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DENVER, CO – The House today passed legislation to create an alternative financing method that protects property owners and improves cash flow for small and medium-sized contractors and subcontractors.
“Our bill makes it easier for small and mid-sized contractors to secure important projects while still having access to the cash they need to purchase materials or fulfill payroll,” said Majority Leader Monica Duran, D-Wheat Ridge. “This bill works in two ways: to protect project owners and improve cash flow for contractors and subcontractors. Together, through a modernized financing method, we’re making it easier for small businesses to compete with larger corporate contractors and meet construction demands in our state.”
“Our legislation reduces barriers for small and mid-sized businesses,” said Rep. Michael Carter, D-Aurora. “Right now, large amounts of money held by project owners as retainage can create major financial burdens for Colorado contractors, leading them to rely on costly short-term borrowing options. This bill creates more flexible financing options for contractors of color, women-owned businesses, and younger contractors, while protecting project owners. Under this bill, small and mid-sized contractors and subcontractors will have more cash on hand during construction to pay their employees, purchase new materials or get a jumpstart on new construction projects.”
HB26-1311 passed the House by a vote of 55-9. This bill provides a fair retainage option that protects owners and improves cash flow for contractors and subcontractors. This bill modernizes construction payments by allowing contractors and subcontractors to post a surety bond instead of a cash retainer while working on private construction projects.
Surety bonds are licensed, adding an extra layer of security for companies and project owners. With access to earned cash, small and medium-sized contractors can meet payroll, purchase materials, invest in their communities and deliver projects on time.
If HB26-1311 is signed into law, Colorado would join Washington and Oregon in offering improved liquidity options through similar legislative efforts for small and mid-sized firms while ensuring liability protection for everyone.