Six years ago, David R. was a contractor building a fourplex apartment building. The laws had recently changed, requiring fourplexes to have sprinkler systems installed. “There were only five companies that did that between San Antonio, Laredo, and La Isla. Only one company wanted to come look at my project.” Due to the high demand of this sprinkler installation service and the low supply, companies could get away with overcharging. David decided that he would get certified to install sprinkler systems and charge this service for a more reasonable price.
David says he charges about a third of what that company charged him for a comparable job. David and his 10 employees now install sprinkler systems and fire protection in private, commercial, and government buildings.
The biggest challenges in this industry are finding credit and funding everything up-front. “Right now my dream is just to survive. …It’s very difficult to get credit, so you have to fund everything yourself.” David’s clients do not pay him until the job is done, or up to 90 days later. In the past, the people who sold the raw materials would take some of this risk by offering credit. “But now they don’t have inventory… now you go to them and say “I need this and this” and they say ‘good. Pay me now, and I’ll go get it for you.’ So you become the financier for your clients. Because you have to go buy the materials and then wait to be paid at the end of the job. You have to start with your money.”
That is not the only reason the industry is so difficult, David says. “None of the other companies want to help you. …They never tell you where to start if you want to get certified… and if anyone starts charging a cheaper rate, they start badmouthing them. That way no one will contract them and the price never lowers.”
David is proud of his work. “We’ve done about 200 installations. About 99% of our clients are very happy and use us again or recommend us to others.”
This loan will go to buy tubing and other raw materials in order to install sprinkler systems in a 12-story building in La Isla. David needs to buy the materials up front, “So I’m looking for credit anywhere I can.”
Without this loan, David would have to hire fewer workers and take on smaller jobs. David originally went to a bank, but they said they do not lend for this kind of loan. “A loan to buy a house, yes. But to buy raw materials? Not one cent.”
David hopes that eventually he can get a larger loan or a revolving line of credit.
David supports his wife and two children with this company. He is from Mexico, but moved to the U.S. 20 years ago. David describes himself as “a person who wants to help the community but every day it’s more difficult.” He advises other business owners “don’t spend effort on superfluous things.”
LiftFund. (www.liftfund.com) is an award-winning nonprofit organization (previously known as Accion Texas) with a mission to provide credit and loans to small and start-up businesses that have limited or no access to credit from commercial sources. Established in 1994 in San Antonio, LiftFund has helped Texas and Louisiana entrepreneurs strengthen their businesses, stabilize and increase their incomes, create employment, and contribute to the economic revitalization of their communities. Learn more at www.liftfund.com.