Starting a contracting business or even expanding one is a pretty exciting thing. So maybe you’re just getting started, or maybe you’re already established and looking to expand. Whatever the reason, you know you’re in need of cash or likely need to look into loan options to figure out which ones work best for you.
So as someone in the contracting business, there’s a variety of reasons you may not have the all the money you need right now. There are expenses you’re likely thinking about like storage, transportation, supplies, equipment, and maybe even some real estate. And perhaps you can afford most of those costs, but you’re a little tight on cash at the moment.
And there will certainly be a few of you who already have the money, but for those who don’t, you’ll more than likely need to get some financial help from alternative sources. Which can seem a little intimidating at first, but luckily for you, in today’s world there are dozens upon dozens of loan options out there when it comes helping small contracting businesses get started.
So let’s take a look at two of these alternative funding companies and see how they compare.
Loan options for contractors: Finance Factory vs Lendio
Startup Loan Options
Finance Factory: Offer unsecured personal and business funding (no collateral) for up to $350,000. And this option requires one guarantor to have a credit score of +660. There are 0% interest rates for up to 21 months.
Lendio: Offer secured business financial assistance (collateral) for $500,000 – $750,000. This option says your business must be at least 6 months old and have a credit score of +680 to be qualified. And interest rates run from 0% – 17%.
SBA (Small Business Administration) Loan Options
Finance Factory: You need to have an established business with tax returns supporting good cash flow. The interest rates are 6% – 8% and have payback terms that go from 10 – 25 years. SBA loans typically take anywhere between 2 weeks and 2 months (14 – 60 days) but offer the highest amount of funding with the best interest rates.
Lendio: You need to have business tax returns and personal tax returns for a minimum of 2 years. They need to know your year to date profit/loss statements as well as year to date balance sheets. They also need to know your debt schedule. The loans range from $50,000 – $5,000,000 and have payback terms of 10 – 25 years. You can typically expect to receive the funding between 30 – 90 days and the interest rate is prime+ (4.5% starting and will vary above that depending on credit score and other factors).
Important Note: SBA loans are government funds, so alternative financial institutions must be certified to provide them as an option. This means SBAs, no matter where you get them, offer the same range of money. The difference will typically come at the speed you get them and interest rates – with 4.5% being the starting point where additional percentages are added. This means they could range higher than Finance Factory’s fixed interest rates between 6% and 8%.
Business Lines of Credit Options
Finance Factory: Offers Business Express Loans that are non-SBA. They have lines of credit up to $500,000 and can get you funding in as a little as 1 – 2 weeks. However, you are required to have an existing business with revenue. Interest rate and loan terms may vary based on the individual. Provide free, personalized, quotes online that offers all of the information needed for you to get started (including interest rates, how qualified you are, and loan terms). Will search out for unsecured loan options.
Lendio: Business Lines of Credit can give anywhere between $1,000 – $500,000. They provide the funds in as little as 1 – 2 weeks and the interest rates range from 8% – 24%. Businesses must be at least 6 months old with $50,000+ annual revenue and you’ll want your credit score to be a minimum of 560. Typically secured loans.
Important Note: Business Lines of Credit only require interest payments on the cash used and not the total cash available in the lines of credit.
Equipment Loan Options
Finance Factory: Easiest financing to obtain and qualify for. Can be used for anything ranging from trucks, computers, and other equipment. It’s the easiest to get because the equipment is the collateral. Loan amounts, terms, and interest rates vary based on the individual. Again, they provide free quotes online. Will look at credit scores between 600 – 800, but 660 is the ideal.
Lendio: Offer between $5,000 – $5,000,000 with payment terms of 1 – 5 years. You can get the funds in as quick as a 24 hour period with interest rates at potentially as low as 7.5%. The business needs to have been around for 1 year and have $50,000 in annual revenue. Your minimum credit score must be 650.
Finance Factory focuses on providing unsecured loans and assisting you at the personal level to find loan options.
To determine whether you’re qualified, Finance Factory looks at the Three Cs: Credit, Cash flow, and Collateral. They’ll look at any credit between 600 – 800, a minimum account balance of $1,000 – $5,000 for monthly cash flow (but also look at annual revenue), and will accept collateral as an option. However, You only need one of the three Cs to qualify for a loan – meaning as long as you fit the credit and cash flow qualifications, you will be able to get an unsecured loan.
Finance Factory has a team of highly trained professionals who guide and educate clients so they can make the best and most informed decisions possible when looking at loans. They help you every step of the way and give you all of the information for your application. Their specialty is making and building relationships between small business owners and vetted lenders while offering great rates and affordable terms for everyone.