have payroll, you’re trying to invest back into the business, cover those expenses, and be a very strong rainy day fund for emergencies. I think that’s one of the biggest things that people miss out on that over utilization you mentioned. And then an emergency actually happens and they have nowhere to turn for that money. Can, Do you think of any other, uh, additional use cases that could help our, our, uh, our

Speaker 2 (09:27):
Viewers here? Yeah, I think that’s, uh, I think that’s a perfect way of explaining, uh, the use of a liner. It is they, for your emergencies, um, you wanna have other things covered, uh, through the day-to-day purchasing. You don’t, you don’t wanna have to lean on that line of credit for that use, uh, u utilizing it for those emergency use cases, that that’s really what this is for. It helps you get through the bad weeks. It just helps you get through the bad months sometimes. But it, uh, but it also can be there whenever, you know that rainy day thing happens and you need something to lean on, this is the thing to lean on. Um, I, I’m a big advocate of why to try to, I think if you can obtain one, go get one. It makes sense. It makes sense to have it, but don’t overutilize it. I I don’t know if we mentioned either, uh, baes are gonna wanna see you being in business for two plus years before they would want to extend this to you as well, typically. So, uh, I don’t know if we touched on that, but I I wanted to throw that in there as well.

Speaker 1 (10:23):
Two years of bank statements. Yeah. Yes. Uh, that’s, that’s a lot. Um, a lot of businesses just really don’t have that, right? Not nowadays. It’s

Speaker 3 (10:35):
Not, that’s not just like you wake up one day, you start a business and you have bank statements. Yeah, I mean, it, it takes time. It’s more than just two years of being in business. It’s two years of, of running a business with a business account, with business and, um, you know, statements. It’s, it’s not just like your, you know, your personal, your personal bank account. Um, it’s more than that. And I think that when we look at an industry that’s already so strapped for cash, if, like Rain said, if you can have a line of credit, go get one, they may be difficult to get. And so when you’re thinking about having the rainy day fund, having retainage, being able to pay your employees, I mean, it, it’s already difficult. And if you are a new business and you’re just starting out, I mean this, this could be near impossible at a certain point, don’t you say, Wouldn’t you say

Speaker 1 (11:27):
It’s a good goal?

Speaker 3 (11:29):
Exactly, Yes.

Speaker 1 (11:31):
Aim for success. Uh, and don’t stop once they just say no, those not forever, hopefully <laugh>. Um, so let’s, uh, let’s go on to a couple of the others here. Um, ooh, the fun one, this one’s one that everybody loves. Uh, everybody knows what a credit card is, but if you’re not everyone, um, it’s essentially how a line of credit operates. But on a much, much smaller scale, you have a card, you can make purchases, borrow funds at a pre-approved limit. Simple as it gets.

Speaker 3 (12:08):
And before we go into the pros and cons, does, I would love to have some, um, activity in the chat if anyone wants to chime in. Have you ever used, you know, a credit card for your business expenses? And if you have, what do you typically use them on? We hear a, a variety of things as we talk to contractors and specialty contractors every day. Um, but would love to hear from you all, what are some of the biggest ways that you’re using credit cards? Pros and cons, Let’s go.

Speaker 1 (12:38):
So I will be paying attention to see what anybody posts. Um, but I guess really the pros and cons are what they try to advertise to you. <laugh>. It’s easy to use, you know, you can use it for everyday purchases and it’s very, very quick. You know, you just go up to the register, tap the card, and put in the chip, and then you’re off to the races. You don’t owe that money for, you know, up to 30 days. But Jonathan said something, pay it back and full every month. There you go. Yes. Good. Good hygiene, good financial hygiene.

Speaker 3 (13:22):
That last part’s very important.

