Scheduling work far out in advance is a good way of protecting your cash flow. But what happens when the flow of new projects dries up? The pandemic has changed the demand for construction significantly, although some areas are affected more than others. If you’ve been relying on a backlog to ensure that you always have something to do next, now might be the time to change your tactics. Here are a few things to think about as you plan.

How Have Backlogs Protected Construction?
The construction industry often has a slow season, although this depends on the area and the specialty. Contracting business owners have long had to plan for slow times and expanded their business offerings so that they can keep paying their bills until they get busy again. The thing is, construction hasn’t had much of a slow season for several years. This is how the industry kept growing, even as other industries were starting to notice slowing in 2018 and 2019. Having a large backlog of future projects translates into a more reliable income. That makes it easier for you to hire regular employees and provide a better guarantee of paying them consistently.

How Are Backlogs Measured in the Construction Industry?
In the construction industry, backlogs are measured by a certain number of months. If you have a backlog of 8 months, this means that you have 8 months’ worth of projects already in the pipeline. Over the past year, backlogs for the industry have dropped by about 0.5-1.5 months a handful of times. If you were tracking along with much of the industry, that might mean that you have not added as many new projects to replace current ones. Over time, if backlogs completely run out, that means companies may lose a significant amount of potential income.

How Significant Have California’s Backlogs Been in Recent Years?
Of course, backlogs are region-specific as well as related to the specialty. Anyone who lives in California should be well aware that the state has had a significant backlog of housing and commercial projects that could extend out for several years. The changing economy can throw this into flux. If land prices remain high and investors remain wary, it’s likely that new construction starts will drop. If prices go down or if the economy rebounds strongly, investors may feel more comfortable about funding construction projects.

What Does a Loss in Backlogs Indicate for the Coming Years?
In the middle of a crisis, it is difficult to predict what will happen in the next five years. After all, in 2010, it wouldn’t have been unusual to claim that California would never have the same kind of construction momentum that it had in 2005 or 2006. Yet the industry rebounded and moved even faster. In the short term, it is likely that the loss of backlogs means that you may need to take fewer risks with your cash flow, or find other ways to protect your income.

What Can Contracting Businesses Do to Protect Future Income?
It might seem logical to extend projects to increase your backlog, if only to protect cash flow. But in this case, efficiency is more likely to win the day. Think about the ways that you waste time or money unnecessarily right now, and cut back. Focus on maintaining cash flow and being realistic about your estimates. Avoid bidding below your costs on projects, as this may only drive a race to the bottom with companies competing against each other to earn less. Instead, focus on providing a value relevant to the current economic climate.

Building a backlog of projects can help to protect your income, but you can’t always count on it. To start building a contracting business you can count on for the rest of your career, visit CSLS today!

In order to run a successful business, you have to keep an eye on your money. This is particularly true in the first few years, if you have to do your own accounting. There are lots of reasons to hire a professional to handle your bills and income, but it’s still wise to keep your own tabs on it. Here are a few money management tips to make your business run more smoothly.

Watch Your Cash Flow
When you handle your personal expenses, you probably wait until you have income before you pay the bills. But what happens when you have more bills to pay than income to handle it? What do you do when you have a lot of money that comes out at one time, while the income slowly trickles in? Keeping an eye on your cash flow helps to ensure that you have the money to pay the bills when they come due. This also helps you to avoid having to make tough decisions, like determining whether to pay yourself or pay the rent on your workspace.

Beware of Excessive Overhead
Overhead is a term used to describe the bills you have to pay from the revenue that you bring in. If you have a lot of bills to pay, cash flow may be a bigger problem for you. A lot of people working in construction need to pay for:

• Labor
• Equipment rentals
• Supplies
• Workspace
• Services

You may have to make some decisions about whether or not to buy or rent equipment, or how much inventory of supplies you keep on hand. Keeping this in balance gives you more flexibility with your income.

