Wednesday, September 20, 2006

L.A. Times - Boot Camp Preps Firms for Public Work

In today’s Los Angeles Times, Cyndia Zwahlen writes in the Small Business Report that Los Angeles Unified School District (LAUSD) is offering a free eight week boot camp to help more small business contractors capture a larger slice of the $19 billion of contracts the agency will issue in the next six years.

Veronica Soto, Director of Contractor Relations & Small Business Program for LAUSD, has taken the lead in creating the boot camp for small contractors. Included in the boot camp curriculum is a program called Contractor MoneyWorks to give contractors the tools to acquire bonding and working capital, two key barriers for most small construction businesses wanting to work with a public agency.

While the details of Contractor MoneyWorks are not available on the website, one can expect to learn about bank financing, SBA loans, and other publicly supported financing programs.

If you don’t qualify, don’t throw in the towel on finding the working capital you need to participate in contracts issued by government. Here’s a brief excerpt from my posting of August 27th on Government Contracts Funding and Katrina.

If you're not able to access funding from your bank, there are funding sources that specialize in providing financing when your customer is a government agency or a prime contractor fulfilling a government contract. The funding is structured as a revolving line of credit or a term loan and is secured on a senior basis by the contract, accounts receivable and other appropriate collateral. In some cases, a business can borrow up to 90 percent of eligible accounts receivable. Rates will be a bit higher than bank interest rates, but can be much less expensive than factoring.

So if you're providing products or services to the government or to a prime contractor fulfilling a government contract, don't get caught in a working capital squeeze. Financing is available - feel free to give me a call and see if I can help.

Purchase order financing, factoring and equipment leasing may also be viable options in providing you with the working capital to pursue contracts with the government or public agencies.

One last thing – regardless of what type of financing you utilize, don’t forget about the cost of working capital when you prepare your bid or proposal. If you forget about any interest expense you may incur, then your profit margins will not be what you projected.

Need help finding the right lender or telling your story the right way? Read "Matchmaking for Business Loans"

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