Speaker 1 (13:24):
Yes, yes. Pay it back in full every month because there’s no interest for 30 days. Most cards. The, I guess for what most people really love about cards or the perks that come with them, you’ve got those rewards that you can get, get points, you can get cash back. There’s so many different options there. And you can be flexible and fun with it, you could say. But hard part about it is that there’s not a lot of credit availability there when it comes to, say, large purchases. It’s not exactly the best option when it comes to that. And applying on them is not hard, but it will affect your credit. They’ll do a hard inquiry and that’ll drop your score down a little bit. But it’s, it’s difficult for a new company with very limited business credit to actually qualify in the way that would be beneficial. If it’s not a hard no of you actually qualifying, they’re gonna give you something that may not be the most financially beneficial one for you. Um, but that 30 day term is, is typically a pretty standard process. Rain, were you, how familiar were you with like, credit cards when you were running the bank? Running

Speaker 2 (14:51):
The bank? I, I love that.

Speaker 1 (14:52):
I love saying that I’m hyping you up.

Speaker 2 (14:55):
I don’t, I don’t know, uh, if I ever ran a bank, but I appreciate the hype right there. Um, the <laugh> very familiar with credit cards. Uh, again, credit cards, I, I feel like they’re either available for emergency use or, uh, very specific use. So gas or workers’ lunches or what, whatever, you know, your specific use case can be that, you know, you can pay back each month, uh, or pay back within a quit timeframe. Those, those are the use cases that you really wanna focus on with your credit card and make sure it’s business use, do not mix the business and the personal, um, that, that, that can be an auditing nightmare waiting to happen. And nobody, nobody wants an auditing nightmare. So, uh, keeping you to the business, keeping that, keeping that specific to that. I, I, I’m a big advocate of not mixing anything business and personal because what happens, uh, you know, if, if something does go south with the business, you never want that to impact your personal as well. So, uh, keeping those separate, keeping those, uh, divided up, it’s always a key. So,

Speaker 3 (15:58):
Yeah. So guys, what I’m seeing in the chat is a lot of materials. Um, so we see that, you know, there’s a, there’s a big emphasis on using credit cards to pay for materials. So the, the things that I’m thinking about are, we’ve seen that it’s typically a 30 day standard term, but what’s the average amount of time in days it takes for a contractor to actually get paid on a job? I know interested

Speaker 1 (16:29):
That’s about

Speaker 3 (16:30):
80, Yeah, about 80 days. So

Speaker 2 (16:34):
84, 84 lot of

Speaker 3 (16:37):
Friends. So, so when we think that we’re, we’re putting material costs on a credit card and those 30 day terms exist, but if you’re not getting paid until day 84, even day 60, what does that look like for your business when you’re, when you’re strapped for cash? Right? Because if you think about it, like, yes, like I got this big job, I won the bid, I bought the materials, we’re getting to work. Bigger job often equals longer timeframe. So you’re, you’re talking like 120 days after, you know, all of these things are happening. Oh, my word. Like, that’s, that’s a big discrepancy. So, so on, in addition to using them for business purposes, um, you know, having, making sure that they’re, they’re, they’re being used in the right way and thinking about the timeline that has to go into what you’re, when you’re getting paid and when you’re putting those purchases on the credit card.

Speaker 1 (17:31):
Yeah, it’s good points. Very good points. Okay.

Speaker 3 (17:39):

Speaker 1 (17:39):
We’re onto the most complicated one, in my opinion. Um, if you’re not familiar with what factoring is, uh, it’s where you agree to sell. You as a business owner, uh, agreed to sell your invoice, your receivable to a third party factoring company that purchases that and collects that money from your customer while also paying you up front for a percentage of that invoices amount. It’s complicated, but I’m gonna make it a little bit simple for you. Uh, so in the process, you’re ha you’re agreeing to sell your receivable and get that money practically instantly, and it is a pretty quick turnaround time. Cool part is that, and I’m sure if you have any gripes with this, uh, 84 days, Jonathan, I can imagine that that’s a part of it. Uh, if you have gripes with chasing that customer to pay you for the money that is owed to you, this could be possibly helpful in that regard because that burden of collecting is not placed on you.

