The Return of Good News for Home Builders – NJ RREM Program and LENDING

The New Jersey Department of Community Affairs recently announced the second Request for Qualifications (RFQ) for General Contractors for the Homeowner Reconstruction, Rehabilitation, Elevation and Mitigation (RREM) Program and posted the Round 1 Qualified Contractor Pool.  DCA has scheduled a third and fourth round for August and September, respectively.  Of special note, the RFQ has the following line in all caps for emphasis:

THE RREM PROGRAM IS A COST REIMBURSEMENT PROGRAM. AS SUCH, PARTICIPATING BUILDERS MUST BE ABLE TO FUND RELEVANT PORTIONS OF THE CONTRACT AND SUBCONTRACTOR/VENDOR PAYMENT COMMITMENTS FOR UP TO 30 DAYS AFTER APPROVED DRAW REQUEST.

Contractors responding to the RREM RFQ will want to begin a discussion with a lender to secure working capital to cover business operation until reimbursement. There is added good news.  Regional business journals are beginning to report an increase in construction and land development loans.  The Small Business Administration (SBA) has supported businesses in New Jersey with disaster assistance loans and can be a source for working capital assistance for RREM Program contractors.  Lenders participating in the SBA 7(a) loan program are ideal sources for securing business loans.   In recent years, the SBA Office of Capital Access retooled a loan product, CapLines, four loans designed to help businesses meet short-term and cyclical working capital.  It’s worth taking a look at the product features.

CAPLines

• Builders Line is financing for small general contractors or builders to construct or renovate a residential or commercial property.  The builders line can be used to finance direct labor and material cost.  The loan  provides for interim disbursements as construction progresses at stages approved by the lender.
• Contract Line finances direct labor and material cost associated with a contract between contract award and invoice payment.  Financing can be revolving or non-revolving.
• Working Capital Line is a revolving line of credit that provides short-term working capital.
• Seasonal Line is financing for seasonal increases in accounts receivable and inventory (and, in some cases, increased labor costs)

SBA Small Business Lenders

In celebrating the 50th anniversary of National Small Business Week in June, the SBA recognized its top lending partners.  Wells Fargo was one of three banks honored as a leading SBA small business lender.  M&T is at the top in key markets in New York, Baltimore, Philadelphia, Wilmington, and Washington, DC and has plans for future growth in New Jersey.  Business lending is becoming increasingly competitive among national and regional lenders, community and savings banks, and federal credit unions.  The following lenders are included on the list of the 100 most active SBA 7(a) lenders by lending volume in the New Jersey | New York markets.

Noah Bank | NewBank | Republic First Bank | JP Morgan | TD Bank | BCB Community Bank | New York Business Development | Newtek Small Business Finance | Indus American | Unity Bank | Citibank | BankAsiana | BNB Bank | Sovereign Bank | Wells Fargo Bank | Financial Resources FCU | Fulton Bank of New Jersey | Community National Bank | Kearny Federal Savings Bank | Cross River Bank | The Provident Bank | East West Bank | M&T Bank | Woori America Bank | Key Bank 

With the looming business prospects under the RREM program, contractors will be able to talk with their lender or a SBA lender about the best loan product that fits their needs.

SBA CAPLines Fact Sheet

Request for Qualifications (RFQ) for General Contractors for the Homeowner Reconstruction, Rehabilitation, Elevation and Mitigation (RREM) Program: estimated timeline for RFQ to create Qualified Contractor Pool:

• RFQ Pool 2 - July 17, 2013 – Deadline July 31, 2013
• RFQ Pool 3 - To be announced: August 17, 2013
• RFQ Pool 4 - To be announced: September 17. 20012