Minimize Debt Load
It’s hard to run a business without incurring any debt, particularly if you did not have a significant amount of savings to start with. However, running up a lot of debt can increase your overhead. If you have to choose between paying credit cards or a line of credit on the equipment and supply purchases and paying the people who work for you, you will be in a very difficult position. Be strategic about your choices to get into debt for the business. Sometimes, it may be unavoidable. At other times, there may be alternatives that make more sense, like delaying a purchase.

Don’t Forget to Invoice
When you are traditionally employed with a regular boss, you don’t have to worry too much about when you’re going to get paid. You just wait until payday and get your money. As a business owner, you have to ensure that you receive payment for services. And while this may seem obvious, it can be more difficult than you think. When you agree to a contract for a business or a private property owner, you may need to bill them throughout the project and at the conclusion. Then you have to wait for payment according to the stipulations of your contract. If you forget to invoice, you may end up waiting longer for the money.

Pay Bills on Time
Many construction fields require you to have a decent setup of equipment and supplies before you can start to offer services. This means that you may have bills before you have reliable income in which to pay them. Write down all of your expenses or use an accounting program that helps you keep track of them. Ensure that each of your bills can be paid on time whenever they are due. This will help you to avoid late fees, which can make it more difficult to manage your cash flow.

Money management is just one more way you can set yourself up to be a great licensed contractor. Passing the exam is the first part. To discover the benefits of expert exam preparation, contact CSLS today!

As the owner of a contracting business, your work might require you to take certain precautions related to environmental regulations. There are quite a few of them, and the ones you’ll work with depend on the jobs you do. Here are a few of the most common you can expect to encounter while you’re on the jobsite.

Clean Water
Everybody needs clean water to drink. Part of the way that we achieve this is by sending water supply through water treatment to test for and remove contaminants. But while this provides a moderate level of protection, it doesn’t ensure that there will always be clean water under all circumstances. As the owner of a contracting business, you may need to take care to ensure that debris from your jobsite does not end up in the local water supply. Environmental regulations may dictate how close you can set up to sources of water, as well as how you dispose of waste when you are done.

Dust Management
When you are working on a construction site, you have to manage what you bring in and use, as well as what you unearth in the process of your work. For example, lead is a naturally occurring element that can be toxic if people inhale or consume it. Lead was also a common material used in construction, particularly in plumbing and paint. If you are renovating or demolishing an old building, you will need to pay attention to whether or not you may stir up lead dust in the process. Careful mitigation of harmful toxins like lead or silica can minimize the likelihood of illness or injury to people living and working nearby.

Hazardous Waste Disposal
Many construction jobs require the use of possibly hazardous materials for manufacturing, building or cleaning. While this may seem like an uncommon part of your job, you may actually be dealing with hazardous waste disposal on a regular basis. For example, you need to have a plan to dispose of paint that you do not need and cannot use for another project. Similarly, it’s unsafe to leave piles of debris around the jobsite. Proper disposal ensures that it doesn’t blow down wind or get caught up in the water supply. Waste materials don’t have to be actively toxic or poisonous in order to represent a hazard. There are many natural elements that can still cause significant harm, like mold.

Why Environmental Regulations Exist
If you pay attention to politics, you’ll notice that politicians will often write laws dictating the way that businesses need to run in order to protect the environment. On the other side, you may see politicians who want to limit these kinds of regulations because of the ways that they can make running a business more difficult. As a business owner, you will need to balance these two perspectives. You don’t want to accidentally harm the people near a jobsite, but you also need to get your work done. Understanding the environmental regulations that are most common for your field and what you should do about them will minimize the hassle that you face on a regular basis.

When you own a contracting business, you’ll need to follow a lot of rules to ensure that you can keep it running smoothly. To find out how to get started, visit CSLS today!

For the moment, social distancing seems to be the order of the day. While you can still do work, your contracting business needs to be accomplishing as much as possible. But trying to do that while you stay six feet apart from everyone else and avoid touching things feels impossible. Here are five things you can do to keep your workplace and jobsite safer, with a few concerns to note along the way.

