Obtaining funding can be challenging for businesses. Although most financial institutions and banks are usually comfortable with large companies, certain conditions may restrict small ones. Typically, companies such as construction businesses need financing to cater for expenses like rent, salaries, suppliers, equipment, and mobilization. The following are ways you can use to finance a construction business.
Leveraging Your Clients and Suppliers
Cash flow issues are the main reason why construction companies seek financing. The timing of cash flows is the main cause of these problems. Even though your clients may delay their payments, you should pay your suppliers on time. Fortunately, you can improve this situation by postponing your supplier payments while hurrying your suppliers to pay you.
This is an effective way of funding your construction business. A factoring firm can fund progress payments or slow-paying invoices and also give you an advance. This advance can assist in running and developing your businesses. You can easily qualify for factoring, and the invoices are funded quickly.
Small Business Administration (SBA)
The SBA is a good way of funding Construction companies, but some people overlook it. Since this is a government agency created to help small companies, it has great packages aimed at helping small and midsize businesses in various sectors. Although this program doesn’t issue loans to businesses, it guarantees loans to financial institutions, allowing them to lend to small companies.
Typically, construction businesses have problems with their suppliers due to payments. This is because they have to pay their suppliers before receiving payments from their clients. Such a situation can make your company miss opportunities and create cash flow issues.
Supplier financing is a perfect way of solving these issues. This method usually caters to your suppliers’ costs, enabling your business to operate smoothly. Supplier financing works by using a finance firm to act as an intermediate of transactions between your business and your suppliers. Typically, the finance firm pays your suppliers, while your company pays it within 90 days.
Although investing in a construction company is usually a good idea, you may encounter financial challenges. Seeking professional help is usually a perfect way of keeping your business running. Contact us today at Monterey Commercial Capital for reliable financial solutions.