Get Geared Up Before Applying For A Construction LoanShare
Are you getting ready to expand your existing construction business or launch a new one? Part of the big picture is to be able to generate enough cash flow to catapult your company to success. With no money, this can be difficult to do. That is where getting a loan comes in. You'll need a construction or business loan in order to get the equipment and materials you need for a successful future. But keep in mind, there are some things you should be prepared for in advance. Take a look.
Do You Have Collateral?
One of the first things a lender will ask you is what type of collateral you have to support the loan they are about to grant you. If you run a construction company, you may have equipment that you can use to help back up the loan. If some equipment still has outstanding loan balances, try to pay those off or consolidate prior to applying for a new loan. This will help boost your creditworthiness and improve your credit report. The more assets you have that you can use to borrow against on a new loan, the more likely your loan terms or APR will be in a reasonable repayment bracket.
What's Your Credit Score?
Before even going to your lender and applying for a new business loan, you need to know exactly where you stand with your credit. Now is a good time to run your credit report and obtain your FICO score. A minimum credit score of at least 600 can allow you to pre-qualify for most construction loans. But the higher your score is before applying, the better the rates will be and the less you'll have to pay.
Is There a Solid Business Plan in Place?
When approaching a lender, one thing they will inquire about is your overall business plan. One question to be prepared to answer is, "Where do you see your business in one year or ten?" Go into your meeting knowing the exact answer. Sure, you could simply tell them what your plans and goals are, but to keep things professional, have a business plan drawn up. Map out your business goals and needs. Jot down exactly the financial plan that your company will need to prosper. To generate an attractive and easy-to-digest proposal, consider hiring a copywriter or content designer to write one up for you.
Obtaining construction equipment financing doesn't have to be a complicated process. When you have the right vision for your company and a plan of action in place, you'll get approved faster and reap the long-term rewards.