It’s placed on the factoring company, but the underwriting isn’t necessarily based on your credit, it’s on that risk of who your customer is, how well do they gonna pay. So, and you do have a little bit of an option here. You can either factor individual invoices that’s known as spot factoring, or you can factor a whole contract. And every single one of those, uh, pay applications and invoices goes to the factoring company and they pay you. Biggest problem about it though is that you don’t own that receivable anymore. That’s not your invoice. You’re getting that percentage, which is, uh, you can, you could say it’s a majority, but it’s not all of it at once. You have to have invoices to sell. If you don’t have invoices, you don’t have any money coming to you from the factoring company. So different than if you need money to start a project, this may not be the right fit because you have to have done something beforehand.

But the thing about it that I think rubs people the wrong way is that they are incredibly invasive. And by invasive, one of the biggest aspects is that your hiring party, either the owner or the GC that hired you, they have to agree to pay that factoring company. They have to agree for that to even occur without their approval. You can’t factor your invoices. And they’re also really, really getting in deep on the financials of your business, like digging into, well, all aspects of it. Not gonna use the joke that we used for Stranger things, but it’s there. They’re digging very far. And I think a pride point is that you’re never technically paid in full. You’re always going to have a percentage that the factoring company keeps as their cut. So you get paid that percentage up front and then the factoring company follows up, chases them for payment.

Once they finally get paid, they’ll pay you another percentage, but it’s never gonna total 100%. Right. I guess like, uh, a use case of it, you could say is that you have a whole bunch of invoices that you need immediate funds on. You agree with the factoring company, the factoring or your hiring party agrees to pay the factoring company and you’re able to get that money without qualifying for other forms of factoring or other forms of financing if you didn’t hit those prerequisites. Mm-hmm. <affirmative>. So it could be helpful in that regard. What would, what would you say is part of like, uh, your experience when it comes to factoring?

Speaker 2 (21:46):
Yeah, I think, um, invasive, uh, and the way you described it, uh, you took the words kind of right outta my mouth there. It’s, uh, that, that’s exactly how I feel about it. I, I, you know, most of these things you ask me, Hey, tell me your use case. And I, I always have a hard time when it comes to factoring, um, just because I know how invasive it can be and how much control they seize over everything and the whole process. And so, um, you know, the, the limitations of not being able to, um, you know, have much control over whether it is just one, uh, or two projects that they can be involved in. They’re gonna be in everything. And, uh, yes, uh, John, you described perfect use cases. Um, however, uh, it, it, it, it can’t, It, it is not for everybody. And I think it’s only for when you truly like are at that point where you don’t have anywhere else like that. That’s the place to go for that po point in time. And I know a lot of people have dug out of some bad situations, but utilizing it that way as well.

Speaker 1 (22:50):
So yeah, we have a question from Jonathan in the, in the chat. We never use factoring

Speaker 3 (22:56):
And actually our q and a is coming up, so

Speaker 1 (22:59):
Okay, we can cover that then

Speaker 3 (23:01):
Financial option that we’re gonna cover. And then we will answer this, um, Jonathan in the q and a section here, just a second. Um, we have one more financial option and then we’ll roll right into the questions for us.

Speaker 1 (23:13):
Don’t worry, I will answer you

Speaker 3 (23:16):

Speaker 1 (23:17):
So last one that we have here is materials financing. And everybody in the chat, you know, they posted about materials. So this could be something that could be helpful for your business, a type of financing where the materials are purchased directly by level set. In this instance, instead of you having to pay for it through your own needs, we pay the supplier directly and extend to you terms for repayment. Pros of it, I mean, we can go on and on, uh, but pay 120 day paid, win paid terms for materials purchases. That’s a very long time. Covers that 84 days. Jonathan. Um, I guess the, the best part about it’s that it’s not based entirely upon your business, it’s based on the project itself, the risk of that project, who hired you, and if there’s any, uh, construction issues that are happening, liens, bankruptcies, those, those types of major red flags that are happening with your hiring party. And you don’t have to be a two year old business to use it. Um, what would you say rain is the age that would be exactly like, necessary in your opinion

Speaker 2 (24:46):
To, to utilize materials financing?

