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It’s no secret that operating within the construction industry is capital-intensive. Construction business owners need to shell out money in order to make money. Fortunately, you don’t have to finance construction projects out of pocket. Construction business loans are available to help contractors financing the costs associated with construction projects such as on-site facilities, materials, equipment and machinery, payroll, and working capital.

While it’s possible to bootstrap initial operations, eventually, you may need to apply for construction business loans to facilitate the growth of your construction company. But before anything else, it’s important to know what you’re getting into.

Factors to Consider in Choosing the Best Construction Business Loan

You’ll need to invest in the growth of your business before taking on new clients and accepting more projects. With that said, it’s important to have quick access to working capital for contractors in the construction industry.
There are different factors that determine the best type of loan for your business. As you search for the perfect construction business loan, here are six things to consider:

• Cost: Not all high-APR loans are bad. In fact, sometimes, it’s wiser to apply for short-term loans with higher rates to control your cash flow.

• Speed: If you need immediate funding, do know that working with traditional lenders take time. Check out alternative loans from online lenders instead. Application and funding process takes as little as 24 to 48 hours.

• Flexibility: Make sure to know what your company needs so you’d know which type of loan is best for you. Many business owners take on a business line of credit because of the flexibility it provides.

• Loan Amounts: Some business owners look to borrow as little as $500 while some want to borrow $5,000,000. The type of loan you’re going to pursue also depends on the amount you’re looking to borrow.

• Specifications and Requirements: The requirements vary depending on the type of loan. Make sure to ask your lender about this.

• Terms and Rates: Again, the terms and rates depend on the loan. You may have to make monthly or weekly payments; fixed or not fixed. Make sure to match loan payments to your income to prevent cash flow shortage.

Top 5 Construction Business Loans for Your Company

Now that you know what you’re looking for in a loan, it’s now time to narrow down your search. Here are the top five most common small business loans for contractors.

1. Business Line of Credit

As mentioned, a business line of credit is one of the most flexible financing options available. With a business line of credit, lenders assign you to a predetermined revolving credit line. You can repeatedly repay and withdraw from the line without having to reapply. Furthermore, you only have to repay the funds you’ve withdrawn plus the interest – not the entire credit limit. A business line of credit is great for contractors who need immediate financing to pay for expenses on a new or ongoing project. You can use the funds from the loan for any business purpose.

2. SBA CDC/504 Loan Program

We all know how hard it is for small business owners to secure funding from traditional lenders. Therefore, the government – the Small Business Administration (SBA) created loan products specifically for small businesses that struggle to qualify for funding.

One of the SBA loans is the CDC/504 loan, which happens to be one of the most popular construction business loans. SBA loans, including this one, come with low down payments, competitive interest rates, and longer repayment terms than traditional loans. SBA-approved lenders will loan you 40% of the costs to needed for the project – renovating existing facilities, building new ones, or purchasing land. Another lender will give you 50% of the project costs, while lenders expect you to provide the 10% or 20%, depending on the lender you’re working with. Repayment terms can go as long as 20 years and the interest rate depends on the U.S. Treasury market rates.

3. SBA 7(a) Loan Program

Another SBA loan suitable for construction companies is the SBA 7(a) program. You can use the funds for almost every business purpose, including the purchase construction equipment and commercial real estate. Just like the CDC/504 loan, you can receive up to $5,000,000 and the repayment terms can go up to 25 years. The 7(a) loan is one of the sought-after business loans because of its flexible use of funds, longer repayment terms, and lower interest rates.

4. Short-Term Loans

Short-term loans are great for contractors who need working capital for predictable business expenses. With short-term loans, borrowers are given a lump sum amount which can be repaid regularly, whether weekly or monthly. However, these loans can have a higher APR compared to long-term loans, but the key is to repay the loan within a year to save on interest rates. You can use a short-term loan for immediate purchases, as well as for daily business expenses, such as hiring new workers, making payroll, paying for utilities, and other business expenses.

