Are you a contractor working through the financial swings that come with the business model? Managing cash flow and overhead on projects as a contractor is a major challenge. Here are a few common scenarios that will leave you short on cash despite the fact that you will see great profits when the job is completed.
You Win an Unexpected Bid
Your business is humming and everything is normal and functional. You go to work, have plenty to stay busy and you turn a profit. Bidding on jobs is part of the process and you are so experienced that you can sense when something will stick. But you still throw out the occasional bid that isn’t expected to land a job.
And then it does…
Now you have a big decision to make. Do you pass on the job? Or will you make moves and take advantage of the huge opportunity that has landed on your doorstep? Most people in this position will jump on the opportunity and reap the rewards. You will need to cover costs however and contractor loans for the project are a great move.
Double Booked on Projects
Ever heard the saying – You gotta make hay while the sun is shining. Well, it rings true in this business. When things are rocking and project opportunities show up simultaneously, you may find yourself double booked. That means you need to hire more crew members and extend your lines of credit to pull together material costs. Your business is growing, the hustle is real and you don’t want to cut corners to pinch pennies on any project. This is a good time to use contractor loans options to cover payroll, materials and other expenses through the project. You can pay it back quickly when the tab is settled and walk away with the extra profits to invest in the next round of bids.
Are you running subs on big jobs? Or maybe you are one yourself. Either way, subcontractors have their own set of expenses and headaches ranging from employees and taxes to equipment and materials. They often require a big deposit on a job to cover these costs. A contractor loan will keep them running and drive the job forward in a pinch.
Investing in Equipment
How much more could you make by purchasing a new or used backhoe, scissor lift or other major piece of equipment. You may already be eating costs greater than the interest on a loan by renting or leasing equipment for jobs. If a loan means the equipment becomes immediately accessible, you can confidently work the price into job bids. You also hold the machine as an equitable asset in your business rather than losing on rentals fees without gaining any ownership. Lending is a viable growth solution when it comes to machinery and equipment investments.
Your Best Contractor Loan Option
There are quite a few lending options out there for contractors. We recommend the Kabbage lending platform for most contractors seeking to secure funds with fast turnaround and acceptable rates. They will fund up to 250,000 with lightening fast turnaround times. This is ideal for adding employees and funding new business projects. For large development and commercial construction loans that require more than 250k dollars, shopping local lenders and specialty development loans is your best bet.