A Financing Choice for Construction Subcontractors

Hoping to get business financing for a construction subcontracting business is extremely challenging and will remain very difficult for the near future. Many experts predict that it’s going to take years for the industry to regain a stable footing in the economy. Plenty of institutions would be very reluctant in providing business loans to subcontractors unless the idea of this prediction happens. In fact in the UK the sheer number of Lenders who will even consider financing contractors is at an all-time low.

Even though the situation may look dire for some, there are many construction subcontractors that are prospering in this environment. And they also span the industry from general construction, to demolition, to carpenters, to HVAC companies. Given that the industry they are in is considered risky by many lenders, perhaps it is challenging for them to get business financing even though they are doing well.

Most subcontractors hunt for business financing because they have cash flow problems that originate simply because get paid in 30 to 60 days after invoicing, or submitting an application for payment. Before waiting to get paid, they basically deliver the work first and send an invoice or application. Unfortunately, few have the capital to wait. To be able to pay suppliers, office expenses and employees, they need that cash.

One alternative to solve this problem is by using construction factoring. Construction factoring provides an advance on slow paying invoices, providing the cashflow a company must meet expenses while waiting for their invoices to get paid. The transaction is pretty simple, a factoring company advances you a part of your invoice – about 75% as a first payment. It is possible to get the remaining second payment of twenty-five percent (less the factoring fee) as soon as the transaction is settled and the client has paid the invoice or the application.

One benefit of construction factoring over a conventional business loan is its flexibility. The factoring line is not fixed but instead is founded on your invoices or applications. It grows with your sales. Furthermore, most factoring companies go through the credit of your customer among their more important funding criteria. This makes construction factoring an ideal solution for small and mid-sized companies, whose biggest assets are solid clients.

Construction factoring financing is an effective solution for companies whose biggest challenge is they can’t wait 30 to Sixty days to get paid by clients.

About The Interface Financial Group Looking for construction factoring? We’re a leading provider of construction factoring and can give you a competitive factoring quote. For information, please call 0800 014 8626 or go to www.ifgnetwork.co.uk now.

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