Financing for construction companies is often one of the best means for preserving working capital in the face of rising construction costs, supply chain constraints, and delinquent project payments. It can provide fast access to capital, often with minimal financial burden. However, careful consideration should be given to which direction a company goes with financing, as a number of options will be available — each with its own set of payment schedules, interest rates, and loan fees.
Working capital loans, for example, can be of great assistance in meeting day-to-day operational expenses for a given length of time. Without that infusion of cash, a company might not have the working capital to establish the financial security for those larger projects and lose out on a construction bid that it could otherwise manage. Also, these types of loans for contractors and construction companies can serve as a lifeline when needing to meet payroll while waiting for project payments.
PEAC Solutions provides access to working capital loans of up to $250,000 for construction companies. Interest rates are competitive and come with loan terms of up to 24 months. Payment options are flexible, with daily, weekly, and monthly options available.
Another great financial option at a construction company’s disposal is leasing. When equipment needs to be upgraded or replaced entirely, leasing is a flexible method for getting new machinery without needing to pay for the entire purchase upfront. After making a series of payments — there are plenty of terms to fit budgetary and usage needs — companies can simply return the equipment once the term expires. Machinery ownership isn’t for everybody, and leasing allows for increased flexibility during uncertain financial times.
Equipment financing, on the other hand, can provide the funds necessary to secure the heavy-duty machinery required for major construction projects. Payments can be much more manageable than purchasing the equipment outright. It also leaves working capital available for other expenses.
Benefits of Leasing and General Contractor Financing
The sudden influx of funds and the ability to lease equipment and free up cash can be just the cushion needed to pay employees, subcontractors, vendors, and suppliers and avoid delays in a project’s progress.
Here are just a few benefits of leasing and financing for construction companies:
- Preserve working capital
Financing and leasing needed equipment can ward off the need to dip into cash reserves. Even if the money is available to purchase equipment, the additional funds can help keep cash on hand in case of an emergency.
- Secure necessary equipment
It takes time to accumulate the funds necessary to purchase equipment for larger projects. Leasing makes sound business sense if multiple projects are on the docket that will require the machinery.
- Shorten turnaround time
Alternative equipment financing options often come with a faster turnaround time than a traditional business loan. The typical business loan can take weeks to process, which could mean losing out on a bid essential to business. Leasing the equipment can enable you to have the equipment on your job site much quicker than if you purchased the equipment with a typical business loan.
- Take advantage of flexible payment options
Many lenders offer flexible payment terms, allowing construction companies to structure their payments in a way that best suits operations. When dealing with seasonality, it may be possible to negotiate variable terms, such as paying more some months and less other months.
Securing financing during a time when construction costs are on the rise, supply chain disruptions are still an issue, and delinquent project payments seem to be growing in frequency is possible with the right partnerships in place. It’s all about finding a lender that can offer the payment schedules, interest rates, and terms that work best for each business.
PEAC may be the answer. If interested in learning more, a member of our team would be more than happy to explore the leasing and additional funding options available. Contact us today.
PEAC Solutions is a DBA of Marlin Leasing Corporation. Equipment financing is provided by Marlin Leasing Corporation. Working capital loans are originated by WebBank.