Business Loans For Builders

Why might a builder need a business loan?

As the owner of a building contractor, there are many reasons why you might next extra funds to help support or grow your business. With high up-front costs and often a long wait to receive payment from clients, it’s vital that you have enough working capital on hand to cover your ongoing costs.

Here are just some of the reasons you might need to consider a business loan:

• Keep your cashflow healthy in the long period between starting work and receiving payments
• Make sure you have working capital available to cover fixed costs like:
  • insurance
  • contractor fees and staff wages
  • WorkCover
  • fuel, vehicle and equipment maintenance
  • licencing fees
  • tax
• Buy or upgrade your tools and equipment
• Bulk buy materials at discount rates
• Hire extra staff or contractors
• Buy or upgrade your business vehicles
• Marketing
• Grow your business by acquiring a competitor

Marketing is key to the success of an apparel business, and you could also use a business loan to hire in the marketing expertise you need and run traditional or online campaigns to build your brand and get your products in front of more customers.

What are the requirements for getting a business loan?

Getting a business loan can be easier than you think.

While you can still expect to be knocked back by the big banks unless you have a solid trading history, a top-rate credit rating and collateral to offer, there are plenty of alternative lenders out there willing to offer business loans to builders.

Each lender will have their own criteria when it comes to things like credit rating, how long you’ve been in business, and how high your turnover is. If you’re higher risk (e.g. if your credit score is low) you may still be able to get a business loan, although you can expect to pay a higher rate of interest to compensate for that risk.

The most important factor ALL lenders will look at is your capacity.

Lenders need to know that you will have enough cash – after all your expenses – to cover your loan repayments.

How to apply for a business loan

If you are applying to an alternative lender for a business loan, the process is usually quick and easy:

What options are available to builders?

There are several types of small business loans you could consider, to support or grow your electrical business.

Unsecured small business loan

A short-term option, unsecured business loans are usually for between 3 months and 2 years.

You can use the funds for any purpose. Many lenders will let you set a repayment schedule to suit your trading patterns.

Equipment loan

A specific-purpose business loan secured on the equipment you are buying.

The term will often be tied to the lifespan of the equipment. You will not be able to sell or upgrade the equipment until you have repaid the equipment finance.

Vehicle loan

There are several types of business car finance you can use to buy your work vehicles, including car loans, hire purchasing and leasing.

While your work vehicles are under finance you will not be able to sell or upgrade them.

Business line of credit

A business line of credit is similar to an overdraft facility, giving you access to cash up to an agreed limit, often with the right to draw, repay and redraw funds as you need them.

You only pay interest on what you borrow, but there are often set up and admin fees.

Business credit card

Business credit cards are great for covering day-to-day expenses and making purchases, but unless you clear the balance each month the cost can be extremely high.

Before entering in to any business loan agreement, be sure to seek professional advice. It’s also important to ensure you understand all of the costs (including all fees). You can get a head start by using our business loan calculator.