5. Equipment Financing

In every construction project, you’ll need equipment to get the job done. However, construction equipment can be expensive and startup companies or newer firms may not have the funds to finance all the equipment needed to complete a project. Equipment financing provides you with the funds you need to lease or purchase construction equipment. Similar to traditional loans, you can repay the loan in regular installments. However, you don’t need to put up personal or business assets since the equipment being financed serves as collateral. In case of default, the lender will have the right to repossess the equipment.

Apply for Construction Business Loans Today!

Construction business loans can help keep your business afloat while you wait for your clients to pay you for services rendered. Banks loans take weeks or months before you can receive the funds. If you need cash quickly, SMB Compass offers construction business loans in as little as 24 to 48 hours.

It’s undeniable that the construction industry is booming. Over the past years, the demand for construction services is continuously growing, making it one of the most lucrative industries today. For this reason, many entrepreneurs venture into the world of the construction industry. If you’re one of the many, then you know that you need construction business loans to survive in a cutthroat environment.

The best way to keep your business afloat in the midst of heavy competition is to secure financing and aggressively market your business. With that said, here are four innovative ways to do so:

1. Be a Part of an Industry Association

Industry associations usually have resource hubs where contractors can network and make quality connections that will eventually lead to success. This is especially true since building relationships and making connections are important in the construction industry. Additionally, members are often allowed to advertise or market their services at low or no cost.

2. Remember Your Existing Clients and Leads

Contractors are often caught up with everyday business operations that they tend to overlook the simplest marketing strategy: following up your current leads and clients. Failing to follow up on current leads means you’re possibly missing out on great business opportunities. Likewise, you should also contact customers a few months after doing business with them. Check in and ask them if you can help them with anything. A simple call or email would suffice. When customers are happy with your service, it can lead to more business and you can even ask for referrals.

3. List Your Business in Online Directories

When a potential customer searches for the best construction company in the area, search engines often show you online directories rather than individual websites. One way to market your construction business is to list it in online directories. When listing your business, include your name, address, contact number, business hours, etc. and leave no detail behind. The details you include can affect your ranking in the directory, so make sure to double check everything. Check your online listing regularly to answer questions and respond to customer feedback.

4. Be Specific When Advertising Your Business

It’s easy to be overwhelmed when advertising your business. Some entrepreneurs list every single service they offer in their ads, but this strategy can actually backfire. Telling your target market that you can do everything can actually be boring and it can even scare customers away. The most effective way is to advertise your skills one at a time. By advertising in small fractions, you can keep your target customers engaged, which increased the likelihood of them availing the services you offer.

The Best Construction Business Loans for Your Business

When running a construction business, you need working capital to stay afloat in a competitive industry. SMB Compass offers construction business loans for businesses throughout the United States. Our trusted financial advisors can help answer the questions you have in mind. Feel free to call us (888) 853-8922 or email us at info@smbcompass.com to know more.

Singapore is one of the most competitive and most comfortable countries to do business in Asia. Starting your own business or franchise in Singapore could be easy, especially if you know what industry to enter. But before venturing into your business, make sure that you have set your finances straight. One of the ways in doing this is by opting the aid of licensed money lenders to jump-start your business’s capital. Here’s a guide on how to choose the right type of loan for your small business.

What Kind Of Business Industry Do Do You want To Enter?

Depending on the nature of the industry you want to enter, you want to choose money lenders which suits your need. Obtaining loans from money lenders are easy these days. This is especially because money lenders already have specific programs for people who want to open a particular type of business. By choosing a program targeted to your industry, money lenders have already pre-empted the needs of specific industries and how best to distribute the loan.

To attract the attention of borrowers, money lenders make favorable payment schemes and better interest rates. Always put your options in front of you and choose one which you think matches your needs. This is crucial for to meet your demands. Determine which money lenders have a program best suited to your needs and your industry.
Also look at its terms and conditions and make a preliminary judgment if you are willing to stick with the state until the end. Among the initial question, you also ask yourself is if it is flexible enough to meet your needs. With these preliminary considerations in mind, starting your small business should be a breeze.

How Much Money Do You Need And Where Will You Use Them?

After determining the industry you want to enter, you need to ask yourself how much do you need? The loan you obtain from the money lender depends on the amount of capital required to start your business. You also have to look at your current pool of money and how much more do you need. A guide to figuring out how much you need is to make a preliminary list of all the things you need for your capital expenditures.

Capital expenditures could include the following: the cost of purchase of your land, the construction of your place of business, obtaining a business permit and its necessary taxes, procuring the materials for your inventory and these are only among the things you should identify from the very start.

This is important because you do not want to understate the amount of money you need to start your business and lack funds later on. This may lead to delays in starting your business. Moreover, lacking funds in the middle of starting your business means you have to obtain the new loan from money lenders.

This means providing them with additional requirements and collateral. In case you have an excess of the money you borrowed, make sure to be frugal and invest or use the money for other expenditures. Never use it for your expense.

Will You Be Able To Pay The Money Lender?

One of the most critical question to ask yourself is will you be able to pay your money lender? What this question asks is not for the immediacy of you paying but of your ability to pay. Your ability to pay is often of the primary considerations of money lenders to determine if your loan is granted. If it shows that you have defaulted on your previous loans or if you have insufficient proofs to give the money lender of your ability to pay, this may result in your loans’ denial.

Money lenders usually provide reasonable and flexible payment schemes and programs. Choosing the right payment plan helps you with your ability to pay, and this is one of the things people overlook doing. One of the things borrowers have to be mindful of is that loan payments can be made in an installment manner or on a one-time payment basis.

Choosing the installment method distributes the expense into smaller costs and within shorter months. This is easy to do as long as the borrower always keeps a portion of its revenue for their loan payment. A one-time payment basis is often hard for some borrowers to comply with because they think of the aggregate amount of the loan and how hard to achieve the overall amount.

One of the best solutions for this is to imagine that your investment is on an installment basis. Thus, make sure also to keep a portion of your revenue every month.

Do You Have Enough Collateral For The Loan?

Before you can obtain a loan, one of the requirements money lenders asks for is collateral. This collateral serves as the guarantee to money lenders that the loan will be paid. Insurances can be in the form of property or equipment which would be levied if you do not pay your mortgage. With this in mind, you have to make sure you have enough features to present as collateral. This also serves as evidence of your ability to pay. Also take note that depending on the loan you obtained, some require more significant insurance while some do not require one at all.

Always make sure that the collateral you give to money lenders are yours. One of the most significant problems money lenders face is that some of the guarantees they receive are often not owned by the borrowers. Instead, it is owned by someone else who is not a borrower. This causes headaches to money lenders because then they have no guarantee of the loan being paid. More importantly, be responsible when it comes to providing information about the thing being used as collateral.

Only Choose Licensed Money Lender

The one and most important thing that you should remember when obtaining loans are always to get it from licensed money lenders. The government usually certifies some companies or individuals authorized to grant loans to ensure safety between the borrower and money lender. The requirement of government approval is necessary because it makes sure the business is legitimate and transactions will be provided.

Never make the mistake of approaching anyone who is not sanctioned to lend out money. If you do, your interest, as well as your businesses’, will not be guaranteed. With the world today, our safety is no longer guaranteed. There are some however who make the mistake of obtaining loans from unauthorized money lenders.

Some of the effects of borrowing from illegal money lenders could be the interruption of starting your business, your business not pushing through at all for the inability of funds and one of the most important things to be wear about is high-interest schemes.

Conclusion

Do not hesitate to take leaps of faith in starting your own small business in Singapore. Following the guide above, always keep in mind to only choose licensed money lenders to ensure the safety of your companies success. Still be alert of potential scandalous money lenders in doing your business.