In US, construction industry is one of the largest sector with expenditures reaching over $1,231 billion. There have been seen some positive trends in the construction industry. The current value of the US construction industry is now 4.3% of GDP.
Industry experts say that the next five years are expected to be growth years and will see a rise in demand for retail buildings.
With these numbers in mind, there are also some small level construction companies that are looking to grow their business, but due to lack of cash, they can’t make their dreams come true. Financing a construction business is a real problem especially when you have an opportunity around. There are lots of challenges and obstacles in getting funding.
When to Consider a Construction Business Loan?
- Construction materials & supplies
- Hiring workforce
- Paying lease on land
Business Loan for Construction Services
Since the strict sets of requirements and long wearing lending process, banks are not in the game of providing quick funding. Most constructors businesses first think about banks when looking for funding, but quickly fed up with their complicated lending process. With quick lending process and affordable rates, alternative lenders are now leading the lending market. Alternative lenders offer variety of funding programs with flexible repayments.
Alternative Business Loans for Construction Businesses
Here are some of the best alternative business loans that will better serve your business needs;
SBA loans are the most secured types of loan with government guarantee. These loans are somewhat similar to commercial loans, but due to government involvement, they come at flexible rates and terms. SBA’s CDC/504 loans are especially designed for construction businesses, helping in the purchase of land, renovation of work area, buying equipment and other construction related machinery. SBA 7(a) loans are another funding program that can help your construction business in managing cash flow, funding a new project, purchasing supplies and materials as well as refinancing existing debt.
Construction business requires lots of heavy equipment and machinery and equipment loans are especially designed to help purchase the required equipment. With equipment leasing program you can lease your required equipment at competitive rate. You can not only take advantage of the equipment, but at the end of the leasing term, you have the choice to own the equipment.
Commercial loans are best fit for construction companies looking to construct a building, condo, residential apartments, and shopping malls, and so on. These loans provide debt-based financing between lender and company. Commercial loans carry a reasonable underwriting criteria. However, in repayment, you need to pay full interest rates over a set period of time. For approving a commercial loan, lenders considers your business’ annual revenue, cash flow both inflow and outflow, balance sheets as well as profit and loss sheets.
Business Line of Credit
These lines can help construction businesses to manage business contingencies and to cover cash flow problems. Also a line of credit can also be used for purchasing inventory and supplies, for a new or future project costs, for payroll as well as for buying equipment. In business line of credit, you have an advantage of paying interest on funds that you draw from it. Plus your credit doesn’t matter.
This type of alternative loan is based on providing funding that is secured by business’ assets. Asset based loans are designed to work as revolving lines of credit and this structuring allows construction businesses to borrow from their valuable assets to cover operational and other unexpected expenses. This type of alternative financing is usually used for business growth purposes.
If you have any questions or concerns, please call us on our toll free number (833) 827-4412. Alternatively, get your free online quote by filling our online application form, if you’re ready to apply for construction business loans.