Tag archive: construction industry

Finance Trends: Construction Industry

Financing in the construction industry continues to be a challenge for many contractors in the United States, according to Todd A. Feuerman of Construction Global.

He states that “even during the pre-recession period, lending to construction firms presented challenges to most banks.” Feuerman suspects “that this was due to a number of economic factors, including the sensitivity of contractors to economic cycles, revenue fluctuations from year to year, excess competition and the expansion of the construction industry”.

Additionally, Feuerman concludes that “there are other credit underwriting issues that continue to challenge banks in lending to construction firms, including prominent construction company failures, the unpredictable nature of the work, estimates used in the preparation of financial statements, diminished gross profit margins with continued backlog profit erosion, lending against bonded accounts receivable and addressing “quasi liens” on accounts receivable secured with joint check agreements”.