In Florida, the question is never, “Will a hurricane strike?” but, “When, where, and how much damage will it cause?”

Florida is often the starting point for hurricanes, and the destruction can be catastrophic, so the state is looking for qualified contractors to carry out the necessary recovery work.

One company, ATLYS Global, has set up shop in Florida with a novel solution to ensure that all contractors can participate in the disaster recovery business, regardless of the company's size or credit capacity.

To understand the unique ATLYS solution, it is important to first understand the challenge it solves.

When a disaster strikes—be it a wildfire in California, a tornado in Kansas, or a hurricane in Florida—the federal government provides resources to ensure adequate recovery in affected communities. Since 2017, Federal Emergency Management Agency (FEMA) Disaster Relief Fund allocations totaled $223 billion.

Of these funds, only $114 billion has been disbursed as of February 2024. In Florida, more than $18 billion has been allocated and only $13 billion has been paid out, leaving contractors with a $5 billion bill. This means contractors are forced to maintain operations despite large gaps in reimbursement for restoration work undertaken.

This is not a new problem. In May 2020, the nonpartisan Congressional Research Service (CRS) released an analysis of the American Recovery and Reinvestment Act of 2009. A recurring theme in the report was the inability or delay in releasing federal funds for infrastructure projects.

The report concluded that these disbursement hurdles are directly related to the creation of new programs and require a novel approach using available liquidity. For example, CRS found that infrastructure programs received only 9% of allocated funds in the first six months. The report found that after eighteen months only 50% of allocated infrastructure funds had been disbursed.

“Short-term liquidity for contractors to operate and deliver the duration of the project is critical to the recovery process. Consider the billions of dollars the federal government committed and committed to rebuilding after Hurricanes Ian and Idalia. “Where does Florida find borrowing capacity for $3 billion in contractors and subcontractors to do this work?” Founder and President of ATLYS Global Frank Robinson said.

“Part of the challenge is that FEMA and (the Department of Housing and Urban Development) are reimbursable programs, which means someone has to do $3 billion worth of work to get it paid and can be used by the federal government.”

In simpler terms, contractors and subcontractors must incur out-of-pocket costs and wait an unknown amount of time for reimbursement. Imagine a contractor doing work on a house, only to be told by a homeowner that he will definitely get his money at some point in the future, but he doesn't know when. When it comes to disaster recovery, contractors face this dilemma every day.

For many contractors and subcontractors, this type of capital is simply not available through traditional lending institutions. Even if contractors have strong balance sheets to support the work, traditional lending will not achieve the capital push capacity needed to enter and sustain the recovery market.

This reality creates an environment in which few companies can compete for these projects. Many of these large companies enter into contractual relationships with subcontractors where they get paid when they get paid. This reduces the risk of the large companies, but puts the cash burden on the actual subcontractors swinging the hammer in the Florida heat.

This is where ATLYS Global comes into play.

The ATLYS Global Federal Contractor Finance Program (FCFP) is specifically designed for disaster relief and recovery. It provides weekly funding to contractors working on projects related to government contracts.

Financing is not based solely on creditworthiness, but rather focuses on the obligation to repay as the main source of security. The ATLYS model also takes into account sudden and significant capital needs, particularly given the significant costs associated with projects such as rebuilding entire communities or replacing complex infrastructure.

The FCFP is the only “non-recourse” financing solution on the market. ATLYS is able to issue billions of dollars in loans each year, giving small businesses the opportunity to compete with much larger companies that have large traditional lines of credit.

“When contractors and subcontractors at all levels have access to immediate working capital, recovery occurs faster and those affected by the disaster have a more efficient path to normalcy,” Robinson said.

When a disaster strikes, the local economy is often damaged or decimated. Local businesses need the economic boost that comes with federal recovery funds.

“Let’s look at Lee County,” Robinson said. “Recently, $1.1 billion worth of reconstruction projects were awarded to contractors. It will take months for these federal funds to benefit the local economy once work begins. Because ATLYS provides non-recourse capital each week to contractors working in Lee County, local restaurants, retailers and other businesses will see this economic activity much more quickly, at a time when they likely need it most.”

“We are able to work with local contractors who may not qualify for the required credit and may otherwise not even bid on projects because they know they lack the capital,” says ATLYS Global CEO Timothy Toohey added.

The FCFP has issued over $350 million in loans over the past five years.

In addition to Florida, the program is available nationwide and ATLYS has done business in Texas, New Jersey, Arkansas, California, North Dakota, Mississippi, South Carolina, North Carolina, Louisiana, the U.S. Virgin Islands and Puerto Rico.

In Florida, ATLYS Global hired and recently hired Ballard Ken Lawson to serve as executive director for the ATLYS Florida Business Center. Lawson, a Marine, previously served as executive director of the Florida Department of Economic Opportunity, where his top priority was helping Floridians recover from Hurricanes Hermine, Matthew, Irma and Michael.

In this role, he gained first-hand experience not only in responding to disasters, but also in overcoming the challenge of finding enough teams to complete the work required for recovery.

Lawson described the challenge in an editorial in Florida Politics in 2020.

“States must wait for Congress to approve the (Community Development Block Grant) funds. Then HUD must tell states how much they will receive for each disaster. “Next, HUD must publish a federal record of what funding this storm will look like,” he wrote at the time.

Lawson further described how each state must develop and submit a state action plan. HUD then typically has 60 days to review the plans before issuing a grant agreement. Only once this agreement has been reached can states begin distributing the funds.

As you can imagine, it's a long process that Lawson says can take up to six months.

“That’s why the FCFP program is so important in disaster relief,” Lawson says now. “Not every company can afford to move forward with projects for which they will not receive reimbursement for several months. And even those who can lose access to important capital that they could use during this time to complete other projects or grow their business.”

In December 2023, ATLYS hosted and Lawson moderated a discussion (see photo at top of this post) about the financing challenges facing disaster recovery contractors in Florida. The panel included leaders from the Florida Division of Emergency Management, FloridaCommerce and the Florida Department of Business and Professional Regulation.

ATLYS has been highlighted as an alternative funding source to ensure disaster relief contractors have the liquidity they need to rebuild homes and help provide federal disaster funding to Florida's economy.

ATLYS leaders have direct experience on how to better respond to disasters. Atlys' innovative financing approach may be the best opportunity for local contractors to enable rapid recovery for individuals, businesses and economies suffering from a storm.

“This is one of those situations where you wish this wasn’t necessary,” Touhey said. “But disasters are a reality in Florida, and these types of innovations – we hope – will help make a difference for the people affected.”

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To learn more about ATLYS Global and the FCFP program:

Website: Home | Atlys Global

Contact Ken Lawson at: [email protected]

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