Construction business owners know when to take advantage of growth opportunities in the market. But sometimes it isn’t always possible. Despite wanting to move on potential projects with large equipment demands, cash flow concerns may be a barrier. Alternative business lending programs for equipment financing help business owners have the capital necessary at any given moment, giving them leverage to make quality decisions.
Why construction companies need equipment financing
Even owners who have been in the business for a long time still experience hard times every now and then. In fact, with larger and more involved construction projects, the probability for mishaps increases. Invoices that don’t get paid, equipment repairs, city permit and code surprises that tack on project costs – all of these inconveniences eat up available cash which might leave you lacking when the perfect opportunity presents itself.
A business may also want equipment financing just to avoid using operational cash flow. Applying for a working capital loan for operations is a more complicated process. Taking advantage of the reasonable terms and ease of application for equipment financing keeps a business from dipping into their cash reserves.
What is equipment financing?
If a construction company requires new, used, or leased equipment, they have the choice of using available cash or using equipment financing programs. These types of loans amortize over 12 to 60 months and can be used for both construction equipment or operating equipment such as phone systems, computers, or vehicles. Keep in mind that the type of equipment you need may have an impact on the terms of your financing. This is because some equipment, like phones and computers, depreciate faster than other types of equipment like front loaders.
What is the equipment financing application process?
The application for equipment financing from a lender like SMB Compass operates differently from traditional lenders. It takes just a few minutes to provide the information needed to show your business has more revenue coming in than expenses going out. That’s the “big picture” view a quality alternative lender takes to offer you loan programs that will fit your business. So high credit scores, collateral, week and month-long application processes, and upfront fees don’t have to be a part of the equation. Neither do unmanageable repayment terms. In fact, none of these issues means “No” is automatically the answer:
- Tax liens
- Debt problems
- Low or no credit history
Lenders decide the terms for equipment financing based on several factors. These can include the business credit, the history of the business, the accounts receivables, bank statements, and the equipment need.
Why Do Alternative Business Lenders Exist for Equipment Financing?
Making an application with a traditional bank lender is a complicated process. You can expect to have to turn over a lot of paperwork, have your credit analyzed with a fine-toothed comb, and also have to provide collateral. If you don’t want to go that route, maybe you could turn to your customers and ask them to change payment terms or increase deposits, neither of which makes you look good as a legitimate business owner.
Alternative funding companies fill the gaps. They still believe in the little guy and know that just because a business has a few dents and dings, there can always still be the potential for prosperity. There might be a certain niche in the market that your business is primed to fill. There could be disaster recovery projects in your area with not enough contractors to fulfill the need. Whatever the reason, these types of lenders know how to partner with a business and get their credit back on track. All while providing much-needed funds throughout the process.
Take the Next Step in Moving Your Construction Business Forward
Start building your portfolio and establish a lending record with SMB Compass today. We have a variety of loan programs for all types of construction equipment and operations. Visit SMB Compass today and get the funds your business needs to thrive.