Speaker 1 (24:48):

Speaker 2 (24:49):
I mean, it, it’s really for anybody and everybody in terms of an age. Um, I, I hate to, uh, put, put a timeframe in there cuz uh, theoretically materials financing can be used with everyone. Um, there’s so much contingent on the project stability and the people that the general contractor, the owner, whoever it is that you may be working with or being hired by, uh, that that is really what the underwriting is being based upon. Uh, so you as the business, yes, limited time in business can, can cause us or can cause the need to like go out and find more information and, and get a better understanding of what, uh, what and how well you qualify. But so much of it’s based on the actual project itself. So if you have a really stable job, like, doesn’t matter, well yeah, come on. That type of thing. So

Speaker 1 (25:43):
To that point, you know, the application process is pretty dang simple. If we, compared to other options that we’ve showcased here for us to approve a project, all that we’d need is pretty much the signed contract for that project between you and who hired you and an invoice from your supplier. That’s basically it. Um, so if you have terms with your customers, this could be something that can be very beneficial to help build those terms out even further where if you don’t have terms with them now you can get some because instead of paying out of pocket up front yourself, you have an option to have that supplier be paid in full day one. They’re never gonna be upset with you about that. So on the the negative side, um, you know, it can only be for materials on a construction project. Those materials have to be permanently used on that project. It can only be for that project in particular, can’t take from one project to another. And it cannot be used for owner-occupied residential projects. Strictly commercial projects and public projects. Uh, that’s the main focus. So if you’re taking on larger projects with higher materials costs or expanding into new territory, or you need payment for materials before you actually even get paid for the work that you do, this could be something that would be possibly beneficial for your business. We’d love to chat about it too.

Speaker 3 (27:26):
Yeah. And John, would you, or Rain, would you ever see yourself telling someone you should use materials financing on every

Speaker 1 (27:34):
Job? No, absolutely not.

Speaker 3 (27:36):
There’s never a world where that is going to happen.

Speaker 1 (27:38):
No. Uh, it should be used strategically and all of these, all of these options should be used strategically. It’s not a one and done scenario. You can use all of the above to be flexible with your money. Um, you know, barring the factoring side of course, but if you’re, if you’re smart with how you allocate the money and spread it around, you’re reducing your financial risk and you’re increasing the amount of cash that you have on hand at any one point. So you can be liquid and not be stuck in a rut.

Speaker 3 (28:15):
Cause that’s what it’s about, right? If we’re, if, if level set becomes your supplier, right, we’re gonna go buy those materials, we’re gonna become your supplier, you know, have all of this liquid capital at your disposal. And one question I wanna ask is like, how could this, we don’t pull credit, it’s not about credit, but how could, how could you see this positively impacting someone’s credit?

Speaker 1 (28:43):
A few ways direct, it’s, it’s all indirect. But by being able to, you know, if you have credit cards or if you have a line of credit or if you have any other thing that is a affecting your credit score, your credit availability, you can use materials financing to essentially offset that amount that you have to pay for, say the principle balance on a line of credit. You need materials to be purchased instead of building up that, that balance even further. Can you use materials financing? You have that cash on hand to be able to make those payments and affect helping out your credit and then be able to pay for those materials once you actually get paid on the job.

Speaker 3 (29:34):
Yeah, absolutely. Before we move on to the questions, cuz I’m seeing a couple more pop up. Anything else that you guys want to add about any of our options that we just spoke about? Um, so we talked about lines of credit, credit cards, factoring and materials financing. Any last thoughts on those before we hop over to questions?

Speaker 1 (29:54):
Keep business, business, keep personal, personal,

Speaker 3 (29:58):
Great advice range, shaking his head, the banker, the owner of the bank says yes.

