Whether you are considering expansion plans, raising start-up funds or looking for working capital to keep your construction business on its feet, finding financing can be challenging in any economic climate. However, there are a number of options available to explore.
In this writeup, we look at three ways to secure funding for your construction firm, including those that are closely connected to your assets.
While traditional banks are known to have strict requirements when it comes to advancing loans to businesses, they remain a popular source of funding especially if you have a large construction company.
Today there are banks that have earmarked specific funds for small business lending, so it should be easier to get yourself a bank loan regardless of scale. All you have to do is apply and provide the needed paperwork. Notice however that you’ll need a suitable collateral to get a bank loan.
Another financing option that that presents construction businesses with a good opportunity for financing is peer-to-peer lending. Peer-to-peer lending, commonly referred to simply as P2P lending, involves getting money through online services that match lenders with borrowers. The loans are advanced by fellow businesses or individuals instead of banking institutions – on a small but practical scale.
Through P2P lenders, you can get a loan much faster and with fewer restrictions compared to banks and other financial institutions. To obtain a P2P loan, you apply much in the same way as you would with a bank or some other financial institution, but without the many restrictions that you often encounter with the latter.
Depending on the situation or lending arrangement, a P2P lender may put your application through a vetting process, after which they share your application with their investors to see (often by posting it). Not all P2P lenders will follow the same process though, but the bottom line is: you’ll normally get the loan much faster and with fewer restrictions than from any bank.
Leasing your property or asset-based lending
While most construction professionals or businesses think about getting a loan as the immediate impulse whenever they need funding, loans are not your only option. Equipment leasing provides an alternative for any construction company that might not be in a position to raise the much-needed cash to meet its immediate financial needs.
Alternatively, you may be shocked to find out just how much money you have in equity tied up in your equipment. There are companies such as EquifyLLC.com that offer asset-based lending and are able to help you use that equity to receive the financing that you need, when you most need it.
In the construction business, you often have employees to pay salaries on a regular basis, frequent input costs and equipment maintenance – yet your pay often depends on completed projects. This means that you can always run into tough times and find yourself in dire need of liquidity to keep things running. When this happens, it will help to know where to look. It’s our hope that this resource helps.