Nesan, L J (2006) Project finance model for small contractors in USA. Construction Economics and Building, 6(1), pp. 25-41. ISSN 2204-9029
Abstract
Construction projects do not require a large capital outlay but a large working capital to start up the project. Unfortunately, for small contractors there are very limited options available from the banks or other lending institutions to cover this large working capital requirement in the absence of sufficient collateral. The “Project Finance” method presented in this paper is recommended as the most effective method for small contractors in the United States. The problems of small and start up contractors in funding their projects have been little addressed in the literature. The current financing practices were observed through both the literature review and interviews with contractors and bankers in the western Michigan area and subsequently a system has been proposed which could help a small start-up company seeking higher growth. The growth rates that can be achieved using the project finance system in contrast to the traditional “line of credit” arrangements as illustrated in this paper show that the project finance model is beneficial.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | construction cash flow; construction financing; contractor financing; financing small firms; project financing |
| Index terms: | start-up contractor, construction project, option, United States, interview, cash flow, literature review, project finance, funding, financing |
| Subjects: | production management, organization, Geography, financial management, economic analysis, data analysis and analytics, decision analysis, data collection methods |
| Topics: | Research Practice, Risk Management, Business Strategy, Geographical Context, Project Management, Cost Management |
| Descriptive scope: | 4 PCEA |
N.B. Descriptive scope is a count of how many of the five facets of empirical research are indicated by the words used in title, abstract and keywords. It is not intended as a judgement on the research; merely a count of the kind of word we would expect to indicate Phenomenon, Concepts, Theoretical framing, Empirical techniques, Analytical techniques. If all five are present, then a code of “5 PCTEA” will indicate this. If you feel the coding for this record is questionable, we welcome discussion around the terms we matched or the way we categorized them. The facet you would expect may not be coded, or a facet may be coded inappropriately. This can also bear on a larger question, of which facets should be treated as defining in construction management research. Please get in touch, and we will look at it. More details here