Small Business Loan for Electrical Contractor

For many beginners, knowing how to fund electrical contractor businesses is the most difficult step. You have a great idea, and you know clients will be interested, but how do you finance the plan?  How do you get an electrical contractor business loan?

In truth, your funding options are wider and more varied than you might think. For some people, they speak to a bank and think that the dream is over after a rejection. However, you may still be able to get an electrical contractor business loan. If not a loan, you can take advantage of one of the other fantastic solutions available with the South Florida Funding Group.

Financial Demands for Electrical Contractors

Why is an electrical contractor business loan in demand? Because there are many expenses that meet both new and existing services in the industry. For example, electrical contractors need to think about:

• Equipment - As you’ve probably guessed, this is a necessary expense. Unfortunately, it’s an expensive one too. As time goes on, equipment wears and needs replacing, and this means that finance is nearly always required for one form of equipment or another.

• Payroll - Unless you’re a one-man show, the next common expense goes on wages and salaries. If you want high-quality workers, this will come at a cost. In this field, in particular, there has been an employee shortage in recent years. Therefore, the best workers come with a premium.

• Training and Certifications - For the more experienced electrical contractors, they’re in a position to hire a less experienced assistant. Yet, this doesn’t cut down on costs entirely because you still need to pay for apprenticeships, training, and certifications. While trying to run a business, it’s difficult to educate and train less-experienced workers. With this, some turn to an electrical contractor business loan.

• Cash Flow and Growth - After this, every business needs a steady stream of cash running through the business. When performing, cash is required to encourage growth with advertising, hiring, and meeting the regulations that exist in the industry.

If successful, your many years in business will lead to costs including:

• Refinancing debt
• Hiring
• Working capital
• Materials and equipment
• Project bids
• Marketing

Types of Business Loans for Electrical Contractors

Now we know the importance of financing, we need to understand the funding options available to those who need it. If possible, we will always recommend getting a bank loan since they come with favorable terms and rates. If not, feel free to explore the following:

1. Electrical Contractor SBA Loans

Firstly, many consider this the second-best financing option because it is designed for small businesses and is supported by the Small Businesses Administration. Although the loan comes from a traditional lender, a percentage of the loan is secured by the government. Therefore, the risk is alleviated for the lender and you’re more likely to qualify. Should your electrical company default on payments, the lender can turn to the government. With some SBA loans, they can run for up to 25 years.

2. Electrical Contractor Equipment Leasing and Financing

Since electrical contractors are so reliant on equipment, another good option is equipment leasing and financing. If you’re currently on a mobile phone contract, equipment financing works in much the same way. You pay a certain amount a month and own the equipment once the term is over; if you default at any point, the equipment is taken as collateral.

The difference between leasing and financing is that you own the equipment through financing and simply borrow with leasing.

3. Electrical Contractor Cash Advance

You might be looking to fund electrical contractor services despite your bad credit, and this is certainly more difficult than obtaining help with good credit. Rather than securing funding through credit, a cash advance works by securing against the cash flow of the business. As a result, you receive funding in return for a small percentage of all debit/credit card sales.

Generally speaking, this is a short-term solution. While equipment leasing can last for 10 years and SBA loans for up to 25 years, cash advances have a life of fewer than two years.

4. Electrical Contractor Secured and Unsecured Business Loans

If you need a good chunk of money as an electrical contractor business loan, another option would be a secured or unsecured electrical contractor business loan. As the name suggests, a secured business loan is secured against an asset for which the loan is used. Otherwise, an unsecured business loan uses your credit and trustworthiness as a borrower. The advantage of choosing this option is the availability for those with average credit; rather than getting rejected immediately, the lender will offer a higher interest rate.

Even after this, you might consider mobilization funding, factoring for electrical contractors, lines of credit, and other funding options.

Starting an Electrical Contracting Service

As an electrician, you’ve probably moved from company to company wondering why you’ve never taken the jump and launched your own service. If so, now could be the time. Although it won’t be easy, it has the potential to be a huge success if you follow the advice and keep customers happy. How do you get started? We recommend the following;

• Start by getting all the training and certifications needed to work in homes, commercial buildings, and other properties. The more training and certifications you have, the easier it will be to get customers.

• Next, think about how much you’ll charge. Don’t just undercut the competition because this could limit your earning opportunities (and annoy your competitors thus ruining relationships from the off).

• Use our advice today to get working capital and create a business plan.

• Although some will try to cater to every single audience, we believe in mastering a niche. Rather than being good at many things, you can be an expert in green energy, home energy, or communication systems.

• Keep tabs on industry trends and move with the times. Simultaneously, offer positive customer experiences, and don’t be afraid to grow when the time comes.

No matter what stage you’re in, don’t be afraid to contact South Florida Funding Group for alternative business funding financial advice today!