Chipi enables Small and minority construction businesses to bypass financing and capitalization limits by enabling them to access the capital of the project developer

Cash Flow Solution

for Small Construction Businesses

Risk Solution

for Property Developers and GC’s

Property Developers Reduce Construction Risks by Extending Their Financing Scale to Fill the Cash Flow Challenges of Targeted Small Businesses

Activate Your SBE and UBE Hiring Goals at Scale

Gain a Competitive Advantage to Attract Subs

Social Equity Solution

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What we do: Chipi provides a technology workflow for approvals and payments that allows large Developers and General Contractors to insert their own funding into materials procurement and payroll thereby replacing and augmenting the financing and capitalization needs of small, underestimated, and underrepresented construction businesses.

Cash Flow Gaps for Subs Become Risks for Developers

financing access for subcontractors is a problem

Waterfall Construction Payments is a very slow process, particularly for those at the end-points, creating cash flow gaps.

Risks include payment risks, performance risks, schedule risks, and budget risks.

Delays in construction payments are a result of top-down payments that stop at each project management level

Cash Flow Gaps are Difficult & Expensive to Fill for Small Businesses

SBE MBE and DBE have limited access to trade credit and are unbanked

Credit availability is limited or unavailable for many. Subcontractors that are small or from underestimated groups are subject to barriers that create operational problems and limit production capacity.

Bonding, based on Financial Criteria, becomes a Challenge

Reality of Bonding Due Diligence is largely based upon capital and financing both of which are limited in availability for small and minority businesses

Understood Bonding Due Diligence Criteria

Reality of Performance and Payment Surety Bonding Due Diligence is largely based upon capital and financing both of which are limited in availability for small and minority businesses

Poorly Capitalized Subcontractors Introduce Schedule Delays

62%

Create Schedule Delays

Prequalified subcontractors introduced project delays with 80% of all subcontractors spending “a majority of the week” chasing payments.

Construction Payment Processes Create Risk and are a Barrier to Workforce Expansion

Project access challenges for small and minority construction businesses are created and reinforced by the top-down waterfall payment process that creates cash flow gaps. These gaps cannot cannot be filled because of thin capitalization or little access to external financing.

Top-down waterfall payments in combination with low capitalization and poor access to financing make entry into large construction ecosystems difficult and limits any available capacity

DBE’s and Small Businesses are Underbanked

Accessing financing is difficult. 59% of external financing requires a personal guarantee that can make business challenges devastating to livelihoods.

9%

Use External Financing

Small Construction Businesses have Low Cash Reserves

Majority-White businesses have 7x the cash buffer of Majority-Hispanic businesses and 13x the cash buffer of Majority-Black businesses.

20

Days Cash Buffer

20

Days Cash Buffer

Small Construction Businesses have Low Cash Reserves

Majority-White businesses have 7x the cash buffer of Majority-Hispanic businesses and 13x the cash buffer of Majority-Black businesses.

Failure Rates for Small Construction Businesses are High

Exit rates are 59% within 5 years and 73% within 10 years. DBE’s have even higher exit rates, masked by their inability to even enter construction ecosystems.

24%

Failure within 1 year

Days-Sales-Outstanding is High

The average DSO for subcontractors is 52 days but materials supplier purchases are completed 30 days ahead of invoicing leaving negative cash flow that approaches three months.

89

Days Sales Outstanding

89

Days Sales Outstanding

Days-Sales-Outstanding is High

The average DSO for subcontractors is 52 days but materials supplier purchases are completed 30 days ahead of invoicing leaving negative cash flow that approaches three months.

Large Gap in Business Equity by Race

Poor financial inclusion of Black and Hispanic Americans has created an unbreakable cycle where lower family wealth leads to lower business capitalization, poor opportunities, and poor profitability.

