So you’re a mechanical contractor, and you’re looking to apply for a loan. Maybe you’re just starting off, or maybe your business is beginning to expand. Regardless of the reason, like most small businesses, you’ll need money to fund it.
Starting and expanding a business is an exciting thing. And while figuring out how to fund it can be a little overwhelming, we luckily live in an age where loans are available in all shapes and sizes. Whether you need a startup, SBA, or even equipment loans, there are a ton of options out there.
And fortunately for you, they don’t all have to be associated with high interest rates, collateral, and banks. Getting a loan can be intimidating, but it doesn’t have to be. In fact, it can be pretty simple if you know what you need ahead of time.
Mechanical Contractors: Are you ready to apply for a loan?
How much money do you need?
It seems pretty obvious, but for anyone interested in getting a loan as a mechanical contractor, you’ll have to know the amount of money your business needs. The cap for available money depends pretty much on the type of loan you get and how much the lender is willing to give out.
While banks can shell out a large quantity of money for applicants, their interest rates and need for a collateral make them a bit riskier than alternate sources.
If you’re looking to apply for a loan and it’s not in the six or seven figures, it would probably be best to look into startup funds or SBAs from alternate sources. When you go to an alternate source for a loan, the application process is much easier than if you were to go to a bank.
And even though the interest rate may be a bit higher, you’ll end up spending less cash than you would at a bank because you’ll be paying the loan off sooner than later.
Why do you need to loan apply for a loan?
It’s pretty straightforward. Knowing what you need and when you need it is a pretty important part of figuring out if you should take one out, and if so, what type you should get.
If you’re just starting out, a startup loan can offer upwards of $350,000 and is unsecured. On the other hand, if your business is established, and maybe even growing, you might look into SBAs, business express loans, revenue-based loans/advances, or equipment financing. Some of which can offer upwards of $1 million in unsecured loans.
What does your Credit, Cash Flow, and Collateral look like?
To put it simply, lenders will look at your personal and business credit when figuring out whether or not you qualify to apply for a loan. They typically look for a credit score of +660 but are willing to look at anything between 680 and 800. It’s mostly just a way of seeing whether or not you’re dependable when it comes to paying things back.
They also want to know your cash flow. This is determined by your monthly and annual revenue through statements. But they also look for a minimum account balance – with $1,000 being the minimum and $5,000 being the ideal. Remember, they’ll look at your tax returns and current debt as well.
You only really need one of the three Cs to qualify, so when I’m saying collateral, it just means it’s a potential option. But don’t worry, you can usually get an unsecured loan based on one of the other two as long as you reach their minimum requirements. However, if you do opt into this choice, you will need proof of it.
How long have you been in business and what’s your plan?
This is more-or-less a question every lender will have for you. They want to know how long you’ve been in business and whether or not it’s been successful in the time it’s been around. It really depends on the lender, but typically something between one or two years old wouldn’t be bad to shoot for.
And outside of just time, you need to know your business plan. While they do want to see financial goals, they want something more in depth as well. I’m talking about the way you get to make that money. They want a pretty solid proposal and plan that shows you’re creative and are ready to face some of the challenges ahead.
What industry are you looking to get into and what’s the company structure?
As a mechanical contractor, it’s pretty simple. If you want to be a plumber, then you’ll register as a plumber. If you want to be an electrician, you’ll say electrician. Pretty straightforward.
And beyond that, are you running the operation solo, or do you have a partner? Do you own any other companies? Lenders really just need to know how your chain of command works and whether it’s your only source of business income.
Are you certified in the type of mechanical contracting you’re looking to get into?
Most mechanical contracting requires some form of permit, license, or certification before you can start working.
Do you have any legal contracts or agreements already?
It’s pretty much about whether or not you already work with suppliers, have any partnerships, sales agreements, or real estate agreements.
Finance Factory helps mechanical contractors make decisions about the right loans for them.
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.
Interested in finding funding for your business? Finance Factory would love to help! If you’re looking to fund your business within the next 30 to 90 days for $25,000 to $500,00 and have a credit score of 660 or better, let’s chat! Get pre-qualified right now with our quick-step pre-qualification form! And don’t worry, this will not result in a hard credit inquiry of sensitive information. We just want to learn more about you and your business. Click below to get started!
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