Speaker 1 (30:04):
Mm-hmm. <affirmative>.

Speaker 3 (30:06):
Awesome. All right, so let’s start, um, with John’s question, John, Jonathan said, um, we have never used factoring but do have a line of credit and use our credit cards. What is their total cut? 8% of the invoice? So I believe Jonathan’s asking like from a factoring perspective, Yeah, like what’s cut? And Jonathan, if that’s not what you’re asking, definitely let us know.

Speaker 1 (30:33):
Well, I’ll answer it based on that assumption here. Great. Uh, that percent cut can change quite drastically. I see sometimes there’s like a 70% that people will get upfront for that, for that invoice, but the remaining amount that it takes that, that they take from you is going to depend on how quickly they get paid from your customer and also what terms you agree to upfront on that contract with them. Every single one of them can be different. And if you have more invoices that you factor, I think that that would be viewed favorably. If you have less invoices to factor, they’re going to raise that cut that they’re going to take. But I’d say 8% is probably a wise estimate, less, possibly more.

Speaker 3 (31:32):

Speaker 2 (31:33):
I I would probably say higher than that, uh, if I’m being, but it, it depends on your, your agreement in place. But more often than not I see, I see that number being higher than 8%.

Speaker 3 (31:48):
Yeah. Okay. And then, um, Robert asked down to what tier of subcontractor does materials financing apply? Example he gave was gc,

Speaker 1 (32:03):

Speaker 3 (32:04):

Speaker 2 (32:06):
All tiers really

Speaker 1 (32:07):
All of them. Yeah.

Speaker 2 (32:09):
And, and honestly, um, a longer payment chain is a good thing. And what I mean by that is, uh, if you are, you know, uh, fourth on the tier, uh, what, whatever it may be, um, that that’s just a longer tier, uh, for our underwriting team to base their underwriting on and find a way to, to work that deal and to make it happen. So, uh, so yeah, no, no specific tier, uh, limitations. And yeah, the further down the chain, it actually, in a weird way, it helps, uh, sometimes. So

Speaker 1 (32:45):
How, how, how most of the financial industry looks at construction, we look at it favorably. They look at it from a perspective of, Oh, you’re at the very bottom of the payment chain. That means that you’re not gonna be paid for forever or paid at all. We look at it and we say, Wow, there’s a lot of flowing, there’s a lot of money flowing from different hands. There’s a lot of points that we can mitigate risk, that we can analyze that and lead us to being able to say, yes, absolutely. We’ll finance materials for this project because we have that data to be able to draw from.

Speaker 3 (33:23):
Awesome. Uh, so another question. Is there a minimum material purchase and can I purchase for more than one job at a time?

Speaker 1 (33:35):
So answer both. Uh, we do have a minimum of $10,000. It can be for, it can be from any number of suppliers at once, but as long as the total for all of the material that we’d be purchasing at one point is above $10,000, then we’re good to go. And for multiple projects, yes, we have some of our customers that are on four, five projects at a time. And even further than that, those 120 day paid when paid terms, those are mutually exclusive from one another. So you can essentially have five projects going at once, different timelines for each of them. And if it’s a large project that takes a longer time, you need materials financed at the beginning, middle, and end. We can phase the project out to where each of those terms are also mutually exclusive from one another there. Hope that answers your question, Robert.

Speaker 3 (34:43):
Awesome. Well, last call for questions. Give it just a second. Um, you guys really did a great job of being thorough through all of those financial options. Um, thank you both so much for being here while we see if there’s any lingering questions, um, what we wanted to do was just offer you the ability to, um, grab your phone. I’m sure we’ve all used this at a restaurant at this point. Um, excellent. So Robert asked about the cost of materials financing. So I’m going to leave this up and just let you guys know, um, for those listening, if we want, if you wanted to scan this, all it’s gonna do is take you to a page that gives you more information about materials financing. Um, give you a couple of questions to answer. We do have a pre-qualification process just to see if you would be potentially qualified for materials financing.

