There's an old adage among construction contractors: You're never one big job away from bankruptcy.

The saying works not only from the perspective of always needing to win new projects to stay busy; it also applies from the standpoint of the risk contractors assume when they get what they wished for and take on a large project. 

Indeed, because contractors must pay workers and buy materials to keep a job in motion, sometimes for months before they ever get paid themselves, the bigger the project, often the bigger the risk.

This is particularly true for small, minority- and women-owned businesses, who are almost always challenged to meet the financing and cash flow requirements of the contracts they win.

For example, Denise Ransom, owner of Columbus, Ohio-based Elite National Building Services, which provides in-progress and final cleaning services for commercial construction projects, knows the bigger the contract she wins, the more financial gymnastics she'll have to perform to see it through to completion.

"There are few banks that will fund construction projects unless you're a huge contractor," Ransom said. "But for subcontractors, generally, it's a challenge. My only asset is my house, and you can only put that up for collateral so many times."

Another hurdle is the time between getting the work, and when she'll actually get paid for the completed job, which is typically at least 90 days. That introduces another complication for small businesses like Ransom's: even if she could get a bank loan to fund her contracts, she'd still have to start paying it off before she received the funds for its completion.

"Banks want you to start paying that back in the next 30 days," Ransom said. "That doesn't work if you're cash strapped."

The solution has been a program called Capital for Construction, an initiative of the Columbus-based Economic and Community Development Institute, a Small Business Administration intermediary microlender focused on developing small, minority- and women-owned businesses.

In the three years since its founding, Capital for Construction has disbursed loans totaling $4.9 million to disadvantaged contractors for payroll, materials and other project costs. Loans can be approved for as little as $5,000, all the way up to $350,000.

That's the type of loan Ransom now uses to buy materials and pay her staff when she wins what for her is a large contract in the five- to six-figure range.

"When I get a contract or a purchase order for services, I'll go to ECDI and ask for enough to cover my supplies and labor in the value of this contract so I can buy materials and I can pay my subs," Ransom said. "Once the job is over, the general contractor pays ECDI back the amount that I've taken out, I get a check for a balance if there is one, and that fills the gap."

With interest rates in the mid to upper single digits, the loans themselves are competitive with what small subs could get from banks, if they were able to get those loans. Steve Fireman, ECDI's president and general counsel, said the program culls funding from multiple sources to pull the loans together.

"A loan for $100,000 might have $25,000 from our SBA fund, $25,000 from an area bank, $25,000 from a foundation the borrower qualifies for, and $25,000 from a general fund," Fireman said. "All of those might have a little bit different note rate, but they come to a blended rate of 6.5% or 7%."

Nancy Tidwell, president of Columbus-based NRT & Associates, a small public affairs and consulting firm focused on community outreach and diversity and inclusion who has helped lead the Capital for Construction initiative, said the program targets the biggest hurdle small and minority subs have: getting paid.

"Access to capital is the number one barrier for minority construction contractors," Tidwell said. "There are a number of commercial contracts small companies won't even bid on, because they know they can't get paid quickly enough."

From that perspective, the program essentially buys out the value of a sub's contract from the beginning, instead of the small business waiting to get paid months after a job is done.

While the program is currently focused within Ohio, Fireman said similar initiatives are available in a few other states, including North Carolina, and that the concept has the potential to work at a broader level.

Ransom would welcome that type of development.

"It's a godsend. Without it, I wouldn't be where I am," Ransom said. "I wish it was a program that was nationwide."