For many companies, the only alternative they have to grow is to apply for a loan. Without this type of financing, it would be impossible for them to access business opportunities. Knowing how to get a commercial loan is a necessary knowledge.
This is especially true for construction companies because to start executing a new project they need capital to buy material, equipment and pay the payroll. Unfortunately, for these businesses, it is more complicated than for others to access a loan.
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“How to get a commercial loan?” Is a frequent question among small business owners. And not without reason, because for these companies it can be more difficult to access credit (if compared to other types of businesses).
Unlike a restaurant, a workshop or any retail business, it is difficult for a construction company to generate profits in the short term.
This low cash flow is mainly due to the fact that in this industry it is common for customers to be late in payments, which are usually made during several stages of the project, or sometimes only made until the work is done. finished
Unfortunately, banks and some lenders are aware of the financial problems that can affect a construction business and are inclined to reject loan applications from these companies.
Similarly, for a contractor to access a bank or SBA loan, he needs to meet certain requirements: have a high credit score, never have been bankrupt, have not been foreclosed, and have more than 5 years in the business, just to mention a few.
For most, it is difficult to meet these requirements, which become another barrier to capitalize on their construction business. Then, in response to the question of how to get a commercial loan, alternative lenders emerge as the most viable financing option.
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How can a loan help you expand your construction business?
For the owners of this type of business, getting a new contract can be a real problem rather than an opportunity. If they do not have the money to buy tools or hire labor, it will be impossible for them to finish the work or deliver it within the established deadline.
Therefore, for small business owners dedicated to construction, a loan is the door to many opportunities.
With that money they could finance all the costs associated with a project:
- buy materials and spare parts for machinery
- rent sanitary facilities
- to cover unforeseen expenses, such as outsourcing qualified personnel who are responsible for certain parts of the work
Although commercial loans are used to cover these costs, it is common for loan money to be used primarily to pay employees’ salaries and to invest in construction equipment, which comes at very high prices.
But these resources turn out to be of great help on other fronts. Those who seek to expand their operations and obtain more contracts can use a loan to improve their facilities, open new offices, hire more staff, and train their employees.
How to get a commercial loan
After listing the financial difficulties faced by a construction business and reviewing the opportunities that a loan offers these companies, it is time to find out how to get a commercial loan if you are a contractor.
First of all, and as we have already mentioned, if you do not qualify for a bank loan, you must use an alternative lender such as Andreas Financial.
To access a loan, follow these steps:
- Answer some questions about your construction business by filling out an online form.
- A specialist will contact you to learn more about your company and explain what your options are, and the financing alternatives they can offer you. During this stage of the process, we will answer all your concerns.
- Send basic business financial records. With them, the lender will know which credit is best suited to your needs.
- After carefully reviewing your application, the lender will send a final offer explaining the credit conditions. You must accept it, like the terms of the loan, in order to access the capital. After signing it, you will receive the funds in your bank account.
Requirements you must meet
When applying for a loan in Andreas Financial you will notice that our criteria for approving it are more flexible than those of a bank. To make a decision, we only take into account your company’s cash flow, your credit score, and the way you plan to invest the money.
However, you must meet some requirements:
- In order to access a small business loan, your company must have been operating for at least 9 months
- Your business must generate sales of $ 30,000 annually or $ 2,500 per month
- As a business owner, you must have a FICO credit score of 550 or more
You can access the small business loans offered by Andreas Financial in just two days. We offer our clients favorable interest rates and the best market terms.
Our mission is to ensure that anyone has access to the capital they need to finance their ventures, and to make smaller businesses grow.
Now you know how to get a commercial loan
How to get a commercial loan for your construction business should not be a concern for you. Although it may be difficult for a bank to approve a loan, since this sector of the market is stationary and inconsistent, there are alternatives to obtain the working capital you need to finance your projects.
Buying materials, hiring labor and acquiring new equipment are just some of the ways in which you can invest money from a loan. You can also use it to expand your operations and get new contracts, which will ultimately grow your construction business.