Ensure Access to Sanitizing Implements
When you’re working on a job site, things tend to be a bit rougher than they might be inside a workshop or office. Instead of standard bathrooms, you might be dealing with portable toilets. However, this is one of the most important times to make sure that everybody has an opportunity to wash their hands and to keep the place sanitary. Your health literally depends on it. If the site where you are working doesn’t already have these tools, bring them in. Request additional assistance from clients if necessary.

Structure Tasks for Maximum Distance
Depending on the type of work that you do, you might have several employees working at various points on the job site. Or you might have two or three people working head-to-head. If you’re in the former category, keeping a minimum distance of 6 feet might be easy. If you’re in the latter, you may need to rethink your workflow. The reason for social distancing is that if someone coughs or sneezes, the droplets can only go so far. Ensuring a safe distance between workers minimizes the chance of contact.

Clean Each Station Between Tasks
Outside of industries like healthcare where absolute cleanliness is vital, most employees may not be accustomed to cleaning the area where they were just working. To understand the importance of cleaning stations, tools, and reusable protective gear, imagine that you’re just about to follow someone at the gym. When a person is done using a particular piece of equipment at the gym, it is a standard practice to wipe down everything that they may have touched. That’s mostly to keep the equipment from getting gross, but you can see how it applies to keeping your workplace sanitary. Providing anti-microbial wipes or sprays in various places will make it easier for people to clean up when they are done with a task.

Encourage Practical Use of PPE
Many industries have diverted significant numbers of supplies of personal protective equipment to the healthcare sector. This is because there has been a dramatic shortage of PPE like:

• N95 masks
• Sterile gloves
• Protective gear to limit contact with eyes

Even if you don’t think you or any of your employees have contracted COVID-19, you may not necessarily be able to assume that nobody could. The virus has an incubation period of 7-14 days, which means that somebody may have it for up to two weeks before they see any symptoms. This doesn’t mean that everybody needs to suit up like a hazmat expert before they start work for the day, but maintaining a reasonable commitment to regular cleaning and the use of PPE as needed can minimize transmission.

Implement a Sickness Protocol
If you haven’t already significantly changed your standards for how to handle a worker who is obviously sick, now is the time. The last thing that you want is to have an employee infected with COVID-19 coming to work because they feel like they have no recourse. Take a moment to examine new federal policies concerning paid leave for workers who have COVID-19. And then make sure that everybody on your team understands that they need to stay home when they are sick.

While construction remains an essential service for the state of California, you may need to continue going to the jobsite and finishing projects as needed. Taking this advice can help you minimize your risk. For more information about building a safe contracting business, visit CSLS today!

When you read about consumer or business confidence, it feels like it could mean a variety of things. What does it mean to be confident in a particular aspect of the economy? How does this data change the way that you make decisions for your contracting business? And what if people turn out to be wrong? With this information, you’ll understand what confidence means in finance and how it may affect your contracting business.

What Is Confidence?
If confidence feels like a somewhat nebulous standard of measurement, that’s because it is. Confidence is the way that people feel about themselves or some aspect of their world. It is not always an indicator of the way things actually are. However, finance experts use confidence as a way of determining what may happen in the future. People make decisions based on the confidence they have in certain aspects of the economy. For example, contractors look at their existing and expected sales and profit margins as a way of determining how confident they are in their own fields for the next several months or longer. It’s not a certain way of predicting the future, but it helps complete a more robust picture.

What’s the Difference Between Consumer, Investor and Contractor Confidence?
Now that you have a general idea of what contractor confidence means, you should know that there are indexes meant to measure confidence in other aspects of the economy. For example, you may read about increases in investor confidence in a thriving stock market, or decreases in consumer confidence based on rising housing prices. While you must keep in mind that confidence is highly subjective and heavily dependent on specific measurements, it can still give you an idea of what people plan to do with their own money. Specifically, if confidence in the economy starts to drop, you’ll notice that people will become more reserved in the types of financial risks they are willing to take.

