Are you looking for working capital loans for roofers? If yes, then you are in the right place. This post will give you information about the types of easy working capital loans and how to maintain your working capital.
What is Working Capital?
Working capital refers to the difference between account payables and assets of your business. This defines your business's solvency and allows you to easily determine your business’s financial health once you know the exact amount of working capital.
If you are an existing roofer or thinking about starting a roofing business, you will have to ensure that you keep a positive working capital. In simpler terms, your business assets must always be more than your existing liabilities. The moment your current liabilities start going higher than your assets is when your working capital starts to go low or even negative.
Roofing businesses can experience a time when the business slows down. For instance, during the winter season, it becomes increasingly important for roofers to maintain an adequate level of working capital, or your business might run into the risk of a shutdown.
6 Working Capital Loans for Roofers
If you are a roofer, here are six types of working capital loans that can help roofers.
1. Business Term Loans
This is one of the working capital loans for roofers that give you a lump sum amount of money. The lender then gives you a specified time period to repay the loan. Your repayment terms can be a few months or a few years.
That said, the average interest rate on this type of loan may range from 7% to 30%. If you have a strong financial and personal credit history, you may even qualify for more favorable loan terms and rates. Once you have the cash, it is entirely up to you how you want to use this loan. Plus, you do not need to secure the loan by putting any of your personal or business assets as collateral.
The lenders will determine the maximum amount of loan you can get based on various factors. These include your business revenue, credit rating, and your business's overall financial health.
2. Business Cash Advance for Roofers
Are you a roofing business owner facing a cash flow pinch and need immediate cash? Then merchant cash advance can help you. This type of working capital loan for roofers allows you to sell future revenues to the lender and access instant cash.
This loan is not a typical business loan. Think of it as getting advance cash in advance from the lender against your company's future receivables. A lender will loan you an amount that will be a percentage of your future receivables.
3. Business Line of Credit
Roofers often need quick cash in order to take care of their daily expenses, and a business line of credit is a good option. This type of working capital loan for roofers gives you access to instant cash whenever you need it.
Suppose you are a roofing business owner and want to improve your chances to get approval, apply for a line of credit in advance. A business line of credit acts similar to a credit card with a predetermined limit, and you can withdraw the desired amount of money at the time of need. You can then repay the money that you used along with an interest rate.
Once you have paid the money back, you can use the line of credit again. However, always ensure that you do not exceed your credit limit. Many roofers prefer this type of loan since there is no collateral, and you have access to revolving financing that you can use as and when you need it.
4. Equipment Financing
As a roofer, it is essential for you to have the proper equipment. Without working capital, you will not be able to start your roofing company. Typically, high-quality equipment comes with a hefty price tag leaving you in a position where you cannot afford any expenses out of your own pocket.
This is where equipment financing can be one of the useful working capital loans for roofers to meet your business equipment needs. The best part is this loan does not require you to pledge your personal or business assets. The equipment that you purchase becomes the collateral for the lender. This allows the lender to offer you lower interest rates because their investment is safe.
You can also pay back the loan in full as your business start generating revenue. You can also use depreciation of your equipment to gain tax benefits over the years.
5. SBA Loans for Roofers
If you are a small business looking for bank rate financing, you can opt for small business administration (SBA) loans. Small businesses often struggle to secure a loan from a traditional bank, and that is why SBA has created special loans to support and encourage business owners like yourself.
The SBA gives incentives to traditional lenders to offer loans to roofing business owners and cover up to 85% of the borrowed amount. This virtually protects lenders against any risks.
6. Invoice Factoring
In this type of borrowing, you sell your outstanding invoices to a lender at a discounted price/value of the actual invoice. Lenders will usually pay you approximately 60% to 90% of your invoice’s actual amount and give you the cash you need.
After that, it will be up to the lenders to collect the invoices from the customers. So, you do not have to deal with the hassle of chasing your customers and processing the payments. However, some lenders may offer the entire value of your invoices and charge you a weekly fee until you repay the borrowed amount.
Get Easy Working Capital Loans for Roofers with a Single App
If you are a roofing business owner looking for a working capital loan, you can easily do so from an app instead of contacting a conventional commercial bank. VERGO can help you get access to any type of loan to enjoy cashback and many other perks. You will have a debit card solution that will allow you to gain access to money and ensure consistent access to working capital as per your needs.
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