The money lending business has been in existence for thousands of years. Lending money is a proven business opportunity and if done correctly, yields excellent returns.
Subcontractors in effect lend money to their customers in the form of labor, material and equipment in hopes of being reimbursed for their expenses each month. The goal is to get your money back with a little profit to boot. Unlike a bank, you don’t know if you’re going to make a profit. Banks are basically guaranteed to make a profit if the borrower pays as promised. Banks insure their position by taking collateral on the borrower’s assets. It may be the borrower’s home, stocks, equipment or receivables, as well as a personal guarantee. Subcontractors don’t receive collateral or personal guarantees, however it would be nice if we did.