How Does Confidence Affect Your Business Right Now?
At the moment, contractors are reporting lower levels of confidence in their ability to continue to grow sales and keep their profit margins high for the near future. As a business owner, you can imagine what those kinds of concerns may do for the way that you run your business. If you’re worried that you won’t be able to get enough sales this year, you might limit your overhead as much as you can. You may decide against hiring more workers, and if the trend continues, you may have to consider laying people off. This can affect the way that your business runs. That might mean that you have a simpler workflow, or it could mean that you have fewer services you can offer and more limited selection of projects.

How Can Low Contractor Confidence Change the Construction Industry?
Confidence in one aspect of the economy can change on a dime, but it depends heavily on the pivot point. Once people are worried about the future of their contracting businesses, they may make decisions that affect their ability to continue the business long-term. If these changes happen at the same time as lenders tighten loan requirements, or at the same time that a lot of other industries are noticing a drop in sales, there may be broader effects. Ultimately, part of rebuilding the economy after an economic downturn or recession lies in establishing confidence once again. After the last recession, it took a few years before the construction industry was able to run at levels even close to where they were before the housing crisis.

Contractor confidence may not mean a lot to you yet, but it poses serious long-term effects to your contracting business success. For more information about starting on a construction career path, visit CSLS today!

Although it feels like construction is going through a lot of changes toward streamlining processes and automation, it really takes many years to drastically alter the function of the industry. You can probably think of many fields that used to include a lot of long work by hand that are now easily done by a machine, in some cases without the careful attention of an expert operator. At present, some jobs may eventually be replaced as a result of automation. Here’s what to watch for, and what you can do once you see the writing on the wall.

Watch Innovations in Similar Industries
Since construction tends to be an industry that adopts technology relatively late, it’s important to keep an eye on what is happening in other similar industries. You can also keep track of the trends in your field in other parts of the country, or in the world as a whole. For example, a burst of development in autonomous equipment in the mining industry made adaptation for the construction industry much quicker. These developments aren’t necessarily a bad thing, especially since so many of these jobs currently go unfilled. But if you want to know what’s going to happen to your job in the next 10-20 years, you should pay close attention to people who do similar types of work as you in different parts of the economy.

Keep Track of Automation-Heavy Fields
Although automation is starting to happen in nearly every aspect of the industry, there are certain fields that are in the process of big improvements right now. Professional trades like:

• Carpentry
• Plumbing
• Electrical

could have as many as half of their existing jobs automated within the next 30-40 years. That seems pretty far out at this point, but it’s not likely to happen overnight. If you’re planning on going into one of these fields, you may want to pay attention to what experts believe the job forecasts will look like in the next 10 years.

Avoid Knee-Jerk Reactions
When you start to think that your job may be rendered unnecessary, it is tempting to stick your head in the sand and pretend that it won’t happen to you. But this is possibly the worst choice you could make. In industries with rapid development like information technology, people can see their jobs become obsolete within a couple of years. By comparison, you probably have some time to prepare. And if you take that opportunity, you have a much higher chance of remaining relevant.

Study the Latest Techniques
The fact is the technology cannot replace the entire construction industry. There will still be a need for lots of skilled workers who can operate or monitor machinery that produces structures. If you want to have one of those jobs, you need to know how to do these things. Innovations are developing on a regular basis, and what might be a standard practice now could be extremely outdated five years from now. Paying attention to these developments, testing out new techniques whenever you have the chance, and considering adopting them into your business practices gives you the best chance at beating the competition.

Consider Changing Fields
If ever there was a case for expanding your educational opportunities, a change in the construction industry would be it. The last thing that you need is to find yourself stuck in a niche part of your field where you will struggle to diversify your services. Instead, be flexible enough that you can change your business model if it becomes clear that your field can’t sustain the number of workers in it right now. Adding an extra classification to your license or teaming up with someone in another field to provide a more complete service package are a couple of ways you could consider doing this.

