Credit Line

I've been a roofer since I was a teenager and the past 4 years started selling and learning the business side of the trade. I currently received my license as a general contractor and I'm slowly trying to spread my wings and get out on my own. Problem is I applied for a credit line at 2 supply houses but was denied. Is it because I'm a new business??? What should I do??? We all know shingles aren't cheap, and I don't want to result in having to ask homeowners for money up front. Is ther a simple way on receiving a credit line? Thanks for your input.

I would never, ever give a "down payment" for any work to be performed on any of my properties....I may lend a helping hand to a guy just starting out, by paying his supplier for materials or the like.

As I stated previosly, only due to a decline in working capital did I begin requiring a material deposit/payment, (just in the last 3 yrs,,....been in biz since 83')....There's also the fact the majority of our work is on second-homes/out-of-state owners, who it seems, by nature. have become difficult to work with. It's a shame, but a necessary evil.

I was talking with an old retired rancher....We were both musing at what the heck has become of us,....he recalls selling bulls to guys over the phone and shipping them out; Receiving check for $10,000 or so in a few weeks. I've done deals much the same w/second home owners; They call...I give them price....They say do it...I do it...They send payment when done....

I started 50% down at signing of the contract about 10 years ago and would never do anything else.......if its over $1000.00. anything uder is payable at completion. I have never lost a job because of it and I have never been stiffed since I started doing it.

I don't need the hassles. I have never had a customer not pay a downpayment and if they did, I would just move on to the next customer.

Image is everything. If you want to be viewed and treated as not so reliable or unstable then " joint check is the approach. Think about it,,,,,,, Joint check rule is a principle that when an owner or general contractor issues a check that is made jointly payable to a subcontractor and the subcontractor's materialman, the materialman's endorsement on the check certifies that that it has been paid all amounts due to it, up to the amount of the check. This rule protects the owner or general contractor from lien foreclosure by a material man who was not paid by the subcontractor. The use of joint checks is well established by custom and practice in the construction industry.

When a subcontractor and his materialman are joint payees, and no agreement exists with the owner or general contractor as to allocation of proceeds, the materialman by endorsing the check will be deemed to have received the money due him. The material man may protect himself by simply refusing to endorse the check until assured by escrow of other arrangement that he will recover his rightful share of the check. Because the materialman is positioned to demand immediate payment in exchange for his endorsement, the custom and use of joint checks is beneficial to materialmen. The joint check rule is likewise beneficial to owner and general contractor. They have contracted with the subcontractor, not the materialman and are usually unaware of the nature and size of the materialman's claim against the subcontractor. The joint check rule provides a simple yet expeditious method for owner and general contractor to pay their debts to the person with whom they have contracted while eliminating the risk the subcontractor will not pay the person with whom he has contracted. [Post Bros. Constr. Co. v. Yoder, 569 P.2d 133, 135 (Cal. 1977)]

R sales, it's easy. Assuming your supplier is willing to bet on the homeowner as well as you. Ask your supplier if they will do "joint pay". The owner makes check to you and the supplier. The supplier takes the check, cuts you a check for what ever is left after the material bill. It's done all the time with small start up guys. However, they will notify the owner to make checks joint pay and that does make you look like you are shakey (and you are), but it beats no credit at all.

The basic idea... only because having a working knowledge of how the world operates is essential to understanding critical areas of owning and operating a business such as down payments along with other information.

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We take a token deposit of 10%. We don't deposit the check until the job starts. Then we bill about ten (10) days after the job is complete. I tell customers, "My work usally last longer then it taes people to pay me". I find the harder you try, or want something, the harder is to obtain. Customers sence deporation. TRY NOT SWEATing.

We have our payment terms printed right on the estimate form and ask for a third down, balance due day of completion. In that way you don't have to actually "ask" for anything. Just point to the line where it says "Our Terms".

JET

My customer ( what few I have anymore) ask me how much up front? It is nothing to be ashamed of and why would you feel guilty or superior not asking? Do your job, do it well , make money. That is what this is all about. B) :) :) B) Deep Down In Florida Where The Sun Shines Damn Near Every Day

Patty,

I started with zero....A lot of us have....One has to work within his/her means....I ran across an old,antique of a kettle....Had an external pump you had to heat-up with a torch....I located the owner and ended up roofing a rental property for him in exchange for the kettle....I was off & running....I had to buy my first new truck cash, as I couldn't get a loan....I'll never forget it; 1984 Ford Ranger 4x4, $9,400.....Took me till 1988,(I think), to land my first bonded job, (never forget that one either; A city project for $558,000). It's not rocket science, however, does take focus & a can-do attitude....

R. If you don't have the $ to operate, you'll might ask HO's for "material deposits"....Your supplier may agree to open a "cash account" for you....I would suggest only asking for the cost of materials....Tell HO's they can pay you, or make payment directly to the supplier....This will build a repore w/supplier that will hopefully lead to a line of credit somewhere down the line.

I began business in 1983, and never, ever asked for any type of deposit up front. Only due to neccessity, aprx. 3 yrs ago, did I start asking for material deposits on residential re-roofs, and I'll tell you, to this day, I hate doing it....Asking for deposits/downpayments simply reflects mistrust &/or poor financial status.

If you plan to grow to any size at all, credit is essential....I recall in the mid-90's; Our accounts receivable consistantly hovered around $800K - $1mil....Unless you have $1mil bucks to utilize, your going to need a line of credit.

my 2cents....

I'm with Patty on this one. Nothing wrong with asking for money up front. The customer is asking you for money up front if you don't get it. Just good business sense. 50% should be plenty. Establish your customer relationship and vendors. Just smart to ask. Not to ask??? Well, if stupidity could be cured...... lets not go there yet. B) :) :) B) Deep Down In Florida Where The Sun Shines Damn Near Every Day