While the current U.S. economic recovery has expanded opportunities for construction contractors and their subs to get more private sector work, many of these firms also want to add public sector work to their project mix to insulate themselves from the cyclical nature of the construction industry. However, public sector projects typically require GCs, primes and subs to be bonded, which can be a challenge.
Qualifying for a bond has specific liquidity requirements – typically, working capital of a total of 10% of the job on hand plus a small credit line to provide cash reserves for unexpected emergencies. Yet, contractors and their subs lacking such liquidity still may have options to obtain bonding necessary for these projects.
Besides tapping into home equity or borrowing from family or friends, here are three ways to qualify for bonding and win more jobs:
By checking these alternatives contractors and their subs that didn’t have required liquidity may qualify for necessary bonding, diversity their project mix and insulate their business from market cycles.
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