Discovering that your intended career is likely to be automated in a few decades isn’t ideal. Making a plan now can help you figure out how to make your business work for the future. To begin on your construction career path, contact CSLS today!

Since COVID-19 is changing lots of industries, it may be an ideal time to rethink your processes. You’ll be spending more time on certain aspects of your workflow, while others may have to go out the window entirely. But you don’t want to go back to a pattern of overpromising and under-delivering, even if that’s common in the industry. Here are a few inefficiencies you should consider, so that your project timelines can remain accurate now and in the future.

Finding Workers
Just this spring, the construction industry in the United States laid off nearly 1,000,000 workers. It’s hard to tell at this time exactly how that will affect your ability to find skilled employees and subcontractors for your project. But since construction was already facing a labor shortage, you can expect that whatever you need someone to do, it will probably take longer to locate them. People in busy, expert fields will likely continue to have high demand for their services. As such, you may not know for sure how long it will take to secure someone’s work until you have already done so. Be sure to research averages if you don’t have a regular subcontractor for a particular task.

Moving Equipment
The time it takes to move equipment to and from the jobsite depends on:

• Where it’s currently located
• How big it is
• What it takes to get it there

Some tools are easy for you to transport, while others may require a rental company to handle delivery. Keep in mind that pandemic-related closures may cause delays in your ability to rent equipment or have it delivered to a particular jobsite. You also may have to wait to pick something up, if you are handling the delivery on your own. This will add extra time to your project delivery schedule.

Waiting on Tasks
If there was any industry that could figure out how to get work done more quickly just by adding more people, construction would be it. However, there are certain tasks that simply take a specified amount of time no matter how much you want to rush it. In a new era of staggered shifts and social distancing, you may spend more time waiting for tasks to be completed in order to move to the next step of the project. Identifying which jobs can be done at the same time, and which ones must be done in a certain order, can help you figure out how to stagger shifts for the best productivity.

Site Cleanup
For a lot of jobsites, clean up and sanitation is something that happened a couple of times a week. Now, it will almost certainly need to take much more time. This is because virus prevention requires careful sanitation at least daily, if not more frequently. Forming regular habits of clearing a particular spot of debris and sanitizing the equipment can help to make the process more efficient. But if you have to do it between tasks, you should factor that delay into your daily schedule.

Paperwork
It is usually good to have more than one person looking at agreements before you commit to them. If you are working on a public works project, it may be a requirement. This can add weeks or even a month or more to your project, depending on what paperwork you need reviewed and who needs to look at it. Although technological innovations have come a long way to make this process shorter and more efficient, you will still encounter plenty of delays in this respect. For example, the time it takes to get certain types of building permits has increased significantly in 2020. You’ll also notice a longer delay for inspectors. Keep tabs on the average wait times and don’t underestimate, so that you can factor them into your bids.

The year 2020 sure is changing the way people in construction think about efficiency. With the right education, you’ll know how to help solve those problems for your contracting business. To get started, visit CSLS today!

If you’re like a lot of people, you were raised with the idea that you’d learn a skill, get a job and keep it until you retired. The past few decades have turned that belief on its head. The concept that you’ll get a job when you graduate from school and stick with the company for the next 40 years is extremely outdated. While some people still do this, changing jobs and even careers mid-life is completely normal. Here’s how to determine if it’s the right decision for you.

Job Satisfaction
It’s true that most people don’t look for work because they love doing it more than anything else. However, it’s worth keeping in mind that job satisfaction is an important factor in your ability to keep working within a particular field for years. People who hate what they do or who have grown tired of it often realize that it spreads into the rest of their lives. When you spend a third of your time doing something that doesn’t make you happy, it’s going to be harder to enjoy yourself in your off-time. The trick is to determine whether or not it is your particular job or your career in general that’s causing the issue. If it’s the latter, you’re probably better off making an adjustment sooner rather than later.

