Obtaining a Business Loan for construction companies is an essential step in expanding your construction company. A business construction loan is short-term financial aid specifically tailored to cater to the cost of building a new business space or renovating an existing one.

Note that different creditors will have varied loan prerequisites, but there are some general steps every borrower must follow when securing a Business loan for construction companies

Gathering the required documents

To secure a Business loan for construction companies, extra documentation required to support your loan application process. Note that the particular kind of paperwork will vary depending on the creditor, but the majority of lenders will ask for:

  •    A business plan – a document describing the activities of your business and how it will be operated.
  •    Projections of your earnings- this is an approximation of the potential income for the newly opened business or the increase in possible earnings for the expanded business. Typically, your potential lender will expect to see the revenue projection for not less than two years. This can be included in a business plan or can be presented in a different document.
  •    Contractor’s approximations – these are estimated from various construction contractors, and they can include general contractors, electricians, and plumbers among others. This information is vital since it will show how much your construction project will cost.
  •    Personal and business financial documents – these documents will help lenders determine the stability of your business. For startups, creditors will request for the debtor’s personal financial records. The records may include personal credit reports, former tax returns, and income statements. For already running a business, lenders might want to see the income statements and tax returns for your business.

Deciding on the type of business construction loan required

A business loan for construction companies can be obtained as a secured loan or unsecured loan. In a secured loan, the business owner will be required to provide some collateral for the loan. Note that this form of a loan will always have a lower rate of interest and better terms. This is because the creditor is assured that you will pay back your loan.

Choosing a lender

Currently, there are multiple merchant lenders offering Business loan for construction companies in the market. Each lender will come with different prerequisite and can provide different terms for the loan. Therefore, borrowers should do a thorough research ahead of deciding which offer suits their circumstances. Pondering the fact the majority of banks will show hesitation while giving loans to startup construction companies like yours, merchant cash advance lending will be the most suitable alternative for you.

Filling the application

After choosing your potential lender, you need to complete all the necessary documentation for the loan application. Every creditor will tell you what supporting documents they will need.

The review phase

After submitting your loan application, a lender will carefully review it to assess the security of your loan. They may have the need to contact you in case they need additional details concerning the proposed project.

Accepting the business construction loan

Once the lending institution approves your loan, they will give you the required information concerning the specific conditions of the loan. Usually, business loan for construction companies is short-term financial aid that has different repayment plans as opposed to standard loans.

While the interest rate of a merchant cash advance might be high when compared to the bank loans, they are flexible and they offer reliable payment terms. They are also suitable for small businesses.