There has been a steady decline in the number of business structures and new homes in the past few years. Construction businesses need to tread carefully if they want to succeed amidst the financial hurdles present.
There are several untoward expenses such as payments for damaged materials, damages at the construction site or replacement of stolen equipment that could end badly for a business. One of the biggest hurdles that construction businesses have to deal with is finding the finance they need. Since construction involves high risks, loans are often not approved that easily.
Builders with good insurance coverage for unfinished and finished sites, equipment and subcontractors can tackle the issue to some extent. However, a short span of business history coupled with unreliable income can be very problematic.
For builders who have been in the business for less than six months and do not show an income of over $8,000, approval for loans will be very difficult. At dire times like these, considering a loan like Merchant Cash Advance (MCA) is a prudent move.
You can find several loan options that come in handy when you want to save your business from going under. Here is a brief overview of various business loans for construction businesses and the reason why MCA tops them all.
Loans that favor construction businesses
Any type of construction business can get easy funding provided its income and credit history are up to the standards expected by the funding agencies. The significant factor here is the difference in the requirements present in the various loan types. Moreover, the income in the construction business is quite risky making it difficult for obtaining a loan for working capital or considering financing with invoice factoring. Here are some common loans that favor construction businesses
Loan for small businesses
If you want a longer repayment period on the loan with a reasonably good interest rate and most importantly need a larger sum, this loan is ideal. Private lenders provide this loan which is mostly of a secured type unlike the Merchant cash advance funding option explained below and is supported by the government.
This is a loan type that is used especially for buying new equipment. It is a loan of short term with a moderately feasible interest rate. To gain the best advantage of this loan, you need to repay the loan in one or two months.
Line of credit loans
If you are looking for a longer repayment term, larger funding and adjustable rates of interest, this type of loan can be ideal. It can be of the unsecured or secured type. To get approved for this loan, you have to furnish income proof, collateral or decent credit score.
Merchant Cash Advance
If you are in a financial emergency and need funding quickly with the least hassle, the Merchant cash advance (MCA) is the right choice. Such loans are short term and generally, do not have long-term repayment options. The loan approval is based on income and not credit, so this is a big advantage for businesses which have marginal credit.
Why builders prefer cash advance
The loan can be customized by the lenders to satisfy the requirements of the building business making it an excellent funding option. When compared to a conventional loan, which is difficult to avail and involves cumbersome paperwork and elaborate procedures, these cash advances are simple and easy to get.
The difficulty with a conventional banking loan is it is regulated by the stringent rules laid by the government for approval. The entire loan approval process requires plenty of documentation and is time-consuming. This is the reason why several construction business owners opt for the merchant cash advance lenders.
How MCA works
MCA works on the basis of the success achieved in both the past and future of construction business. As a construction business owner, you need not worry about providing collateral or the long approval process. The fast approval and no collateral requirements make the loan an ideal one.
MCA for builders is approved on the basis of the sales via credit card and their financial history. In order to be eligible for the cash advance, the business should accept payments from customers via debit or credit cards. Most small businesses in construction field have 95% and more approval chances. The terms for qualification are also easy because the advance of cash is dependent on the sales.
Benefits of MCA
Builders have plenty of good reasons to apply for the loan. With MCA it is easy for small businesses to expand and flourish as they can get the funds they need fast and easily. The business loans have the advantage of being flexible, so enable the business to deal with the short span financial issues effectively. With easy application process and approval which takes only two or three days, many businesses find this advance of cash a highly profitable one.
Here are a few benefits of MCA for builders when compared to other loan options.
- Loan qualification is easy
- The online format of loan application is simple and easy to complete
- Minimal paperwork present
- Approval is pretty quick
- Chances of rejection are minimal
- The funds received via the cash advance can be utilized for different purposes.
MCA: The best option
While credit unions and conventional banks need several weeks and sometimes even months to complete a loan process and decide on approving it, MCA does not have any of these hassles. It has fewer documentations and approval is usually conveyed in a day or two. Thus builders will not have to wait for a long time to access the funds they require.
Lack of adequate funding choices can cripple your building business if you do not take the right measures to circumvent the crisis. With sufficient funds, you can boost sales and increase your profit. When the traditional lending options fail to provide the necessary funding you need at a short notice, a non-bank lending option like Merchant cash advance remains the only viable option that can relieve you of the financial crunch you are in and let you operate your business smoothly and successfully.