Um, and the last thing that I will personally say, cause then I’m gonna hand it over to the guys to answer the last questions and close this out, um, is that you all should never feel like a bank. You’re not a bank and neither are we. We are here to help support you and help your business grow. We understand lean rights, we understand what it is to be in the construction industry. And being a Procore company, our entire goal, our jobs every day are just to better the lives of everyone in construction. And that’s why we’re here. There’s no gimmicks, there’s no nothing that we’re trying to, um, do except better the lives. So as for the cost of materials financing, I will hand it over to you all. I will leave this screen up for anyone who would like to utilize it. Tell us the cost of materials financing friends.

Speaker 1 (36:22):
Yeah. Uh, so a standard is a 2% origination fee for the total cost in the materials. So for example, if it’s $10,000 worth of material prior to us making that purchase, that would be $200 and there’s a 3% monthly financing fee for that outstanding balance for that 120 day term. So for each month that goes by 3% of that balance itself. It’s not compounding cool thing about, it’s that if you get paid faster and you pay us back faster, then those rates disappear entirely. Those costs. And if you pay down the balance, that balance reflects a lowered monthly financing cost as well. So it’s always based on whatever is, whatever the amount that we purchase and what is outstanding, and that’s the only cost associated.

Speaker 3 (37:28):
Yeah, and I like kind of what you said earlier too about, you know, if you have terms with your customers, if this is something that you plan to utilize, you could absolutely build it in to what those terms look like and, and, um, how you’re doing your business and building all of that in. Additionally, um, I’ve heard that you could break out those payments weekly, that you don’t actually have to pay them all at once over the course of a month. Is that also true?

Speaker 1 (37:52):
Yes, it’s monthly based, but it is debited in weekly installments.

Speaker 3 (37:59):
Excellent. So it’s a, it’s a pretty low, pretty low threshold for what you’re paying versus this giant chunk, especially if you’re trying to break into like the next level of your business. Hey, I wanna grow my business, but it takes one to two really big jobs to get there. I don’t have the capital to front for those material costs. We hear. How often do you guys hear that?

Speaker 1 (38:19):
Very, uh, like all the time. Um, every day. And, and to your point about baking the, our costs into, uh, a contract that is high level smart, uh, I coach, uh, all of my customers to do that, and they’re able to essentially have 120 day or paid when paid terms at no cost because they’re calculating those costs and baking that into their bid or on their contract. So they’re always able to break even and they’re able to float that money.

Speaker 3 (38:56):
And John, I also wanna touch on, I know we’re a little bit over time, but you just said that you coach your customers through this. What does that mean? What, how does that look for a specialty subcontractor doing, especially contractor doing commercial business, to have a a, a coach and someone like you to walk them through this? Do does, do the customers go to different people or is it just you and that

Speaker 1 (39:20):
Customer forever? Just me. It’s just me. Uh, I work directly with my customers. They don’t have to worry about, you know, a million other people that they have to talk to whenever they pick up the phone to call level set, talk to materials finance, they talk to me. And the biggest, biggest thing that I pride myself in is that I’m learning about their businesses, them I’m learning about what they’re bidding on, what bus, what jobs they actually look forward to, to getting awarded. And we’re able to get down to business, get to the drawing table, talk about what expenses they’re gonna have for this project as far as materials, and we can then estimate all of the costs that we would have and be able to, I I can be like a second brain, so to speak, help them do the stuff that gets them the money. I can help them save the money in that way.

Speaker 2 (40:18):
Yeah. Yeah. We, we wanna be a partner all the way through. We wanna be an advocate as well for your business. Um, so you know, you John, you say you’re gonna handle the relationship like that. You’re the advocate for them, uh, all the way across the board, and you’re a true partner throughout the whole process. I think we just had another question as well. Um, but yeah, I, I think you described that perfectly, but, uh, ideally just finding a partner, being there, uh, in whatever way you can be. And John’s a perfect, uh, perfect example of that.

