Australia’s construction industry generates over $360 billion in revenue every year, producing around 9% of Australia’s GDP.
Despite these vast numbers, most businesses in the construction industry operate as either sole traders or small businesses and can still run into cash flow issues. If you are a contractor, you are probably no stranger to high insurance rates, licensing and permit requirements, and the expensive cost of materials and equipment, especially when the economy experiences a downturn.
Waiting to be paid can put pressure on your business’s finances and make it difficult to pay staff on time, buy materials as and when you want, and upgrade your equipment.
A business loan can help your construction firm get back on track. The right loan, leveraged correctly, can even help your business grow. We take a closer look at the types of loans available for construction businesses and when and why you should consider them.
What Can Construction Businesses Use A Loan For?
Before we get into the specifics of each type of loan, let’s cover some scenarios that you might require funding for.
Growing Your Business
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- Hiring new staff to keep up with demand or offer new services
- Running a new marketing campaign
- Buying new premises or expanding your existing one
- Purchasing new equipment, machinery or vehicles
Day to Day Expenses
- Covering your working capital requirements
- Purchasing inventory or materials
- Bridging the gap in unpaid invoices
- Paying existing arrears
Managing Your Business
- Debt Consolidation
- GST Payment
- Payroll Tax Payment
Types of Loans for Construction Businesses
A Line Of Credit
When most people think of getting a loan, they envisage taking out a set amount with a bank and slowly paying it back over time. A line of credit allows you to take out a flexible loan that you can access as needed and either repay immediately or over time.
Lines of credit are an excellent option for:
- Meeting your working capital needs
- Taking advantage of strategic opportunities
- Projects where you cannot predict cost upfront
The benefits of a line of credit are that you can access as much or as little of the funds as you need, whenever you need it over the loan period. Another bonus is that you can use a line of credit as a safety net for your business if you are in a position where you may need to access funds but aren’t sure how much you’ll need.
Keep in mind interest is earned on a line of credit as soon you draw down any money.
Equipment, Vehicle and Machinery Lending
Construction businesses require a lot of expensive machinery to remain competitive and get the job done. Having a fleet of vehicles or machinery that you can rely on can be the difference between finishing a job on time and dealing with an unhappy customer.
Since it’s unlikely small businesses have enough cash on hand to replace old equipment or purchase new vehicles outright, equipment, vehicle and machinery lending exists to fulfil this need specifically.
Equipment, vehicle, and machinery loans are an excellent option for:
- Keeping your fleet of vehicles up to date and road safe
- Expanding your capabilities with new tools or machinery
- Upgrading old or outdated vehicles or machinery
- Upskilling your staff with newer and easier to use equipment
- Increasing efficiencies with faster machinery
One easy way to expand your business is to offer more services or produce a larger volume of work faster. New equipment can increase efficiencies, allow you to upskill your staff, or hire specialized workers that can bring in more business.
Trade, Debtor and Invoice Finance
Big projects require big invoices, and it’s not unusual to find your business short on cash while waiting for payment from milestone projects. Trade, Debtor and Invoice Finance loans help bridge the gap between your on-paper payments and what’s actually in your bank account.
Trade, debtor and invoice finance loans are an excellent option for:
- Taking advantage of opportunities as they come by leveraging unpaid invoices
- Using unpaid income to pay staff and contractors and protect your reputation
- Operating as usual without having to worry about receiving payment for big projects
Trade, debtor and invoice finance loans are highly flexible and allow you to choose which invoices you would like paid. They can help you retain your reputation, keep your staff paid and contractors happy, and generally take the stress off your shoulders.
Grow your business with an unsecured loan
With ThinkCap, financing your business goals is easy. We can help you secure up to $300,000 for growing your business in as little as two hours and no more than 24 hours after application. Our unsecured business loans require minimal paperwork and avoid the red tape that traditional bank applications often get caught up in.
Talk to us today about a business loan for your construction firm.
