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Construction Invoice Factoring
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What You Need to Know
The construction industry is one of the largest and most active sectors in the United States, but it’s also one of the most, if not the most, capital-intensive. There is a constant demand for capital to pay downstream subcontractors, suppliers, and vendors. Even with some of the best practices and industry expertise, project timelines can get delayed, payments from general contractors or property owners can be held back, retention can pile up, and cash flow can be strained.
When it’s about when you get paid and not if you get paid, then factoring for the construction industry is one of the most reliable and effective financing products that can be used. Invoice factoring allows for immediate payment on invoices and provides business owners with the comfort that SSVs will get paid on time, allowing for timely payments. With our factoring solutions, you can get access to up to 90% of your outstanding invoices within 24 hours.
This frees up much-needed cash flow, allowing you to focus on what matters most – completing projects on time, paying employees, running your business, and making money!
What is Construction Factoring?
Construction factoring is a helpful cash flow tool for general contractors and subcontractors who deal with 30-90+ day invoices and need to pay current expenses. Instead of waiting for customers to pay their invoices, which can take weeks or even months, construction factoring allows you to sell your invoices or borrow against them.
Once your customer pays the invoice, the factoring company receives the full amount and deducts its fee from the remaining balance. This frees you from chasing customer payments and gives you the cash flow you need to keep your business running smoothly.
How Factoring Construction Invoices Work
- You complete a project and send an invoice with backup to your customer
- You load the invoice package into your factors portal
- The factoring company advances you up to 90% of your invoice in as fast as 24 hours
- Once your customer pays, the remaining balance of the invoice is paid to you, less the factoring fee or interest.
Factoring can be a good option for construction companies of all sizes, but it's especially beneficial for those who are growing quickly, but can’t collect money fast enough. Many companies are making money on an accrual basis, but can’t catch up on a cash basis! Healthy companies with poor cash flow!
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Why Should You Finance Your Construction Invoices?
Construction projects are notorious for extended payment cycles. Clients may take weeks or even months to settle invoices, leaving your company waiting for critical funds to operate. Invoice factoring offers a powerful solution to bridge this gap and unlock the full potential of your business. Here's how:
Improved Cash Flow
The most immediate benefit is the injection of cash into your business. By receiving a cash advance on your unpaid invoices, you gain access to a significant portion of the invoice amount upfront. This steady cash flow allows you to pay employees, suppliers, and other bills on time, without relying on delayed payments.
Fuel Business Growth
Consistent cash flow is the lifeblood of growth. Invoice construction financing allows you to take on new projects, invest in essential equipment, and expand your team. This flexibility lets you seize opportunities and scale your construction business without being restricted by outstanding invoices.
Enhanced Project Management
Predictable cash flow translates to better project planning and execution. You can confidently purchase materials, schedule labor, and meet deadlines without worrying about cash flow disruptions. This leads to smoother project management, increased efficiency, and potentially higher customer satisfaction.
Streamlined Operations
Instead of dedicating resources to chasing late payments, invoice financing allows you to streamline your operations. You can automate the financing process and free up your valuable staff to focus on core business activities. This translates to cost savings and a more efficient organization.
Early Supplier Discounts
With improved cash flow, you can leverage your buying power to negotiate better deals with suppliers. Supplier early payment discounts can translate to significant cost savings for your construction business.
Flexibility in Financing Options
Invoice factoring offers various options to tailor the solution to your specific needs. You can choose to finance all your invoices or just a select few, depending on your cash flow requirements. This flexibility allows you to manage your working capital effectively.
How to Qualify for Construction Factoring
If you're interested in getting invoice factoring for your construction business, here's what you'll generally need to qualify:
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1+ years in business
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Minimum $20k/mo in revenue
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Minimum credit score of 650 or higher
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One-page application
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3 months of bank statements
A traditional bank loan can be a slow and complex process for construction companies. Here at SMB Compass, we understand your industry's unique needs. Our construction factoring solution is designed to quickly provide you with the working capital you need.
Our requirements are tailored for construction businesses, making the approval process smooth and hassle-free. We don't get bogged down in lengthy applications.