Speaker 3 (40:50):
Thank you, Ray. Yeah. And if you guys have a couple minutes to hang on, we did have one more question I think is very relevant to the, um, economic, the world that we’re living in and the status of our economy. It says, how have supply chain issues created problems for using this service? Sometimes you buy things and they don’t show up for months and they ca and they can’t get installed. Have we run into that before?

Speaker 1 (41:14):
I mean, supply chain issues? Absolutely. Um, Rain, I think your expertise would be wonderful to answer this question. Yeah,

Speaker 2 (41:22):
Yeah. I always say, uh, as you know, these things, because these things do happen. I mean, clearly, uh, we’ve had, uh, a crazy weird few years and all that, uh, has attributed to more and more difficult supply chain issues that have come up. Uh, but when utilizing the service, so, uh, I, most of those situations, uh, you probably putting down deposits, sometimes you have to pay for it all up front, but you’re probably putting down a deposit. Um, you know, the 120 day terms are there. Uh, that is what we base things on. Um, and we do a lot of things through, uh, I don’t know how much we dove into this through lean rights and, uh, you know, so there are ways I say all that too. There are ways to work with you throughout that process. And as long as there’s proper communication and you’re working with your advocate or your partner, uh, such as John throughout the process that, uh, you know, situations like these where you buy something and it’s 90 days until it actually arrives on the job site, and then, um, it’s another hundred days until you’re getting paid by, uh, your GC or whoever the owner is.

Proper communication goes a long way in this process. And being able to work directly with your advocate, uh, with your partner, uh, to navigate that situation with the underwriting and credit team, um, is always something that we use as a best practice. And we always use it, uh, as a kind of a model service. I, I’m thinking, I won’t use the name, but there’s one customer in particular. Uh, we had a call last week with them, and it was with myself and the leader of the underwriting team here at Level Set. And, uh, he was getting delayed on a job. And, uh, we always told him, Hey, as long as you’re communicating, as long as you’re sharing with us what’s going on, you know, what’s you’re being told and how things are going more gonna continue to work with you and we’re gonna continue to be an advocate for you and we’ll utilize whatever we can. Uh, a our underwriting guy, he has 30 years of collection and credit management experience. That guy, it can be an extremely useful tool in your back pocket when these things do come up. And, uh, we always preach that. So proper communication, you get a, you did a whole set of a team, not just your advocate. You did a whole team that’s willing to be in your corner and to fight for you, Uh, especially in situations like this.

Speaker 3 (43:43):

Speaker 2 (43:44):
You at that same thing, John? Sorry, Kara, you

Speaker 3 (43:46):
Were able to say anything like that when you worked at the bank?

Speaker 2 (43:49):
No, absolutely not. <laugh> terms for terms, terms for terms, uh, here, you know, terms mean a lot here as well, but, uh, but being able to properly work together and, uh, have that communication. It, it goes so far, So

Speaker 1 (44:04):
Far, I think the focus is that we know the construction industry, we know the problems that people face, and we know that these things don’t happen in isolation. You’re not just the only contractor that, you know, has been affected by supply chain issues. Mm-hmm. <affirmative>, everybody has. So we know what to do, we know how to navigate through certain situations, and we come together as a team to find creative resolutions.

Speaker 3 (44:35):

Speaker 2 (44:35):
Right. I I love that how you just said that, John. It’s a product for the construction industry by the construction industry, and that’s like, we understand it better and this tailored specifically for you and for your business and, uh, it, it works in that purpose and it works very well.

Speaker 3 (44:51):
Yeah, I agree. All right everyone, well thank you for hanging on. If you’re still here, um, we’re so grateful that you spent your afternoon with us and we are, um, like I said, we’ve recorded this webinar. We will send out the recording. It will be completely free. Feel free to share it with anyone and everyone who you feel, um, may benefit from it. We hope you learned some things today. Um, thank you all for coming. See you next time.