Roofing Business Loan Options to Consider
Updated March 9, 2023
Running a roofing company can be a highly lucrative and profitable business. But there can be challenges associated with it too, like coming up with the money to get the business off the ground and running.
Anyone in business for themselves knows that it takes money to make money. But oftentimes this money is scarce. There are plenty of reasons where money might come up short for a roofing business:
- Start-up expenses
- Relocating to a bigger unit
- Expanding the business
- Advertising and marketing expenses
- Building inventory
- Buying equipment
- Covering employee payroll
- Capitalizing on an opportunity
There could be a host of other reasons why a loan might be necessary when existing funds are short. Luckily there are plenty of loan options available to help get business owners out of a financial jam.
How to Grow a Roofing business?
If you’re looking to grow your roofing business, here are some key strategies to consider:
- Expand your service area: Consider offering your services to customers in neighboring towns or cities. This can help you tap into new markets and reach a wider audience.
- Build a strong online presence: In today’s digital age, having a strong online presence is essential. Build a professional website, and make sure to optimize it for search engines to attract more customers.
- Use social media: Social media platforms like Facebook, Twitter, and Instagram can help you connect with potential customers and promote your services. Use social media to showcase your work and engage with your followers.
- Offer financing options: Many customers are hesitant to pay for roofing services upfront. Offering financing options can help you attract more customers and increase your revenue.
- Build partnerships: Partner with other businesses in related industries, such as construction or home improvement, to generate new leads and increase your visibility.
- Invest in advertising: Paid advertising, such as Google Ads or Facebook Ads, can help you reach new customers and increase your visibility in your local market.
- Focus on customer satisfaction: Happy customers are the best form of advertising. Make sure to provide high-quality work and exceptional customer service to build a strong reputation in your community.
- Hire additional staff: If you’re experiencing steady growth, consider hiring additional staff to help you handle the increased workload. This can help you take on more jobs and generate more revenue.
By implementing these strategies, you can grow your roofing business and position it for long-term success.
What Are Your Roofing Business Loan Options?
There’s always the typical option of requesting a loan from the bank. But the requirements to be approved for a bank loan tend to be pretty strict. Generally, you’d need to have plenty of collateral and stellar credit in order to be considered for a traditional bank loan. Unfortunately, many roofing entrepreneurs don’t meet this criteria, and are often turned down.
You don’t have to rely on the bank to get the cash you need. There are other options besides a traditional bank loan to get your hands on the money you need to cover various expenses. Let’s have a closer look at a few of them.
Business Line Of Credit
How many times could you have used a little extra cash here and there to cover expenses? With a business line of credit, you can have that cash available to you at all times. Ideally, a line of credit should be taken out before you even need the money. By having it readily available, you can tap into it whenever the need arises.
A line of credit works similarly to a credit card. You’re allowed to draw from this account up to a specified limit. Any money withdrawn is charged interest, while the remainder of the money left untouched is not subject to interest. Once you pay back the money withdrawn, you can draw from the account over again, as long as you don’t exceed the limit. No collateral is needed for this credit line, and it is revolving to allow for continued use.
Every roofing business needs equipment to operate successfully, but many times, there’s just not enough funds available to cover the costs of buying it. Equipment financing is a funding option that uses the equipment as collateral. This allows the lender to take on slightly more risk at a lower interest rate, and lets you to pay off the expense of the equipment as you generate revenue for your business.
One of the biggest advantages to equipment financing is that you can use the depreciation of the equipment as a tax benefit over a number of years. In addition, the equipment is all yours once you’ve paid off the loan, compared to an equipment leasing program which never makes you the owner.
Short Term Loans
Regardless of whether you’re just starting your business or have plans to expand in the near future, you need cash. Just about every business will need extra working capital on occasion. During these times, a short-term loan might be the ideal option.
Short-term loans work like traditional term loans – you’re given a specified amount of money in a lump sum, and are charged interest on it at each payment. These loan amounts are usually smaller and have more frequent payments made compared to traditional term loans. They’re also meant to cover short-term expenses, and are not meant to have a repayment term of more than a few months.
Business Cash Advance
Business cash advances are not the same as loans. Unlike a term loan where a fixed amount of money is paid back with each payment, a business cash advance is paid back through a portion of your credit card sales. You’re given a certain amount of money that you agree to pay back by allowing the lender to take a certain percentage off of your daily credit card receipts.
Because of this set up, each payment made will be different from the one before, since they will depend on the specific amount of credit card sales that you generated from one day to the next. The higher the percentage of your credit card sales that you pay the lender, the shorter the repayment time period will be.
Waiting around for invoices to be paid can be extremely frustrating for roofing businesses. It’s even more frustrating when the invoices are paid late, further delaying the money from coming in. Luckily, there’s a way to guarantee that you’ll see the cash for these invoices.
This is essentially what invoice financing can do for your business. It can give you more predictable cash flow to cover expenses while you’re waiting for your outstanding invoices to be paid. This can help you when you’re running short on money or urgently need to pay off your bills and cover certain expenses.
After agreeing to sell your invoices to the financing company, you’ll be advanced about 85% of the total value of the invoices, and the remainder of the balance will be held in reserve. The lender will then collect their first fee from this reserve amount, and charge a “factor fee” depending on how long it takes for the invoice to be paid. This is typically calculated on a weekly basis. Then you’ll receive the reserve amount, with the total fees deducted after your client or contractor pays the invoice.
Find Out Which Alternative Loan Option is Right For Your Roofing Business With Credibly
Are you a business owner in need of an online small business loan? Credibly is here to help. We understand the financial pressures that come with running a business and are dedicated to helping you find a funding solution that works for you. Get in contact with us now and get the working capital you need!