You have just won your biggest bid ever if your construction company is growing. That is a thrill for general contractors and source of great pride. Until you realize how much money you’ll have to spend before the job even gets underway.
Will the deposit cover all of it? Not likely. Besides, you don’t have that check yet and it’s time to get busy getting ready but small business loans can help.
Sometimes you have to borrow money to meet payroll and operations expenses when cash flow isn’t enough. This is a common problem for general contractors. Business is seasonal in most parts of the country. Business cycles are long that lag time between winning the bid and getting your deposit. Or getting interim payments once the job is underway. And final payment once the job has been completed.
But you need to ramp up for new jobs. Hire more people. Purchase more materials. And sometimes you want to borrow money, to expand your equipment fleet or take advantage of a larger-than-usual opportunity. Small business loans can help.
There are a lot of myths about small business loans.
5 myths about Small Business Loans
Approval takes forever
- Whether it is about moving forward with a new business idea or need cash quickly to cover an unexpected expense, one of the most common questions business owners have when applying for funding is “How fast can I get cash in hand?”
- You might have heard from friends and relatives that getting approved for a business loan can take weeks or even months, but that information is outdated.
- With new online loan applications, an organized business owner can complete their application in less than an hour, and it can be reviewed and approved within 24 hours of submission.
- Many lenders can even offer cash in hand in as little as two days.
All lenders care about is your credit score
- Most of the banks rely heavily on credit scores for a business loan but alternative financing lenders do not reject only because of a single factor.
- Each company has its own criteria, but they look at a wide variety of things. So don’t despair if your bank turned you down for a business loan.
- Accounts receivable financing or another alternative may be better for you anyway.
- A nonperfect credit score doesn’t necessarily mean you are at risk. That being said, it’s always a good idea to improve your credit. That will open more doors for you later on.
New businesses never qualify
- The startup funding is undoubtedly difficult. Established business is what you need to secure funding, but you need cash on hand to get your business off the ground.
- Seeking funding from investors is a popular route for securing startup funding, but is it the only way? Applying for a startup loan will involve more scrutiny into your personal finances than other types of business loans. Your personal credit score will be the most important part of the application. You may also be faced with less favorable rates than you would receive as an established business. But if you’re committed to finding funding and open to the necessary conditions, securing a loan for your brand new business is possible.
It is a good idea to borrow as much as you can
- Your business may qualify to borrow more than you need right now. But why would you saddle yourself with payments that are higher than necessary? You’re paying interest on the money you borrowed. That’s money you could be using for some other business purpose. Borrow the right amount as much as you need, but not more.
- With terms, you can afford to repay. What if you don’t qualify for a single business loan that meets your needs? This is where working with the right alternative lender may make all the difference.
Online lending is scary
- The alternative business loan financing industry has grown steadily since the Great Recession. Today, there are many online business lenders that are entirely legitimate.
- The issue isn’t whether you can look them in the eye. It’s about trust. If you’re considering alternative financing for your business, it’s important to do your due diligence.
- Look for a lender who has solid, successful experience working with businesses like yours.
- Ask about types of funding they offer, fees and repayment terms.