It’s not easy to manage the construction industry. It can be difficult to manage your cash flow due to the fluctuating costs and seasonality of work. Even established businesses with a history of 20+ years can find themselves in cash flow difficulties. Young entrepreneurs and businesses just starting out in the business world are often more challenged.

Money doesn’t grow on trees. But how can you remain competitive if your cash flow isn’t sufficient to address growth opportunities and solve problems? Small business construction loans are one way to finance your expenses. They can also help cover upfront costs and hire employees.

Finding a lender that offers small-business construction loans is easy. However, getting approval with terms that suit your business is more difficult. There are many factors that will impact the offers you get, such as your creditworthiness, income, and time in business. Each lender has different eligibility criteria. One lender might place more emphasis on your credit score than any other requirements. Another lender might require you to have been in business for a longer period of time to be eligible to offer favorable terms.

There is so much uncertainty surrounding your small business construction loan. You’ll need solid information to help you make the right decision for your company and your future. You don’t have to worry. Here’s everything you need to know about small business construction loans, courtesy of the leading SMB FinTech marketplace–National Business Capital.

What is a Small Business Construction Loan?

A small business construction loan can be a great option for small businesses to finance building or renovation costs, as well as any other business expenses. These specialized loans can be used to help construction companies get the money they need to remain competitive, regardless of whether you are in a slump or have just suffered a cash flow disruption.

There is a variety of small business loan types available, each with its own benefits and drawbacksspan styling=”font-weight 400 ;”>. Construction equipment financing, for example, can be used to break down large equipment purchases into smaller payments. However, it usually comes with a higher rate of interest. Construction term loans, on the other hand, offer a lump sum payment you will repay over the loan term. This type of financing might require collateral or a detailed business plan.

A small business construction loan is essentially an infusion of capital that you will repay to a lender on regular basis. These loans can be beneficial for entrepreneurs looking to grow by helping them manage costs and afford opportunities.

How can I get a small business construction loan?

Your small business loan’s benefit will depend on what type of financing you choose, your financial information, and the lender that you do business with. You’ll be able to get a construction loan that suits your needs if you have strong financial records. It isn’t always easy, however, especially if you work with a credit union or bank.

Credit unions and banks, also known as traditional lenders, often have strict eligibility criteriaspan type=”font-weight 400 ;”>. They will not finance certain industries and they won’t bend to requirements for growing businesses that return their profits. This makes it difficult for entrepreneurs for favorable approval.

Online or “ not-bankspan type=”font-weight 400 ;”>” lender” is the opposite. These lenders can finance more industries and have fewer eligibility requirements. However, they come with higher interest rates. This may seem to be a deterrent initially but it is important to keep your eyes on the end result of the capital you have invested and not get distracted by the cost.

Marketplaces combine these lenders into one centralized platformspan styling=”font-weight 400 ;”>. You can simultaneously apply to both banks and non-bank lenders with one application. This allows you to select the offer that suits you best and helps you achieve your business goals. National is one such marketplace. We are able to streamline the process to make it a matter of days, not weeks like traditional lenders.

There are many types of small business construction loans

You have the chance to get the financing you need for bigger, more ambitious projects with small business construction loans. The funds can be used for costs such as labor and materials, professional services like engineering and consulting, or equipment purchases of any size. There are many financing options available to help you achieve your financial goals, whether you want to build or expand an existing facility.

These are the most popular types of small-business construction loans:

Term Loans

Term loans are the most common type of loan for small businesses. They provide funding in a lump payment that you will repay over the agreed term. There are two options: a fixed rate that is stable over time, or an adjustable rate that fluctuates with the prime rate. Both of these are advantageous for certain circumstances.

Term Loans are ideal for projects where you know exactly how much will need span styling=”font-weight 400 ;”>. You may be required to give collateral to “secure” your loan. Your lender might also require you to show them a plan detailing how you will use the money.

Business Line of Credit

A business line is one of many flexible options for small business construction loans. You can use your credit line to pay for business expenses on an as-needed basis, much like a credit card. You can withdraw the same amount again once you have repaid the original amount. This will allow you to keep up with the latest challenges.

When you don’t know what you will need, business lines of credit can be beneficial. You can take out additional funds from your credit line and pay the interest over time if you need more.

Equipment Financing

Construction industry equipment financing is crucial. You know that the equipment you need in order to compete with your competitors can be expensive. This can hinder your ability to reach your full potential and help you build your business. Entrepreneurs often struggle to pay for this equipment. However, construction equipment financing allows you to purchase the equipment you need and then break it down into manageable payments.

You don’t need to be concerned about putting another asset on your balance sheet as collateral. This option comes with higher interest rates, but the cost is negligible if you expect to increase your revenue, efficiency or productivity.

Accounts Receivable Financing

Late client invoices could prevent you from getting started on your next job. You can turn those unpaid invoices into cash with accounts receivable finance.

It is quite simple. You sell unpaid invoices to lenders in exchange for capital. A small percentage of the fee is charged for this service. This won’t give you the entire value of your accounts receivables, but it can help get your business moving again if it comes to an abrupt halt. You can also leverage the funds to begin on a new contract to streamline your cash flow and meet deadlines.

How to Apply For a Small Business Construction Loan

A small business loan for construction can seem daunting, especially if it is your first time. Small businesses can get loans from commercial lenders with minimal effort if they do their research and prepare well. These are the key steps small business owners need to take before you start the loan application process.

Create a Business Plan

It is important to create a solid business plan, and financial records that demonstrate your company’s viability. It is also important to collect information about the construction project that you are planning to do.

Research Lenders

After you have done all the groundwork, it is time to search for a suitable lenderspan styling=”font-weight 400 ;”>. The bank you already have a relationship with will be your first stop. However, only certain businesses are able to fit their mold. You can search online for non-bank lenders if they don’t offer terms that suit your needs.

Apply with Multiple Lenders

It’s a good idea to apply with multiple lenders, so that you can compare offers and make sure you get the best deal. This process is time-consuming as you will need to fill out all the forms and wait for a decision.

National Business Capital is a marketplace that can help you streamline your search for small-business construction loans. National understands that entrepreneurs don’t have the time or resources to spend researching lenders and filling out applications. We’ve designed a time-saving tool for business owners. You can submit one application and receive multiple offers. Our expert Business Finance Advisors will help you select the right option for you.

Streamline your Search for Small Business Construction Loans with National Business Capital

Entrepreneurs don’t have the time or money to compare small-business construction loan lenders. While you might be able to take a few moments, it is not enough time to fully understand the information available and make informed decisions about your future. This is why many entrepreneurs give up on their search, abandoning their growth and putting off their research. Growth can’t be slowed down, and you may find that the opportunity to change your life has passed you by once you begin looking at financing options.

You don’t have to forgo growth opportunities or delay a challenge. A small business construction loan can help you free up cash flow and allow you to grow at your own pace. National Business Capital’s 75+ lenders and experienced team can help you get the money you need to achieve your goals quickly. We are experts in almost all industries, but construction financing is our forte. Our team will get to know you and your company so we can help you choose the right opportunity for you.

National Business Capital has secured $2 billion for entrepreneurs across the country and received over 2,000 5-star Trustpilot reviews. You can be sure that National Business Capital will be your right partner in growth.

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