Working capital is essential to starting and running a business. Without it, you wouldn’t be able to operate (or grow) effectively. For a flooring business in particular, there are plenty of flooring contractor loans available on the market, including everything from a bank term loan on up too, and including merchant cash advances.
As always, you should do your research to determine which type of loan best meets the needs of you and your business. When it comes to the loan options for flooring contractors, here are the four most common:
1. Equipment Loans
If what you need is new equipment, than an equipment loan is a viable option for you. With this process, lenders will provide you with the funding needed to purchase or lease equipment that’s needed to start your business. You won’t have to pay for the full cost up front either, rather, you can pay back the loan through monthly installments. You also don’t need to secure the loan with any of your business or personal assets since the equipment itself serves as collateral.
2. Business Line of Credit
If you need a loan that offers more flexibility, you might want to check out a business line of credit (LOC). This type of loan is not like a traditional loan where borrowers are given a lump sum of money. Instead, banks and online lenders will give you a predetermined credit limit that you can draw funds from whenever you need to. You only repay the amount you’ve withdrawn, plus interest – not the entire credit limit.
Since you can withdraw and repay whenever you need to, a business line of credit is a great source of funding that can pay for unforeseen business expenses. It offers added flexibility that other types of loans do not. A nice feature about an LOC is, once you’ve repaid your credit, you can withdraw from it again without having to reapply.
3. Merchant Cash Advance
A merchant cash advance (MCA) is entirely different from conventional business loans because it’s actually not a loan. With a merchant cash advance, you ‘sell’ your future debit or credit card deposits in exchange for instant cash. While an MCA is more expensive, it offers faster funding than other financing options. You generally are able to receive the funds within 24 hours to a couple of days from the time you initiate the transaction.
4. SBA Loans
Having a hard time qualifying for bank rate financing?
If you’ve been turned down by banks before, try applying for SBA loans. The Small Business Administration (SBA) created SBA loans to help small businesses secure financing. The SBA guarantees your loan by up to 85%. This minimizes the lenders’ risks and encourages them to take on small/new businesses. Business owners commonly use SBA loans for refinancing and consolidating debts, acquiring new businesses, working capital, purchasing equipment, adding inventory, and paying for other business expenses.
Flooring Contractor Loans for Your Business
If you feel like you’re ready to apply for a flooring contractor loan, SMB Compass can help! Our lending experts will walk you through the steps and answer all of your questions.