Who Can Apply for Contractor Business Loans?

by | Jun 23, 2022 | Construction | 0 comments

Contractor business loans are designed for those who work primarily in the construction industry. As contractors and subcontractors know, money coming in for jobs and projects completed isn’t always received as soon as that work is done. Meaning, that you are left waiting for the funds. Meanwhile, you have your own invoices to pay, as well as other expenses such as payroll and overhead. This is often why people who do work in the construction industry will apply for contractor business loans.

What is a Contractor Business Loan?

Simply put, contractor business loans are those loans geared toward construction professionals. Often individuals who are in various trades such as plumbing, electric, and carpentry will apply for a contractor business loan. Construction companies and home builders might also consider applying for a contractor business loan. The upside here is that you get the money you need to run your business precisely when you need it. You are not waiting on customers to pay their bills in total to get your money.

Who Issues Contractor Business Loans?

You can turn to various sources to get the money you need for your contracting or construction business. Traditional banks, for example, will frequently issue loans to construction businesses. Also, a trendy alternative is online lenders. Online lenders work a bit differently than banks do.

Versus the bank loan process, an online lender will give you a decision usually the same day that you apply. Everything is done online; you submit documents online, fill out an online application, and manage your business with that lender online.

Additionally, unlike conventional banks, an online lender will take a big picture approach to construction lending. This simply means that they are not fixated on just your credit score or credit history. Rather, they look at the entirety of your company or business. They look to see what value you bring to the table. And based on the work you have done and the work you are projected to do, they will make a decision. Usually, clients will receive money from online lenders within just a couple of days. When working with a bank, you are often left waiting for weeks if not months. This certainly is not the case with alternative and online lenders.

Construction Business Loan Types

So how does it work? How do you go about getting the money you need to run your business? Contractor business loans are not as challenging to get as many people may think. And in fact, there are a variety of loan options out there for contractors and construction businesses.

SBA loans

Among the most popular loans for contractors are SBA loans. This is because they have favorable terms and lower interest rates than other loan types. And, if you have been turned down for other business loans, then considering an SBA loan is a good option. Loans in this category can be up to $5 million. You have to fall under the qualifications of the SBA‘s designation for a small business in the United States. You do have to meet certain benchmarks and criteria as well. Remember that you may have to provide a deposit or percentage of the loan’s total value.

Equipment financing

In the world of construction, the use of heavy machinery is an everyday reality. Keeping the machine and equipment updated is crucial to your business. This is where equipment financing can really help. The good thing about equipment loans is that the machinery or equipment in question will usually serve as the security on loan. You can thus often get 100% financing.

Short-term loans

As the name suggests, a short-term loan is taken out over a short period – usually from six months to three years. This is ideal for contractors whose work may be seasonal and who need cash during the slower times. The interest rates can be higher with this type of loan product, but again, you’re paying it back over a much shorter period.

Lines of credit

Lines of credit can be ideal for contracting businesses. This is because you only pay interest on the amount you draw from the line. Additionally, once you pay that money back, it is again available for you. You might think of it as a credit card with much higher borrowing.

We understand that contracting and construction businesses need money. This is a reality of the field and a necessity to keep business running smoothly. This is why we work with many construction companies throughout the United States. We truly want to help.

First Union is Here for You

We specialize in contractor business loans if you need additional catch for your contracting or construction business. We can assist you if you need money to boost cash flow, help with payroll, or start a new project. With resources ranging from $5000 to $1 million, we have the cash on hand right now to find your business. Call today, and let’s get started.