Financing Solutions in Construction Post COVID-19

Financing Solutions in Construction Post COVID-19

Well folks, we’ve done it. We’ve made it to Level 2 of our COVID-19 quarantine, and we’ve come out in pretty much the best nick we could have hoped for. International attention, particularly from the United States, has commended Ardern and the New Zealand government on not only the rapid, clear and concise response to the global crisis, but also the sheer scale of compliance and understanding generally displayed by the people of Aotearoa. David Brain (cofounder of Stickybeak) commented on New Zealand and particularly Ardern’s “advanced leadership and government." Our standing together as a nation during this pandemic has truly shone, and as we've mentioned in previous newsletters, the next step to continue our path of success is to secure our safety nets going into the future. So let’s get right into it - what are the financing solutions in construction post COVID-19 to look out for?

The Three Commandments of Credit: Face The Front Line Armed

 Any loan or financial assistance you may require during or following the impact of COVID-19 on your business will require the same key criteria to be met. Whoever you source this assistance from, make sure you keep these three elements at hand.

 1. Cashflow

No self-respecting lender will be willing to provide a significant amount of financial support without the knowledge that you will, of course, be able to follow through on repayments. No matter how disorganised your expected budget and earnings are, any indication you can provide to your vendor concerning your business’ projected financial capacity will certainly be appreciated.

          *KEY - Ensure you have documentation from an accountant or financial advisor detailing everything related to your business’ finances*

2. Collateral

The security of your assets and any financial assurance or bond is paramount when applying for support. As with any assistance, similarly to cashflow, collateral is needed to ensure the vendor will not suffer catastrophic losses at the hands of less well-meaning prospective loan holders.

         *KEY - in preparation to present assets for a potential lending bond, have those assets valued in advance - it’s one less thing to worry about if worst comes to worst*

3. Caliber

Above all, nothing matters more to a lender than an honest client. While the ability to repay the loan is obviously a deciding factor, many vendors will be willing to work with clients who must subscribe to significantly fewer repayments not only in frequency but also in quantity, often due to extenuating circumstances. However, this is obviously dependent on your integrity and moral rectitude as a borrower. If you keep your nose clean and stick to the realistic, fair goals set out between you and your vendor, it will be increasingly likely that you receive better deals and opportunity in your investment future.

 Never forget that the Kiwi government has found such respect during this crisis from other nations because of its respect for the people of New Zealand. If you find yourself in need of financial aid, make sure you are aware of the government-established and supported lending schemes that are available to you. Alternative financing solutions such as equity partnerships are also an option, so don’t feel trapped or forgotten and be sure to take advantage of the support systems that have been established for us during these troublesome times.

 Bonded NZ Ltd is committed to supporting the construction industry as well as the wider Kiwi community. Stay in the know and get the help you need, when you need it.