Everyone has felt the wrath of the pandemic, especially small businesses. The U.S. government started the Paycheck Protection Program (PPP) in April to help businesses keep their employees onboard, according to PBS, only to see the $349 billion in loans fade to nothing in less than two weeks. An additional $175 billion was funneled into the program shortly thereafter, some of which remains available.
Among those getting relief from PPP loans are lenders in the construction industry. In a recent webinar hosted by Anchin Accountants and Advisers, panelists discussed how contractors that had close relationships with their banks found the approval process quite simple as opposed to those without. Even when approved, panelist Charles Dantone, associate group director and vice president at Signature Bank, said during the webinar that companies must be prepared for impacts to projects' bottom lines.
"Who's going to eat that cost?" Dantone said. "We are looking to see how our clients are planning to go back to work and how they'll manage things going forward."
It's crucial that new projects have "solid funding" in place, he said, so companies must "stick to your wheelhouse."
"Sometimes a company's success is based on the job they didn't take," added Vice President of Commercial Banking at M&T Bank Brian J. Diffendale during the webinar.
For material suppliers selling to subcontractors, Chris Ring, of NACM's Secured Transaction Services (STS), said economic uncertainty has always been an issue. That's why many material suppliers choose to use the mechanic's lien process as a way to secure their receivables against the value of the piece of property, or claims against payment bonds for public construction projects their materials go to improve.
During this time of a global pandemic, with cost overruns and project delays caused by distancing, economic uncertainty is heightened. Companies that have traditionally shied away from utilizing their mechanic's lien rights because they did not want to "offend their customers," are faced with a paradigm shift, Ring noted. They must quickly develop a process for gathering job information and completing the necessary statutory requirement, e.g., serving preliminary notices, filing liens and lawsuits, or face long payment delays and potential write-offs.
For those companies that are not prepared for this paradigm shift, however, Ring said they can count on NACM's Mechanic's Lien and Bond Services for education and services to cost effectively manage the mechanic's lien process.
—Andrew Michaels, editorial associate