The construction industry can be extremely rewarding if you are able to take advantage of lucrative opportunities at any given time. Unfortunately, many construction contractors do not have this luxury thanks to the various cash flow difficulties that come with completing consecutive and/or lengthy projects.
Much like established landscapers, construction contractors must consistently produce high quality results to prevent their clients from taking their business elsewhere. You can’t produce high quality results without high quality equipment and team members. Obtaining these tools wouldn’t be an issue if equipment wasn’t so expensive and construction contractors didn’t have to wait 90 to 120 days to get paid. You don’t have to have construction experience to envision contractors scrambling for cash in order to pay their workers or start a project no later than the assigned date.
The solution is alternative business lenders like United Capital Source, which offer numerous loan programs designed for these exact dilemmas. A small business loan for construction contractors from an alternative business financing company could prevent contractors from having to turn down work because their funds are so tied up in keeping their businesses alive.
NO COMPLICATIONS NECESSARY
You could ask clients to make deposits up front or shorten their payment terms but the negotiation that ensues could only complicate your relationship, and there’s a good chance your client could just as easily find another contractor who will take them up on their terms. Applying for a bank loan is a very tedious process as well, one that is filled with mountains of paperwork and a laundry list of criteria, including net worth, credit score, and the ability to provide collateral. The application for a loan from an alternative lender, however, takes just minutes to complete and only needs to be accompanied by a few financial documents to prove that your business is raking in steady revenue.
Collateral and a perfect credit score are not necessary, largely because it’s so common for contractors to experience difficulty paying creditors on top of everyone else they owe money to, such as workers or equipment suppliers. Terms for financing from alternative business lenders are flexible but very simple. In most cases, the contractor is supplied with enough money to fund the task at hand and then repayment occurs as revenues come in from the project.
GETTING CASH FAST
Construction projects are time sensitive, which means contractors must accept the project and begin purchasing equipment right away. This isn’t easy if the contractor is already involved in another project or is still unable to pay him or herself for the previous one. Banks are not a reliable source for fast cash since they take months to approve loan applications and twice as long to get funded. Businesses that need cash right away to stay competitive (and there’s a lot of them) should instead turn to alternative lenders, which can approve small business loans in under 24 hours and distribute funding in a matter of days.
You’re probably wondering what happens when the funding runs out and you need more money for another lengthy project. As long as you pay off the first loan on time, you are eligible for a second funding program that can potentially have better terms than the first one. Some construction businesses take out working capital loans at the same time every year because they know they’ll be faced with bigger projects during certain seasons, most notably the summer.
FINANCING EQUIPMENT AND INVENTORY THE RIGHT WAY
According to Digitalist Magazine, construction projects have grown larger and more complex, meaning they require more equipment, more workers and more working capital. This might explain why it’s so common for contractors to purchase equipment when it was more affordable to lease and order too much inventory, weakening their company’s net worth. Most contractors just choose the least complicated options without considering long-term effects, such as equipment becoming outdated and maintenance costs.
It seems that contractors are also underestimating the likelihood of project mishaps, or the need for more than just enough money to pay for equipment and labor. Such mishaps are apparently responsible for the stagnation of construction productivity over the past 50 years as well as the shrinking profit margins for construction companies, which range between 2% and 8%.
The business funding experts at United Capital Source are up to date with construction funding and have years of experience in helping contractors receive the right amount of funding for equipment and compensation for unexpected fees. If you aren’t sure how much working capital you’ll need to get a project done on time, UCS will gladly guide you every step of the way. Our funding programs guarantee minimal impact on cash flow, meaning your payments to inventory or equipment suppliers will not interfere with your next project.
FUNDING FOR YOUR BUSINESS IS FINALLY WITHIN REACH
When a construction contractor builds a track record of successful projects, he or she gains the authority to establish a payment policy that prevents delays in collection. But you can’t build such a record without the funding to complete consecutive projects in a timely manner. If you are approached for an important project with milestone payments, call 855.933.8638 or visit the UCS website. UCS business funding experts are ready to show you why they know more about financing construction projects than anyone in the lending industry!