A New Approach

Ox Bonding provides access to bonding and working capital when contractors have nowhere else to turn

At its peak in 2007, the U.S. construction industry employed more than 7.5 million Americans. Since then, more than 2 million contractors and construction workers have lost their jobs, according to the U.S. Bureau of Labor Statistics. The unemployment rate for people in this market is more than twice the national average. It seems that everyone knows someone who has been affected: a nephew who can’t make ends meet anymore as a roofer or a son-in-law who is in the painting business and can’t catch a job.

It wasn’t supposed to happen this way. After the U.S. government announced its stimulus package in 2008, billions of dollars went into banks and insurance companies in an effort to keep credit moving through the economy. One of the main purposes of the $700 billion Troubled Asset Relief Program (TARP) was to encourage banks to lend again at levels before the start of the recession–both to consumers and other banks.

Today, as CEO of Cinium Financial Services, Berman provides bonding, credit and support services to small and midsized commercial contractors. Cinium is the holding company for Upper Hudson National Insurance Co., a licensed and admitted carrier in 16 states, with surety authority in 12 of those, including California, New York, Illinois and Florida. Ox Bonding Insurance Services its licensed agency and the brand under which we market.

"It’s tough out there right now for contractors," Berman said. "There are a lot of good, capable contractors who can’t find work, and when they can land a job nobody will bond them or give them the working capital they need to get through it. This just isn’t right, so we set out to do something to help our clients get back to work."

Banks are still very reluctant to lend to construction projects, cutting contractors off from lines of credit and leaving some relying on their dwindling savings, or, still worse, their credit cards. Ox Bonding’s most popular service is its working capital advance program, which can advance up to 90 percent of an approved requisition, starting on the second one. Ox Bonding charges a one-time processing fee and no monthly payments. "When we advance working capital to a contractor, we ask if they would like us to negotiate an early payment discount for them with their suppliers. In most cases the discounts more than offset our processing fee for the advance. The contractor makes money and the supplier gets paid early—everyone is happy."

By streamlining the process, the CCP product also provides agents who sell it an annuity-like commission stream, receiving a full commission on every final bond issued to enrolled clients.

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