Arranging enough funds to run the day-to-day operations when you are in the construction business is a challenging task, and if you are using credit cards or other cash sources, then you will fall short of funds. If you are in a construction business, you will need funds for construction tools, supplies, equipment maintenance, contractors’ wages or to expand your business. A business loan will make things easier and will not only help you to get through contingent expenditure but also to grow your business. Qualifying for business loans is not easy due to the uncertain nature of the business, and as a construction business owner, you will need to work on certain things to qualify for a loan. Let us see how to qualify for a business loan for your construction business.
Before you apply
Work on the documents that are required to submit along with the loan application when applying for the loan. These documents will be the same for all the lenders. Hence business owners should have these on hand before applying for a loan. The documents include profit and loss statement, business plan, credit history, credit rating and other relevant documents specified by the lenders. Once these documents are ready, then you can start filling out the application for the loan with all the relevant information. Make sure that the application is complete and all the details are filled without missing out on any.
The next thing you need to consider is to create a business plan that will support your loan application, make sure that it sounds to be a realizable plan. The business plan will reflect your financial management and hence should be drafted carefully. If you have not worked on a business plan before then there is nothing to panic; it is just a report of your past activities and future projections of sales and expenditure with supporting documents.
What should business plan include?
Name of the company, address and phone numbers of the owners/partners along with the contact information. It should also include a brief introduction of the business owner and the reasons for borrowing the funds. It should contain details of the history of the company, employees, assets, liabilities and current financial position of the enterprise.
Another thing the business plan should provide is the funding picture of the firm which means how you have funded the business till now and for what business purposes you are borrowing the funds. A detailed view of the profit and loss of the business along with the projects on hand and upcoming projects details, which will help the lender to evaluate your repayment ability.
Finally explain how the borrowed funds will be helpful for your business like whether they will add to the working capital for expansion of the business, buying new equipment or to pay off the existing debts.
With the above details on hand, nothing can hold you back from qualifying for a business loan. However, most of the lenders that advance a loan will check the credit ranking of the business owner, except for certain loans such as merchant cash advance which are based on sales of the business. If you are into the construction business and have bad credit, then a merchant cash advance can be the best option for you. These are all ways on how to qualify for a business loan for your construction business.