Seeking traditional funding for a construction project is a great idea. Business loans help get a company off on the right foot and also can provide an extra cushion in case there are unexpected costs.
But not everyone is aware that there’s a separate type of loan available to assist those in the construction area during actual construction.
These are called construction loans and they offer plenty of opportunities to help builders in the actual construction process.
Construction loans can also be applied for and fund various activities. Here’s why they remain a great option.
It’s fast. A traditional lender may take days or weeks for approval. But a construction loan, on the other hand, can be approved within 24 hours. This is especially handy in situations where you may need funds fast.
It can be used for a lot or a little. While a business loan is usually a big chunk that can be dispersed in many areas or pay for larger expenses, a construction loan can be used for all types of things. It can also be a great way to tide things over until a bid is accepted. Or, if there are unexpected delays, it can keep your reserves from getting too low, and keep paying costs for payroll, labor or equipment.
Possible savings through discounts. Your bigger business loan might allow you to pay it back over several years and sometimes may even include penalties if you’re able to pay it off sooner. But this usually isn’t the case with construction loans. Here, you may need funding fast, such as to buy a piece of equipment or meet payroll before full payment takes place. Since this usually won’t be a high sum, it won’t be hard to pay it off fairly quickly. Along with not having to pay much interest, you may even get a discount for paying it off early.
Overall, a construction loan can be a useful tool to help stretch your budget between getting paid by the client and any other loans.
For more lending strategies visit GP Solutions.