Almost any general contractor will tell you that it’s a tough line of work to be in. Staying up on local codes and managing subcontractors can be difficult, but for most general contractors, the issue of cash flow is the one that keeps them up at night. This is especially true for contractors in the insurance restoration industry.

Unlike other general contractors, insurance restoration contractors have to rely on insurance company payouts to receive compensation for their work. Typically, receiving the payment can take six to eight weeks after the work is completed, leaving the contractor to have to fund the job himself—paying for materials, subcontractors, and employee wages before seeing any money for the project. For this reason, insurance restoration contractors often find themselves in the position of having to take out loans to stay afloat.

Greenlock is a California-based company that offers loans specifically for insurance restoration contractors. They recently put together a borrowing guide that they think every insurance restoration contractor should read before applying for a loan. In it, they offer advice for responsible borrowing.

The first topic they address in their borrowing guide is whether or not the contracting company actually needs funding. Greenlock explains, “Based on our historical data, contractors need to have about 40% of the capital for any given project in order to efficiently carry out the contract. Borrowing should be initiated on projects when the overall cost exceeds your ability to finance it on your own.” Since loans need to be paid back with interest, it makes sense that a contractor should only borrow when absolutely necessary.

When talking about when to apply for a loan, Greenlock suggests starting the process before the funds are actually needed. This advice may sound contradictory to the first piece of advice they offer, but they go on to explain that it is wise to get pre-approved for funds before a business is in an emergency situation. Greenlock says, “…your financial condition is usually better when you aren’t in a crisis, and therefore it may be easier to qualify for funding.” In addition, they say, “By getting pre-approved ahead of time, you’ll be able to access cash quickly when you do actually need it.”

According to Greenlock, a typical small business loan from a bank or other lending company isn’t the best option for insurance restoration contractors. Rather, they should look for lending products that are better suited to the nature of the industry. The types of loans offered by Greenlock, such as Accounts Receivable Loans and Project-based Loans, were designed based on Greenlock’s deep knowledge of the contracting industry and the unique needs of insurance restoration contractors.

For companies that are already in the hole from borrowing, Greenlock helps them by establishing a plan of action to reduce existing debt and monthly expenditures. From there, they offer their financial tools which are tailored for insurance restoration contractors to help them manage cash flow and grow their businesses.

To learn more about Greenlock, visit their website: