You have all the skills necessary to start a successful construction business and now all you need is the financing to make it happen. There are many options available to you in order to gain the capital needed, however financing through traditional sources can be difficult to secure. Whether it will be a small or medium business or you are an established business that has exhausted the traditional funding, there are still additional financing opportunities available.
Being able to raise the necessary funds is critical for a construction business because they will be unable to take on new projects needed to turn their cash flow positive unless they can secure financing. Conventional bank loans, unsecured business loans, business cash advances and taking on a business partner can all help you finance your construction business, each one will have its advantages and disadvantages, and it is highly beneficial to explore each option.
Commercial Bank Loans
Visit several conventional banks and talk with a loan officer knowledgeable to the needs specific to a construction business. Since construction businesses are asset-heavy, ask about asset-based loans and how they can benefit your company. Any raw materials and construction equipment you have can act as collateral for a secured business loan which generally have lower interest rates than unsecured loans. Unsecured business loans are more difficult to attain, but if you do qualify for one, it can be an excellent tool to get your company started. The key to choosing the right bank loan is knowing which one will benefit you the most and which one you have the ability to repay with minimal sacrifice on your part.
U.S. Small Business Loan or Grant
The U.S. Small Business Association, or SBA, provides backing for loans up to 80% of the total or grants for small businesses. They also have access to millions of dollars in government earmarked funds and they can be appropriated to you through a grant if you meet the requirements. Grants are an excellent tool for construction and infrastructure building companies as they do not have to be repaid.
Business Cash Advances
Even if you have been turned down for traditional business loans, you may still qualify for a business cash advance. Unlike bank or conventional loans, business cash advances work on the basis of future income and deduct a percentage of each sale in order to satisfy the terms of the loan. Construction is considered risky by traditional lenders, but there are many alternative and independent lending institutions that offer business cash advances specifically for your business.
Whether you choose unsecured business loans business cash advances or try to get a loan backed through the SBA, it is essential to understand all terms, repayment requirements and length of the loan before obtaining their financial offerings.