We understand your time is valuable. Our streamlined assessment focuses on what truly matters – your agency's revenue and ability to place qualified candidates. Let us handle the financial complexities so you can focus on building a successful construction company.
How To Apply for Construction
1. Quick & Simple Online Approval
Our secure online form takes just minutes to complete. To get a clear picture of your operation, we'll ask for essential details about your construction company, including revenue figures.
2. Skip Mountains of Paperwork
We only require a few key documents, like bank statements or tax returns, that you can upload securely through our system. We prioritize a smooth and efficient factoring process, minimizing the hassle for you.
3. Rapid Funding Decisions
We understand that time is money in the construction industry. That's why we prioritize quick approvals. You'll receive a fast funding decision within a short timeframe, allowing you to access the capital you need and keep your business moving forward without delays.
Finalizing the agreement is a breeze once approved. We'll handle any remaining information and deposit the funds directly into your account. This ensures quick and convenient access to the capital you need, empowering you to focus on what truly matters – building a thriving construction company.
Ready to Get Funded Today?
Quick application loan process and approvals in less than 48 hours
Get the Funds You Need for Your Construction Business with SMB Compass
Slow payments shouldn't stall your progress. SMB Compass invoice factoring is the key to keeping your construction business moving forward. Get the working capital you need when you need it to cover payroll, purchase materials, and seize new opportunities.
Our streamlined process is designed for busy construction companies:
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Quick and easy online application.
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Minimal paperwork required.
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Fast funding decisions.
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Direct deposits into your account.
Stop waiting on clients and start building success today! Apply for invoice factoring with SMB Compass and see the difference immediate access to capital can make for your construction business.
Fill out our simple application in minutes and receive a funding decision fast. There's no obligation, so apply now and build the construction business of your dreams!
Ready to Get Funded Today?
Quick application loan process and approvals in less than 48 hours
Quick Application
How To Apply for Construction
Applying for a business loan is easier than you think
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FAQs
Common Questions. Straight Answers.
No, small business loans aren’t hard to get as long as you have the right tools and resources. Here’s a list of what you need to do to increase your chances for approval:
- Know what lenders are looking for (revenue, collateral, personal and business credit score, and industry preferences)
- Decide on the type of loan for your business.
- Look for potential lenders and gather the necessary documents.
- Work with a financial advisor like SMB Compass. We’ll walk you through the entire process – from filling out the initial online application to submitting your application to our network of lenders to closing the deal.
Loan requirements vary depending on the lender you’re working with and the type of loan you’re applying for. Here’s what we usually look for from borrowers:
- 1-Page online application
- 3 to 6 months’ worth of bank statement
- at least two years in business
In general, the factors that disqualify you from getting a loan are as follows:
- Limited cash flow
- Poor credit history
- Lack of a solid business plan
- A risky industry
- Insufficient collateral
- Insufficient time in business
- Missing documents or information
The loan limit depends on the type of loan you’re looking for.
- Business Line of Credit: $5,000,000
- Inventory Financing: $10,000,000+
- SBA Loans: $5,000,000
- Invoice Financing: $5,000,000
- Business Term Loans: $5,000,000
- Equipment Financing: 100% equipment value
- Purchase Order Financing: $10,000,000
- Bridge Loan: $5,000,000
- Asset-Based Loans: Up to $100,000,000
The minimum loan amount depends on the type of financing you’re looking for.
- Business Line of Credit: $5,000
- Inventory Financing: $25,000
- SBA Loans: $50,000
- Invoice Financing: $25,000
- Business Term Loans: $100,000
- Equipment Financing: 100% equipment value
- Purchase Order Financing: $25,000
- Bridge Loan: $25,000
- Asset-Based Loans: Up to $100,000,000
The first step to choosing the right lender for you is to know what you need. How much money do you need to borrow? What do you need it for?
The next step is to research and compare different lenders. Verify their credibility by checking their rating on the Better Business Bureau, reading online reviews, and looking for upfront loan terms, an official website, and contact information.
Ready to Get Funded Today?
Quick application loan process and approvals in less than 48 hours
