CLIENT
A Hawaii-based framing company with both commercial and residential work, including ongoing jobs under a hotel master service agreement, landed a larger-than-usual condominium project in Honolulu.
The job included replacing windows, installing select framed sliding glass doors, and completing related concrete repairs. Although the project was a step up from its typical jobs, the team had the experience and track record to take it on with confidence.
CHALLENGE
Existing Debt and Upfront Costs Limited Room to Grow
The contractor had a steady pipeline, but the volume of purchase orders through the MSA was putting increasing pressure on cash flow. As more capital was tied up supporting that work, the strain began affecting the residential side of the books and limiting the ability to pursue larger commercial opportunities.
Merchant cash advances (MCAs) had previously been the strategy for short-term needs management, but the condo project required a deposit of more than a half-million dollars for materials within the first two weeks. Labor, additional material purchases and bond premiums followed soon after.
Covering these costs with existing cash flow would have placed even more pressure on overall finances.
SOLUTION
A Plan to Reduce Debt Pressure and Fund the Project
Before Mobilization Funding could support the new project, the existing MCA payments needed to be brought under control. We helped put together a plan to use incoming receivables and a personal loan to pay off the advances and reduce the company’s monthly debt burden.
With that debt off the table, the business had more room to focus on the Honolulu project. MF then put a $532,000 project funding facility in place, structured around the job’s short payment cycle.
The contractor submitted payment applications every other Friday, and payments were due the following Friday when everything was submitted on time. That made it possible to structure the funding around the project as costs came due, including:
- The initial material deposit
- Ongoing labor
- Biweekly material purchases
- Bond premiums at the start of each phase
RESULTS
Greater Capacity for Commercial Growth
✓ Created a plan to eliminate high-cost MCA debt
✓ Reduced monthly debt-service pressure
✓ Preserved cash for MSA and residential work
✓ Secured $532K in funding for the commercial project
✓ Established a new funding relationship to support future growth
Stronger Project Funding Starts With the Full Financial Picture
The funding helped cover the immediate project costs, but the cash-flow forecast created value before the first dollar was advanced.
By identifying the gap early, the company was able to negotiate faster payment terms, reduce the amount of cash needed upfront, and structure funding around the project’s actual payment schedule.