4x

White vs. Black Business Equity

solution to problem of access and cost to financing access during purchasing of construction materials

Hub & Spoke Payments

In contrast to waterfall payments, hub and spoke payments release money directly to the final beneficiary. This avoids delays created by stopping at intermediaries

“Direct-to-Final” Payments are Made by the Developer

The cash flow requirements are filled by upstream team members such as the GC, Lender, or developer with direct and real-time payments to the value-chain endpoint such as the frontline sub or materials supplier

Approvals and Workflows Remain Unchanged. Think of it as “Local Approvals, Express Payments”

impact of having owners of construction projects insert their financing during materials purchasing

Financing Barriers and Payment Speed Become Irrelevant

Chipi's solution is faster than factoring, reverse factoring, dynamic discounting, supply chain finance, invoice finance, PO financing, receivables finance, net 15 payment plans, and payment applications

Developers In-Kind Capital Adds Production Capacity

Capitalization of Traditional Small Business is dependent upon credit cards and trade credit both of which are expensive and limits company size and growth

Capitalization of construction subcontractors and materials suppliers can access much greater amounts of in-kind capital to expand production capacity and grow business

Direct to Final Payments Triggers a Virtuous Cycle that Increases the Workforce and Diversity

Hub and spoke Direct to final payments enables a virtuous cycle where removing barriers to entry enables workforce expansion and increase diversity

Direct-to-final destination payments are the equivalent of 100% cash flow coverage for small businesses, which grows their revenue and profits, expands their bonding capacity, easily qualifies them for capital-intensive projects, attracts new small business entrants, and makes the workforce larger and more diverse

Diversity, Equity, Inclusion

Use your financing scale for Social Equity

Attract and retain small subcontractors and suppliers from under-resourced communities by removing financing costs and barriers.

Deploying capital to enable financial inclusion fulfills your commitment to support small, diverse, disadvantaged, women-owned, minority-owned, and veteran-owned business enterprises.

Let’s change the world!

Diversity, equity and inclusion and can enabled by removing the need for trade credit or banking

Equity Solution

Diversity, Equity, Inclusion

Use your financing scale for Social Equity

Attract and retain small subcontractors and suppliers from under-resourced communities by removing financing costs and barriers.

Deploying capital to enable financial inclusion fulfills your commitment to support small, diverse, disadvantaged, women-owned, minority-owned, and veteran-owned business enterprises.

Let’s change the world!

Most attractive construction project for contractors and subcontractors

Gain Visibility of Suppliers, Subcontractors, and Materials

The process is built around transparency. Strengthening your value chain enables you to build a relationship with otherwise unknown entities and people. Track and control against environmental (or ESG) goals for materials.

Gain Visibility of Suppliers, Subcontractors, and Materials

The process is built around transparency. Strengthening your value chain enables you to build a relationship with otherwise unknown entities and people. Track and control against environmental (or ESG) goals for materials.

Attract Top Contractors and Subcontractors

Your project is the most attractive. Eliminating financing barriers and costs makes your project more attractive than others still following payment dogma.

Capture Financial Waste

Lower your costs.

Inserting your funding into the materials purchasing process will capture the financing costs of materials suppliers that are embedded in their prices.

Property owners can generate income by supplying their capital to make materials purchase payments

Capture Financial Waste

Lower your costs.

Inserting your funding into the materials purchasing process will capture the financing costs of materials suppliers that are embedded in their prices.

Easy to Use, Handles Every Approval Process

Approval requests can follow any path, at will, and can include as many people as needed.

Chipi can handle simple approval chains or very complex ones.

The application is easy to use and can be applied to any funding approval process

API is available for ERP and accounting integration

API Integration

Integrate into your existing technology stack. Request our API’s to integrate into your ERP, payment application, or draw control systems

Eliminate Lien Workflows and Risks

Eliminate Preliminary Notices and Lien Releases from suppliers. Chipi eliminates trade credit and hence the need for lien workflows or filings as it relates to suppliers.

During COVID’s initial outbreak, lien filings grew 40% demonstrating the sensitivity and vulnerability of construction finances.

Pre-lien and mechanics liens from suppliers are eliminated

Eliminate Lien Workflows and Risks

Eliminate Preliminary Notices and Lien Releases from suppliers. Chipi eliminates trade credit and hence the need for lien workflows or filings as it relates to suppliers.

During COVID’s initial outbreak, lien filings grew 40% demonstrating the sensitivity and vulnerability of construction finances.

Attract Top Subcontractors and Suppliers

Bank your own project and see how it can change productivity and workforce diversity

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Quick Start