General Inquiries

Credit Checks

  • 1.  Credit Checks

    Posted 05-22-2020 09:56
    How do some subcontractors perform credit checks for a GC or CM that you work with over different end users?  How much do you take into account the end owners credit worthiness?  Anyone have a standard process they are willing to share?

    Be safe out there.

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    Michael Gilmartin
    Chief Financial Officer
    M. Davis & Sons, Inc.
    Wilmington DE
    (302) 993-3326
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  • 2.  RE: Credit Checks

    Posted 05-26-2020 09:33

    Hi @Michael Gilmartin -- You may want to consult the GC Profiles we have started publishing here:  https://www.levelset.com/contractors/

    There are over 20,000 General Contractor & Construction Manager profiles published, containing the contractor's payment history (i.e. liens filed, slow payment indicators, etc.), as well as reviews and ratings on the GCs payment and business practices.

    In addition to this, the standard stuff:

    - Credit checks from one of the providers like Experian, Dunn & Bradstreet, etc.
    - Licensing check with the licensing Board, and business entity check with SOS
    - You could use something like LexisNexis to check for outstanding tax & UCC liens, bankruptcies, civil judgments, etc.



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    Scott Wolfe J.D., Loyola College of Law
    CEO & Founder
    Levelset
    New Orleans LA
    (866) 720-5436
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  • 3.  RE: Credit Checks

    Posted 05-26-2020 10:04
      |   view attached
    This is a great question considering the future impacts of COVID on the economy.  We perform financial due diligence whether working as a Contractor or Subcontractor on any privately funded project.  It's a two step process for us as follows; i) for new customers (including single purpose entities), we ask for credit information on the contracted party; and ii) for project owners we ask for title holder/borrower information as  well as  availability of funding.  When working as a sub, we ask the GC to assist us in obtaining this information and are 95% successful, if not, we rely on the credit worthiness of the GC.

    We accept various forms of confirmation depending on how comfortable we are with the up stream entities. These may may include; i) if funded by a loan; a letter from the bank verifying the loan is closed and all conditions precedent to advancement of construction funds have been met; ii) if funded by operating cash; two years audited financial statements or verification that sufficient funds are set aside in a dedicated account; iii) if neither are provided; a corporate guaranty or a standby letter of credit to cover all or a portion of the value of our contract.  Also, if we are required to provide a payment bond, we ask for a copy of any upstream payment bonds for the project.

    Most industry form contracts already require the owner to provide confirmation of adequate project funding and allow for the contractor to request documentation that funding is in place as a condition of commencing or continuation of work. Due to current market volatility, when not using a standard form, you may want to include like terms in your bid proposal and/or contract.  I have a couple standard forms we use which I am happy to share with you if you are interested, just shoot me an email.  Lasty, AGC publishes a guide to Construction Financing which you may find useful (attached).

    Hope this was helpful,



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    Wendy Byerley
    Director, Contract Controls
    Worcester PA
    (610) 584-3430
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