Why Working Capital Loans are Important for Construction Companies
by Sumona Finance 19 November 2021
Due to the nature of the construction industry and the constant gaps in cash flow, having access to ongoing working capital loans is essential. It’s a well-known fact that 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.
The Faster Process Loan
Time is the biggest enemy of traditional loan processing. After loan applications, a company waits 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 shortfall when it comes to day-to-day expenses and operations.
Of course, the construction company needs a professional service that can help handle all these operations. If you live in New England, there are trusted companies that do bookkeeping for construction in New Hampshire. They aid organizations in better estimating material and labor expenses, as well as paying suppliers and employees on time and accurately.
This is without taking into account that one of your clients might take longer than 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.
3 Benefits Of Working Capital Loans For A Construction Business
If you manage any construction-based company, it’s always essential to begin and identify alternative business plans which lend benefits sooner rather than later.
When you run your research and process the application early, it allows you to implement the practical capital loans while your financial statements and credit profile are at their strongest, which will result in more economical interest rates and offer better conditions for you.
1. 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 on 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.
2. 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 must be prepared with capital loans when things get tight.
There are numerous programs available for construction companies, such as invoice financing, so it’s easier than you could ever expect to remain solvent once you have access to a lending program that’s just right for you and your business.
3. Application For Working Capital Is Simple
Applying for these types of capital loans is very simple. Just like when you are looking for a good real estate or a construction company that offer financing, you will be interviewed within a short 3 to 5-minute call to review the current and future needs of your business. Once they understand what it is you’re looking to use the capital for and what your timeline is, they will work to put the right program in place for you.
We will understand which is the best product and explain the reason why and how it will provide a benefit to you and your business. If we decide that it’s best to wait rather than apply now, we will explain why with all the details. Once we agree on the best next steps, we’ll send you a short application and a document request via DocuSign.
Even long-standing construction business owners need a partner who can provide financial benefits and support in the current market. Capital loans are always more effective than traditional business loans. You have to pay an immense amount in conventional business loans as the interest and your time are also very limited. Tremendous flexibility is that you do not have to pay the extra fees for the processing.