Tricia Balser and Matthew Gibbons
The Infrastructure Investment and Jobs Act and the Inflation Reduction Act established much-needed funding to modernize and expand infrastructure systems in the U.S. The state of Ohio specifically is set to receive a total of $5.1 billion in funding allocated to infrastructure improvements.1
Much of this funding is earmarked for roads and bridges, with around $4 billion designated for roadway improvements. An additional $5.8 billion is expected to be approved for 2028. The funding is a tremendous opportunity for construction and engineering companies tasked with designing and building transportation-related projects.
Additionally, roughly $100 million of these funds will be used to expand broadband access to residents throughout Ohio. Approximately $5 million has already been distributed through the Broadband Equity, Access and Deployment Program, with additional funds scheduled to be released over the next few years. These allocated resources offer new opportunities for companies within and adjacent to the wireless industry, especially those involved in building and upgrading wireless towers across the state and bringing fiber-optic access solutions to homes.
While new opportunities abound, they also bring challenges for all companies involved in infrastructure improvements. Cash flow is of particular concern. Many new projects require significant mobilization and upfront capital expenditures, leading companies to search for creative options for financing until working capital converts. Companies must also grapple with the rising cost of goods and labor as they manage projects spanning multiple years.
For this reason, when looking to fund an infrastructure improvement project, it’s important that companies know key health indicators to look for when selecting potential banking partners. The top four indicators include:
- An institution that understands the drivers of the engineering and construction industry, and is able to accommodate the inevitable downturn.
- A banking relationship that provides insight into opportunities and sector trends, both within the industry and with other clients.
- A lender’s ability to tailor its product offerings and facility structures to meet the unique needs of the industry and its clients.
- A relationship team with the ability and industry experience to convey your needs to key credit approvers.
When pursuing an infrastructure project, there are many factors to consider. Companies should understand the type of procurement and resulting contractual risks and opportunities, equipment and personnel requirements, cash flow dynamics and opportunity costs, among others. We also recommend companies look for lenders with extensive expertise in the construction environment, as well as those who look ahead to new challenges and opportunities. For example, at CIBC we are expanding our focus to provide financial services to companies involved with providing fiber to individual residences and businesses, indoor and outdoor small cells, and distributed antennae systems.
Although the deployment of funds for infrastructure projects will continue to create opportunities for companies over the next several years, financing challenges will also persist. However, the right commercial lending team can help companies successfully navigate these challenges and take full advantage of new opportunities as they arise.
For more information about our flexible financing options, and steps you can take to obtain the liquidity you need to support your infrastructure-related projects, visit CIBC US Commercial Banking.
This piece was written for Crain’s Cleveland Business Opens in a new window..
1Whitehouse.gov. November 2022. “Building a Better America” (PDF, 245 KB) Opens in a new window.. Accessed January 31, 2023.
