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Home » Featured » How do Construction and Building Loans work?

Construction and Building Loans

Featured

How do Construction and Building Loans work?

December 17, 2021
TIME TO READ 5 mins

What are Construction and Building loans?

The Construction and Building (C&B) industry is composed of different kinds of businesses in Australia. Services like maintenance, renovation and demolition are just some examples of construction businesses that operate in the country. These businesses generate up to $400 billion annually and provide over 1 million jobs.

The C&B industry is not just comprised of builders and construction companies. C&B also covers remodelers, maintenance, roofer and demolition companies; and just like any other industry, these businesses come in all sizes. However, many of them experience having a hard time borrowing money from banks and other lenders. Inability to secure loans can lead to cash flow problems or hinder their growth in the industry.

Capify’s business loans are tailored specifically to the needs of small businesses so the loan amount, rates and repayment terms are better suited to smaller businesses who need access to funds quickly for any business purpose.

Unlike secured loans which require you to borrow against an asset such as a vehicle or property, our unsecured loans aren’t guaranteed, meaning you can borrow money for your business without the need for collateral or assets as security.

Why Is Cash Flow Important To Construction Businesses?

Many small businesses suffer from cash flow problems. For Construction Businesses the problem is usually encountered during payment between client and business. According to statistics, C&B small businesses reported that 8% of clients paid them on time, while 61% were usually paid on time. This is good news but 27% of respondents also reported that they rarely got paid on time while 4% said they never get paid on time.

This means that Construction Businesses have a hard time managing their cash flow even while they are engaged in projects and losing your source of funds can have a big impact on how quickly you can deliver a project and your reputation in the business.

Aside from this, the C&B business is very capital intensive. Equipment, labour and materials are usually calculated well before the money is poured into a project. Aside from this, projects can also need more materials, new equipment and adjustments before they can be completed. Construction also takes a long period of time so your resources are spread which means that having no access to funding can delay projects and have a negative impact on cash flow.

Get an estimate of how much you might be able to borrow in under a minute using Capify’s Business Loan Calculator

How can Construction and Building loans be used?

Aside from cash flow, C&B businesses can also use the funding for:

Bills Payment
Staff Payroll
Additional Stocks or Material
Purchasing or Upgrading Equipment

You might also like to read this: 10 key strategies to succeed in business in 2022

Maintaining a Small Business in the construction and trade industry is challenging enough without the difficulties presented by COVID-19. Whilst these challenges are expected to be eased out in 2022, it still serves an important lesson for businesses: Continuously planning and preparing for the future.

Most small businesses are already trying to shift their focus from traditional operations to a more dynamic and digital approach allowing for greater flexibility and dexterity required to overcome obstacles such as COVID-19 in future.

Below are the top 5 tips for small business in the construction and trade industry that we’ve collated to help businesses within the industry to be better equipped for 2022 and beyond.

Top 5 Tips For Construction And Trade Businesses in 2022

1. Technological implementation

Technology has become an essential part of our daily life. We can see the upward trend of words such as “smart” and “automation” in all the aspects of our daily life. It is no different in the trades and construction industry. The rise of home automation tools, smart devices, app control etc. has given more flexibility to customers and opportunities for small businesses. However, this requires training and equipping business for various technology, so it’s best to start investing in upskilling your workforce accordingly so you can maximise new opportunities

2. Promoting business online

With the limitation of mobility and benefit of flexibility, if one thing is to be learnt from the COVID-19 period is that online presence for small business is essential. The increase of localised business searches with search engines and social media platforms it is of utmost importance so that your business is not missing out on new opportunities. It might take a bit of online education and research to get your business appearing for searches such as local renovations or contractor jobs but it’s definitely worth the effort (or investment if you decide to engage a digital agency to assist)to not only raise awareness and presence but to actually convert customers..

3. Get reviews and recommendations

Gone are the days of quoting customers for the job and getting construction and trades businesses based on competitive pricing. Customers are more demanding now than ever and do their research on the quality of service, workmanship, duration of the work etc before making a decision. The best place for them to learn about this is through various reviews and recommendations provided by previous customers on sites like Trust Pilot, Product Review and Google My Business. This might require you to sign up to different platforms and pay a subscription fee but this not only increases your chance to get more jobs but also increases the reliability factor that is vital to convert customers.

4. Partner or Sign up to online platforms

As you have more money to invest, the chance to get higher profits increases. However, remember that you need to act wisely with the money you borrowed so make the most of it. It’s a good idea to get financial consultants to help you out.

5. The shift from a cash economy

Making timely payments on your small business loans will give your credit score a boost. This gives you better chances of getting lower interest rates on future business loans. Moreover, a better credit score means it’ll likely be easier to get loans in the future.

Although implementing these strategies requires working capital, the benefits of long term success are undeniable. If you require additional funds to achieve these goals, Capify can help you with a variety of short term finance options.

To learn more about our solutions, apply here or call 1300 760 930 to speak with one of our friendly lending consultants now.

If you do require funding but are unsure about your options, chat with one of our lending specialists on 1300 760 930 or Get Started so that we can assist you with getting funds approved within 24 hours.

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