Upward Mobility
Upward mobility might feel like an obsolete term from a completely different world, but it still plays a role in your future prospects. The ability to continue to grow in your career depends on the job and where you’re at right now. If you’re in your 30s and realizing that you’ve almost hit the max on where you could go, you have to decide if you’re OK staying where you’re at. Some people find a great deal of satisfaction in a job where they aren’t constantly having to break the mold. But if you’re looking for something with more variety, or you’re starting to feel like you’ll be doing this job forever, it might be time for a change.

Future Plans
Of course, the timing of a possible career change depends heavily on what you’re planning to do with the rest of your life. Someone who is planning to do something big like start a family or relocate may not have as many options to re-define themselves as someone who has comparatively few new things on the horizon. While many people decide to jump into a new career with both feet, it’s worth evaluating when is the best time for you to do this. Sometimes, waiting even six months or a year so you can prepare makes a successful transition much more likely.

Financial Responsibilities
For most people, the older you get, the harder it is to abruptly shift from one financial situation to another. If you have a house with a mortgage, and a family with lots of expenses every month, you’ve got fewer options than someone who is single and able to move almost anywhere. But it’s worth keeping in mind that a job transition doesn’t have to be a complete pivot from an established, comfortable situation into chaos. If you outline your liabilities, you’ll know what standards you need to be able to hit with a new career.

Transferable Skills
If you expected that the only way to change careers is effectively to start over, you might be pleasantly surprised. When you start in a new field in your 30s and 40s, people evaluating the skills you bring to the table aren’t going to look at you as if you just turned 18. This means that you may have a variety of talents or develop skills that would benefit you in your new career. Take some time to think about the soft skills you’ve picked up so far, such as:

• Professional communication
• Computer proficiency
• Networking
• Personal finance management

You might not be looking for a new job in any of these fields, but most jobs require at least a little of these.

Changing your career is never an easy decision, but it might be the best one you ever made. To start on the path to your own contracting business, visit CSLS today!

The best way to avoid contracting or spreading COVID-19 is to wear a mask when you leave your home. That’s why almost all states have guidelines on the books recommending or requiring them. But since you can’t do all your work from home, eventually you and your employees will have to go back to the jobsite. In many cases, that means you’ll need to persuade them to wear masks. Here’s what you can do.

Stay Updated on PPE Guidelines
The one constant right now is change, which means that you will need to stay updated on the current best practices. At present, until a vaccine is both available and widely used, wearing a mask and practicing social distancing on the jobsite is likely to be recommended if not required. Remember that requirements may be implemented at the state level or by the city. This means that you should plan to follow whichever rules are the strictest. In some states, inspectors are showing up unannounced and fining companies that do not comply with local regulations.

Identify Acceptable Masks
There have been many innovations in masks that people can wear with in the last few months. This doesn’t mean that all of them have the same level of protection. As a general rule, N95 masks are the best tools to avoid spreading contagion like COVID-19. But in many parts of the country, N95 masks have been prohibitively expensive or completely unavailable. This means that you may have to use something else. Keep in mind that any mask that has an open space or a mesh screen to improve air circulation is unlikely to provide nearly as much protection.

Talk to Employees About Common Problems
Ultimately, people are going to have a variety of reasons that they do not want to wear a mask. If you live in a part of California that becomes extremely hot during the summer, wearing a mask all day may be more difficult than if you live and work near the coast. Some people have common breathing conditions that can make wearing a mask regularly difficult to manage. But you won’t know which problems your employees are having until you ask them. Give workers the opportunity to speak frankly about their concerns, and make a note of them. Be sure to avoid dismissing anything out of hand, because it’s better to find a solution instead.

