Construction companies are a popular and lucrative business, especially with the increasing population, housing and infrastructure have become more and more important. This gives an immense opportunity for entrepreneurs who wish to start a construction businesses. However, hefty capital investments are required and loans for contractors may be difficult to obtain. Each company may specialize in a different form of construction and may require different tools, technology, equipment, inventory, and labor. Be it a company that has well established itself over a period of years, or be it a beginner, everybody requires working capital and will have to rely on loans more often than not. What any entrepreneur working within the construction sector looks for is that the loans for contractors should ideally cover repairs, services, purchases and maintenance of inventory, machinery, and equipment required to deliver quality oriented results. In certain cases, companies may also look for loans that may cover employee payroll and marketing oriented expenses, especially the young construction companies, who are looking to make a name for themselves.
Why banks may not be such a good choice
The credit market does have an opportunity to acquire loans for different businesses, however, not all may deliver to a construction company’s expectations. It is a difficult task to find loans for contractors that are the best fit for the applicant. When loans come into consideration, the first option that people think of is commercial banks. The challenge here is that a bank does not understand or take into account the challenges a construction company may undergo and will stick to their own process. Unlike the speeded capital requirements for a construction company, a bank has detailed and time-consuming processes to approve loans. There is a lot of paperwork involved and a lot of waiting. Then comes the repayment. Although at a reasonable interest, the bank does have fixed installments and companies delaying these installments may be fined or worse, be blacklisted to ever apply for a loan. These banks do not understand that a construction business unlike regular businesses, faces payment delays, quick capital injections and seasonal sales, which causes easier paybacks during some months while having a difficult time paying back the same amount another.
Established businesses may have a hard time getting their applications approved by banks since loans for contractors also demand an established name in the market, good reputability with clients and a decent credit rating. Since some construction companies may likely not have either and are looking for loans to either fund one of the three requirements of the bank, it is highly unlikely that their loans will get through. Business owners, especially for these construction companies, in this case, try and seek out other options of borrowing money to inject into their business. Various options including Credit Line, Equipment Financing, Short Term Loans, Business Cash Advance and Invoice Financing options are available. These options may be more feasible than a traditional bank loan, however, may have their own constraints that need to be dealt with.
Merchant Cash Advance
Cash Advances are in fact one of the most efficient ways to raise working capital funds for a construction company. These advances are similar to short-term loans in one way or another and provide quick finance required for a small time period. These advances are usually quickly paid off and can be taken to aid for multiple different capital needs at a time. This makes it an ideal funding mechanism to provide loans for contractors as not only are they flexible at their lending end but also at their returning end. The idea of repayment is based on acquiring company’s effective sales in the near future. The lender buys a portion of the acquirer’s future sales revenue, making this a process where business owners pay back the amount only when they actually earn after a sale. This happens by setting up a percentage margin of the revenue that will come in which needs to be paid to the advance provider. This makes it easier for construction companies to pay back since they are only returning part of what they earn and not a fixed amount despite their profits.
An upfront cash payment is provided to the business owner by the advance providing firm and the process of approval is speeded. It takes a minimum of few hours to a maximum of a few days for the acceptance of an application and cash delivery takes place within two days of approval. There are over eighty-five percent approvals within this form of lending process. Since these are considered as a business to business transactions, the provider does not consider these payments as loans for contractors but instead an advance provided to the contractor to kick-start work. The percentage of return depends upon the speed at which the advance amount is repaid. Of course, there are chances that the percentage of returns may be much higher than expected, however, the format of a cash advance provides the convenience of payback and the process itself is much faster than any traditional lending institution. It provides a good alternative for construction companies in specific to pay per contract instead of worrying about installments every month. The sales of ones credit transactions transfer the percentage of the agreed amount plus an interest percentage to the providers account on a day to day basis. This means that on the day no transaction is made, there is no payback.
Merchant Cash Advance to provide Loans for Contractors
One of the prominent forms of Business Cash Advance is the Merchant Cash Advance. It provides an incredible offer to construction companies. Since it takes into account all the challenges faced by a construction company like any other form of cash advance mechanism, it provides funds to serve as working capital much faster than other forms of lending companies. Merchant Cash Advance holds the objective of providing developing companies with small working capital funds, enough to sustain themselves with an easy and flexible repayment mechanism. Loans for contractors are no exception. The mechanism involves a few simple and easy steps which involve a general description of the business, credit history and adding another user to your credit card. Post providing the required details, an agreement is made based on a prediction of future sales revenue and frequency of sales in order to set a percentage off the revenue plus interest, which is automatically deducted once credit card transactions take place, to pay back the amount borrowed. The process of return continues until the whole amount is paid back.
Loans for contractors using Merchant Cash Advance provide for multiple different working capital requirements at the same time and help the construction company bridge the financial gap occurring for a short term. This allows the company to continue working without having to worry about capital requirements and the borrowed money can be paid back in its due time. The application process, in fact, is as simple as described. The Merchant Cash Advance provider does not ask for a security deposit and hence a lot of steps that a commercial bank goes through, are cut off. The advance provider does not need to dig into your personal properties and investigate funds a business owner is claiming to be a security deposit. Since they work on pre-predictions of future sales they are more concerned with credit history. The application process may take a few minutes to a few hours and the approval process may take as short as about a few hours, to a few days at maximum. The payment is deposited within the business owner’s account within two days of application acceptance.
Another benefit of using Merchant Cash Advance as loans for contractors is that it is an extremely fast process. Traditional forms of commercial banks and credit unions require a time period stretched over several weeks to even a few months at times to complete the entire process before even coming down to a conclusion whether they will accept or reject the loan. By this time, the business owner who requires this urgent working capital has no option but to wait. The businesses may have a major dent in their accounts by the end of it and then find out that they are stranded without a capital since their applications have been rejected.
The Merchant Cash Advance, on the other hand, provides for a speeded process which is much simpler and has minimum requirements. Loans for contractors require a lot less documentation using Merchant Cash Advance and as mentioned earlier no big security deposits need to be made. Using this advance mechanism, one does not need their own money to make money, but use the provider’s capital investment in order to fill in for their required capital expenditure. The overall process is an online mechanism so it actually depends upon how soon the applicant can send in the details. Since the approval is made and announced to you with less than twenty-four hours, you really do not need to wait for anxiety and worry. Within a few days of your application you, as a business owner, can plan on how to use these loans for contractors as expenses or capital investments required at that time.
Another advantage to consider here is that the rate of approval is very high. While construction companies are turned down by most of the banks and financial lending institutions due to the risk involved within their businesses, loans for contractors using Merchant Cash Advance are considerate and understand the required need of the time, constituting in high approval rates. Over eighty-five percent of construction businesses are provided with funds to kick-start their operations or inject capital for growth. Since the process is very fast, if one agency providing Merchant Cash Advance as loans for contractors turns your business down you will be informed in less than twenty-four hours, allowing you to quickly apply to another provider, which will likely accept it. As they say, lightning doesn’t strike the same place twice.
In either case, loans for contractors using Merchant Cash Advance provides a much flexible process of both lending and returning. Since every company in the construction industry has a different type of customer base, skill set and specialty, Merchant Cash Advance Loans for contractors recognizes that they have different financial revenue cycles and can vary from time to time. This gives permission for an understanding of loan requirements rather than drilling down into payback mechanism, providing business owners with working capital investment money in a very short time.