Due to the nature of the construction industry and the constant gaps in cash flow, having access to ongoing working capital is essential. Money is often needed for labor and materials before a project is started and throughout the project contractors are constantly waiting 30-60 days to be paid, which can cause money to be outstanding for as long as 120 days. By securing a working capital loan construction companies will be able to take on more projects and never worry about a short fall when it comes to day to day expenses, such as payroll, materials, and equipment purchases. This is without taking into account that one of your clients might take longer then expected to pay or make partial payments. Working capital loans provide the flexibility and on demand cash to get through both opportunistic and slow times, without worrying about working capital.
Benefits of Working Capital Loans for Construction Businesses
If you operate a construction company it’s important to start identifying alternative business lending options sooner rather than later. When you start your research and begin the application process early, it allows you to apply for working capital while your financial statements and credit profile are at its strongest. This will result in lower interest rates and better terms for the business. If you were to lend money to a company, wouldn’t you want to do it when business was going well?
Working Capital Loans don’t demand any fees to be paid upfront.
There are no application fees when applying for a working capital loan which means you have the ability to see what you’d qualify for without any expense. In addition, rather than relying on specific collateral, working capital loans are granted based off the current and historical cash flows of your business. This means there are no appraisal or diligence fees that a lender is going to need to collect to underwrite your working capital loan.
Working Capital can be the bridge when things get tight.
Construction businesses have frequent swings in cash flow and while there are some you can predict, there are sometimes circumstances that you won’t be able to foresee. Whether you are waiting on slow paying customers, weather impacts your ability to work, or the scope of a project changes, you have to be prepared with capital when things get tight. There are a lot of programs available for construction companies, so it’s easier then you’d expect to be prepared with the right loan program in case things get tight.
Application for Working Capital is Simple
Applying for a business loan from SMB Compass is very simple. We will have a short 3 to 5 minute call to review the current and future needs of your business. Once we understand what you’re looking to use capital for and what your timeline is, we will work to put the right program in place for you. We will understand which is the best product and explain the reason of how this will provide a benefit to your business. If we decide that it’s best to wait to apply rather then secure financing now, we will make sure to explain why. Once we agree on the best next steps, we we’ll send you a short application and a document request via docusign.
Even long-standing construction business owners need a partner that can provide financial benefits and support in the current market. Contact SMB Compass today for a free evaluation.