There was a time when non-recourse financing for commercial real estate projects protected borrowers against personal liability for a loan gone bad. Lenders would look solely to the underlying assets of the project to recover losses when a loan defaulted. However, as times have changed, so too have these protections.
Construction input prices collectively rose by 1 percent on a monthly basis and 3.8 percent on a year-over-year basis, according to analysis of U.S. Bureau of Labor Statistics data released today by Associated Builders and Contractors. This represents the fastest year-over-year rate of materials price inflation since the beginning of 2012. Nonresidential input prices rose 0.9 percent for the month and are up 4 percent year over year.
A contracting business is a living, breathing organism that needs to be fed. If unhealthy, that organism will put tight constraints on a contractor’s ability not only to grow, but also to make payroll and fund projects. When nurtured properly, the business will flourish, minimizing stress in an inherently high-stress industry.
In today’s construction landscape, contractors won’t run out of work; but if their accounting strategies aren’t up to par, they will run out of money. The good news is: this is an avoidable issue. The bad news is: many contractors aren’t properly managing cash flow, and with time (approximately five to 10 years), 70 percent of small- to medium-size contractors will be closing their doors.
Overall, confidence in the equipment finance market is 73.4, an increase from the December index of 67.5, according to the Equipment Leasing & Finance Foundation’s January 2017 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI). January marks the highest index since the MCI was launched in May 2009 to track recovery after the 2008 downturn.
On Nov. 22, 2016, the Eastern District Court of Texas issued an injunction blocking the implementation of the Department of Labor’s (DOL) Overtime Rules, which were set to go into effect Dec. 1, 2016.
The new presidential administration is poised to lead to a number of proposed tax and regulatory changes, many of which will impact the construction industry.
GDP growth in 2017 is expected to experience a cyclical rebound before returning to a rate more in line with long-term potential, according to economist Bill Conerly. In other words, some experts believe that real GDP growth in 2017 will outpace last year, but will stabilize in the years following. Is this good news for small construction companies?
In 2016, the surety and construction industries continued to work together in the state legislatures and Congress to address issues of mutual interest. Here’s a look back at some important legislation in 2016.
Public-private partnerships (P3s) are gaining momentum throughout the United States as an efficient way to design, build, finance and maintain government construction projects. Under a P3, the government entity generally issues an RFP to engage a concessionaire for the project. The concessionaire then secures funding for the project while holding the right to use the project property for the duration of the construction, operations and maintenance period outlined in the agreement.
The construction industry pays the highest effective tax rate of any sector of the economy. Given that realty, contractors should be proactive in tax planning, which includes taking advantage of tax incentives and understanding the internal revenue codes specific to contractors when filing tax returns.