Look for Solutions
There isn’t going to be a solution for every single problem people have related to wearing masks. The fact of the matter is that most people aren’t accustomed to wearing them on a regular basis, especially not at work. But you know that it is something that can be done, so it’s time to research new approaches. People in industries like manufacturing or healthcare may have to wear masks all day long, every day. Research how these people manage to do it to get ideas. Consider options like:

• Ties instead of elastics
• Ear-savers that hook onto elastic loops
• Disposable masks for people working in hot weather
• A variety of mask styles, so people can choose which ones work for them

Giving your employees choices may make it easier for them to commit to wearing them.

Be Consistent
As with any work safety policy, you can only expect a high degree of compliance if you can be consistent about enforcing it. For example, you wouldn’t criticize employees for failing to wear personal protective gear that you did not provide for them. Similarly, you need to recognize that if they are unsure when you expect them to wear masks, they may follow their own instincts. Set a policy for mask usage that is clear, publicly available and easy to review on the jobsite. These steps will help to ensure that people know what is expected of them and that you will enforce the policy if they don’t follow it.

Wearing masks is part of a new normal, but it’s also a common part of practicing jobsite safety. For more information about starting your own contracting business, contact CSLS today!

The wildly popular Paycheck Protection Program (PPP), funded and administered by the federal government, is starting to evolve. At first, employers had to prove that they used the vast majority of the loan for payroll, or risk losing the ability to apply for loan forgiveness. Now, the federal government has relaxed these standards somewhat, after learning that almost one in five businesses wanted to give the funds back. Here’s a rundown of the changes, and how they affect your contracting business.

What Are the Changes to the PPP?
The original Paycheck Protection Program allowed businesses to apply for loans of up to $10 million with an immediate advance of up to $10,000. The advance itself would not have to be repaid, and companies that met certain requirements would be able to apply for loan forgiveness. These terms made the loan program so popular that business owners were struggling to find lenders who hadn’t been inundated with applications. To make the program more accessible to businesses making long-term plans, the federal government made the following changes:

• Up to 60 percent spending on payroll still eligible for loan forgiveness
• Loan period extended from two to five years
• Relaxed verification process for businesses borrowing less than $2 million

Although the program originally opened in April, these changes were approved in early June.

Why Did the Federal Government Change the Program?
The point of the PPP was to give businesses the ability to keep employees on their payroll, instead of having to furlough them or lay off a certain number of people. In the implementation of the program, however, many businesses realized that the program wasn’t as practical as they had hoped. Many companies were hoping to apply for loan forgiveness, and the process for it wasn’t entirely clear. As a result, almost one in five construction-related companies were considering returning the loans, out of worry that they would face an audit or lose the ability to have the loan forgiven.

Have the Loan Forgiveness Rules Changed?
Congress approved amendments that would change the minimum spent on payroll to be eligible for loan forgiveness from 75 percent to 60 percent. They also outlined the conditions under which they would audit the company’s use of the loan and application for loan forgiveness. Generally speaking, they said that if a business took out a loan of less than $2 million and made a good faith effort to meet the requirements for loan forgiveness, their applications wouldn’t be processed as carefully as those who requested more.

How Does More Flexibility Help Contractors?
When this loan program was initially proposed, the idea was to help people struggling in a temporary period of economic distress. A few months into the pandemic, people are realizing that this situation is anything but short-term. This means that expecting businesses to have a quick turnaround on repayment may be unrealistic or even impossible. Adding flexibility to the program gives contractors a better chance at meeting the terms required for loan forgiveness. If that makes them more likely to take the loan, it can provide additional cash flow to support them during periods where work is limited due to COVID-19 in the area.

Is the PPP Still Available?
The availability of this loan program could change at any time, and it’s not clear whether the federal government may extend the program beyond its initial end date of June 30. Many business owners have said that it is difficult to find a lender who will process the applications, although that is heavily region-specific. At present, however, the program is still in existence. Business owners who think they may benefit from it would need to apply as soon as possible.

Protecting your cash flow is an important part of managing your contracting business. To learn about everything you need to get started, visit CSLS today!