Why Working Capital Loans are Important for Construction Companies

How to use working capital for a construction company

Due to the nature of the construction industry and the constant gaps in cash flow, having access to ongoing working capital is essential. It’s a well known fact money is often needed for labor and materials before a project is started and that throughout a project contractors are constantly waiting 30-60 days to be paid.

This results in a company waiting for as long as 120 days to have cash come in. 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 and operations.

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 give you flexibility and an ability to get through both opportunistic and slow times, without falling short of working capital.

Benefits of Working Capital Loans for a Construction Business

If you operate a construction company it’s important to start identifying alternative business lending options sooner rather than later. When you begin your research and the application process early, it allows you to apply for working capital while your financial statements and credit profile are at its strongest, which will result in lower interest rates and better terms for you.

Working Capital Loans don’t require fees to be paid 

There are no application fees when applying for a working capital loan. This means you have the ability to see what you qualify for without any out-of-pocket 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 will demand in order to collect or underwrite your working capital loan.

Working Capital can be the bridge when things get tight

Construction businesses often have frequent swings in cash flow that you cannot foresee or predict. Whether you are waiting on slow paying customers, or if weather impacts your ability to work, or if even the scope of a project changes, you have to be prepared with capital when things get tight. There are numerous programs available for construction companies, so it’s easier then you could ever expect to remain solvent once you have access to a lending program that’s just right for you and your business.

Application for Working Capital is Simple

Applying for a business loan from SMB Compass is very simple. We start with a short 3 to 5 minute call to review the current and future needs of your business. Once we understand what it is 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 why and how it will provide a benefit to you and your business. If we decide that it’s best to wait rather then apply now, we will explain why with all the details. 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 which can provide financial benefits and support in the current market. Contact SMB Compass today for a free evaluation.


Matthew Gillman

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