The U.S. construction sector's market size is massive, and the current housing shortage means that demand for construction companies should only continue to grow. With substantial growth in the cards, it’s a good idea for construction business owners to find financing options that can help them expand their business operations, take on new projects quickly, and access high-quality materials and labor. A small business line of credit is a form of revolving credit that offers business owners flexible access to funds at competitive interest rates. Here are a few ways a construction company can leverage a small business line of credit.
Expand operations
A small business line of credit lets you borrow money to meet the upfront costs of expansion. You can withdraw funds to purchase more materials and equipment so you can take on more jobs or bigger projects. You can also use your line of credit to pay new employees or part-time workers, increase your purchasing power to buy materials in bulk, and access funds needed to scale up your business. Taking advantage of these expansion opportunities can yield excellent results for your business in the long run.
Regulate cash flow
Construction business owners deal with material bills, equipment bills, employee wages, legal fees, insurance costs, and many more expenses from week to week. At the same time, problems like unpaid client dues or slow periods can be common, resulting in cash flow difficulties. A major slowdown in income can jeopardize the business, but a business line of credit can save the day. It offers flexible access to cash so you can bridge payment gaps and manage expenses without stalling ongoing projects.
Quickly resolve emergencies
Construction emergencies can leave your best-laid plans in disarray. When valuable construction equipment breaks down, costly delays can follow. A small business line of credit can be a great source of emergency funds that let you quickly repair or replace your equipment and bring your project back on track.
Unexpected disasters like fires, earthquakes, or floods can also throw your project off schedule. Insurance payouts may take several days, and waiting may put you behind schedule. Your line of credit can provide the funds you need to address the immediate problem. You can repay what you borrow once you receive your insurance payout.
A line of credit supports construction businesses in many other ways, including managing payroll, marketing costs, legal fees, buying or leasing equipment, and much more. However. borrowers should use this product responsibly and understand the interest rates, repayment structure, fees, and credit implications involved. Read your agreement carefully and ask the lender questions if you need help.
