Can a Plumbing Company with Bad Credit Get a Business Loan?

When it comes to keeping your plumbing company running, there are times when you have no option but to seek a small business plumbing loan. However, it can be difficult to get a small business loan if you have a bad credit score. The fact is that plumbing companies are always in demand as clogged drains and emergency toilet issues are extremely common. The fact is that most people tend to underestimate what a plumber can do for them. Their job duties include just about everything.

There is nothing that a plumbing company cannot do. You can even find specialists that perform gas-conveying pipe work. This is why seeking small business plumbing loans or alternative business loans should be easy. However, you might struggle to get necessary equipment leasing and financing if you have bad credit. But, it is important that you do not lose hope as there is bound to be a solution just for you. As there is a shortage of plumbers, there are various incentives available if you require financing.

Plumbing Industry Trends

The building market is closely linked to the plumbing industry. This is why plumbing businesses have to always be on the lookout for home buying and construction trends in order to remain competitive and successful. Although there was a decrease in spending back in 2008 due to the recession, the industry has bounced back and continues to thrive. Besides, the aging Baby Boomers are always in need of plumbers for making home improvements.

Why Does A Plumbing Company Require Financing?

There are various reasons why plumbing companies may need funding as mentioned below.

1. Insurance Costs

The plumbing industry has various insurance costs associated with it. The reason behind this is that plumbing can be a very dangerous job. Safety issues and concerns cannot be avoided. This is why there is a need to spend a great deal of money on good insurance. As a plumber, you have to work in a hazardous environment. It is due to this reason that the government has made it mandatory for plumbing companies to seek insurance. However, the cost of insurance can be quite high. During fluctuating economies or slow seasons, you would have no option but to consider getting a merchant cash advance.

2. Cash Flow

As the plumbing industry is always affected by a fluctuating economy, you have to be prepared and at times this would mean seeking business lines of credit. Even though income is on the rise, financing options are necessary when work is slow or tough again.

3. Payroll

In order to pay your employees on time, you might need to take out a loan. It is important that you review the financing options that are available. The last thing you want is to lose your workers and struggle to find new ones to work for you.

4. Going Green

If you want more customers to choose your plumbing business, you will have to go green. As new developments have been made, you will have to make changes and train your workers so that they are able to use techniques that are not harmful to the environment.

In fact, the Federal Weatherization Assistance Program had been developed by the US Department of Energy. It provides training opportunities to plumbers. You might need to look into different financing options to ensure that you are able to train your entire workforce.

5. Technology

Every plumbing business needs to adopt the latest technology if it wants to compete with other companies. In order to keep up with the most recent updates, you need to invest in technological upgrades. It is vital that you consider your options. By advancing your practice, you can expect to attract more customers and grow your plumbing business in no time. There are plenty of new advances that you need to know about to provide a more efficient service. The newest appliances make use of the Internet of Things and all types of technology. Thus, you would be able to stand out. To increase your popularity, you will have to consider alternative plumber loans if you have bad credit

Types of Plumbing Business Loans

There are various financing options available to plumbing companies as mentioned below.

Plumbing Bank Loans

When on the lookout for financing, traditional banking financing should be your first priority. The reason behind this is that plumber lines of credit and traditional bank loans provide the lowest rates. But, you need to understand that obtaining a traditional bank loan is no easy task, especially if you have a bad credit score. However, it is still important that you consider applying for the loan.

Generally, the bank will require you to have a strong business credit score and you will also have to meet other requirements. If you are successful, you would benefit from the lowest interest rate. You also need to keep in mind that it would take quite a long time for your loan application to be processed. Hence, a bank loan would not be recommended if you require a loan immediately. Otherwise, you would end up losing out on your business.

Only if you have a good credit score and are willing to wait for your traditional bank loan application to be processed should you give it a try. On the plus side, a bank loan would offer a reliable rate and allow you to build business credit. You can expect to pay anywhere from 5% to 10% on interest. The loan will have a term of anywhere from 1 to 25 years.

SBA Plumbing Loans

Another option that is available besides a traditional bank loan is an SBA plumbing loan. It is recommended for smaller plumbing businesses that are unable to get traditional financing. As the strict requirements can make it close to impossible to get a loan, you will have to consider an SBA plumbing loan. The Small Business Administration backs these loans and ensures that plumbing businesses can easily access them. You will have to cover most of your losses when you opt for this loan type. The best thing about the option is that it ensures that most of your losses are covered in case you default. The interest rate for an SBA loan is 6% to 8%, whereas, the term would be around 3 to 25 years.

Alternative Plumbers Loans

Typically, alternative plumbing company loans are known as mid-prime small business plumbing loans. As these loans serve as a legitimate funding option, you can get tax deductions on the interest you pay. However, you would still need to have a decent credit score to get mid prime small business plumbing loan. It would also come with a higher interest rate. But, your chances of approval would be much higher.

Expect to pay an interest of 8% to 25% on this loan type. You will have to pay it back within 1 to 5 years.

Asset-Based Plumbing Loan

Even though it is recommended to seek a traditional bank loan for your plumbing business, you will need to consider an asset-based plumbing loan if you do not have sufficient cash flow and a low credit score. With asset-based lending, you get to set aside collateral such as equipment, real estate, invoices, and inventory. Its interest rate is around 10% to 20%, while the term is 1 to 5 years.

Plumbing Company Equipment Leasing

Access to quality equipment is essential for running your plumbing business.  It is important that you review equipment financing options if you are considering purchasing new or used equipment. With equipment financing, you should be able to get equipment for your plumbing business without the need for upfront costs. Although equipment financing normally involves seeking a merchant cash advance, an alternative loan, lines of credit, a bank loan, or an SBA loan, you can also make do with plumbing company equipment leasing. It would have an interest rate of 6% to 20% and a fixed term of 1 to 10 years.

Plumbing Cash Advance

Lastly, you can also take out a plumbing cash advance. A plumbing merchant cash advance is not actually a loan. It simply involves the sale of your future receivables including your bank account deposits or credit card processing in exchange for immediate funding. Although it is not a typical option, you can rely on merchant cash advance financing for quickly obtaining capital to make necessary purchases or inject cash. In fact, your application can be approved within 2 to 24 hours and access to the funding should be provided in 2 to 5 days. Therefore, plumbing businesses that have poor credit care can opt for a merchant cash advance to keep their companies running. The term would be around 3 to 24 months and the factor rates would be 1.16 to 1.5.

South Florida Funding Group

Plumbing companies with bad credit can get fast cash through the South Florida Funding Group. No matter what you might need the funding for, we are here to help you out. Our dedicated team will handle your case to ensure that your financing needs are met in no time.