The 5 Numbers Your Banker AND Bonding Company Obsess Over (And Why Most Contractors Get Them Wrong)

Remember when I mentioned I'd share the exact ratios bankers and bonding companies care about? Well, grab your coffee. This one's important.

Last week, a contractor called me frustrated. Ten years in business. Solid reputation. Steady work. But he didn't have a line of credit to fund growth.

"Patrick, we've been in business for a decade. I need a bank to give us the capital we need to grow?"

I asked him one question: "What's your gross profit margin? I don't mean the one on the bid, but the real one that shows up on your P&L."

His response was like most contractors: "I'm not sure."

Here's the brutal truth I learned from 30 years in banking

Banks and bonding companies don't care about your truck wrap, your years in business, or even your reputation. They care about five numbers. Period.

And most contractors are looking at the wrong ones.

The Revenue Trap That Kills Cash Flow

Let me paint you a picture. You're growing fast. Revenue is up 40%. You're busier than ever. Life is good, right?

Wrong.

Here's what actually happens: You take on more jobs. You need more materials upfront. You hire more crews. Your cash goes out faster than it comes in. And suddenly, you can't make payroll.

I've seen this movie a thousand times. Contractors think revenue growth will fix their cash flow problems. But here's the thing — if your gross profit margin is broken, more revenue just means you're digging a deeper hole, faster.

It's like trying to fill a leaky bucket by pouring water in faster. The real solution? Fix the leak.

The Doctor's Approach to Business Finance

When you're sick, a good doctor doesn't just throw pills at your symptoms. They run tests. They diagnose. Then they prescribe.

Your business deserves the same approach.

Too many contractors reach for the quick fix — those high-interest MCA loans that promise fast cash. Sure, they'll ease your pain today. But those weekly payments? They're like taking painkillers for a broken bone. The problem's still there, and now you've got a new one.

I watched a contractor last year take a $250K in MCA loans at 42% interest. Weekly payments of $15,000. He thought he was buying breathing room. Instead, he bought himself a cash flow crisis that nearly killed his business.

The 5 Numbers That Actually Matter

After reviewing over 10,000 financials in my banking career, here are the five ratios that separate the bankable and bondable from the "maybe next year":

1. Revenue
Yes, size matters — but not how you think. Banks and bonding companies want to see consistent, manageable growth. Hockey stick revenue graphs make underwriters nervous. Steady 15-20% annual growth? That's the sweet spot.

2. Gross Profit Margin
This is what's left after you pay for labor and materials. Industry standard varies by trade, but if you're under 20%, you're in trouble. Under 15%? You're working for free. I see too many contractors confuse their bid margin with their actual margin — the one that shows up on the P&L after the job's done.

(Hint: If you are a subcontractor under $5 Million in Revenue, your Gross Profit Margin should be in the 35%-40% range, but never under 30% up to $20 million).

3. Overhead Percentage
Your overhead should be like your blood pressure — steady and not too high. Over 25% of revenue? Red flag. Over 30%? Rejection letter incoming. The best contractors I've worked with keep it between 15%-25%.

4. Net Profit Margin
After everything's paid, what's left? Banks and bonding companies want to see 5-10%. Less than 3%? You're one bad job from disaster. Negative? Don't even apply. Build your margins first.

5. Current Ratio (Current Assets ÷ Current Liabilities)
This is the big one most contractors miss. It lives on your balance sheet — you know, that report you never look at. Banks and bonding companies want 1.25 or better. Below 1.0? You're technically insolvent. No wonder they said no.

Why Your Balance Sheet Is Your Secret Weapon

Here's what kills me: Most contractors obsess over their P&L but ignore their balance sheet. That's like checking your speedometer but ignoring your fuel gauge.

Your balance sheet tells the real story:

• How much cash you need to fund growth

• Whether you can handle the jobs you're bidding

• If you'll survive the next slow season

One contractor I worked with had $3M in revenue but couldn't get a $500K bond or a line of credit. Why? His current ratio was 0.8. We spent six months cleaning up his balance sheet, and now he's bondable and bankable.

The difference? He learned to read the dashboard.

The Path Forward

Look, I get it. You didn't become a contractor to stare at spreadsheets. You build things. You solve problems. You make the impossible happen every day on job sites.

But here's what I know after three decades in banking and now helping contractors from the other side: The companies that thrive understand their numbers. Not just revenue. Not just profit. All five ratios.

They treat their business like a doctor treats a patient:

1. Regular check-ups (monthly financials)

2. Accurate diagnostics (know your ratios)

3. Targeted treatment (fix the root problems)

4. Preventive care (plan for growth)

Because here's the thing about cash flow problems — by the time you feel the pain, it's often too late.

Your Next Move

Stop treating symptoms. Start fixing problems.

If you're tired of getting rejected for bonds or bank loans while watching less experienced competitors win bigger jobs, it's time to get serious about your numbers.

That's exactly why I created the Profit Blueprint Program. It's not another course or coaching program. It's a systematic approach to understanding and improving the five ratios that matter.

We diagnose first. Then we prescribe. Just like a good doctor.

Check out the Profit Blueprint Program here →

Because Revenue is for Show. Profit is for Dough. But Cash? That's for FLOW. 💰

Stay profitable,

Patrick Shurney, MBA
Founder, 3P Consulting
📞 443.539.6276
Helping Contractors Become Bankable, Bondable, & Capital-Ready

P.S. — Next week, I'm sharing the single question every contractor should ask their CPA (and why 90% never do). If you've ever felt like your CPA speaks a different language, you won't want to miss this one.

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About Me:

As a veteran in financial coaching with over 30 years of corporate banking experience, my mission is to empower trade contractors like you to become numbers confident, optimize cash flow, leverage debt, and pay yourself competitively.

Ready for More?

Here’s how I can help you:

1.     Profit Blueprint Program: Get your finances sorted and build out a 3-year financial roadmap in the next 30 days.

2.     Loan Consulting: Get Bank Ready. With 30+ years of banking experience, I’ll make sure you're ready to approach lenders with a winning loan package.

Ready to take your financial strategy to the next level? Let’s connect and make sure you’re running a thriving business while paying yourself what you’re worth.