The competition in the US construction industry is cutthroat. Companies are making efforts to gain a competitive advantage by enhancing their cash flow streams and innovation. The sector is heavily predisposed to economic changes, macroeconomics factors, and supply prices.
These aspects directly impact client and investor decisions and help business owners forecast their performance and numbers in the near future. It’s believed that construction projects are quite risky, and that’s somewhat true. Fortunately, by staying away from common financial and operative mistakes, construction business owners can stay ahead of the competition.
However, there are numerous challenges facing construction companies, especially during the post-pandemic era. There’s indeed no way of bootstrapping a construction project. From due diligence tasks to procuring materials and maintaining client relationship, every aspect needs your undivided attention. But the most concurrent challenge of all, is maintaining liquidity and adequate financial backup during a construction project.
Let’s dig deeper to learn about some of the most common financial challenges faced by construction companies in the US.
Scarcity of Loans
Unsecured business loans, usually targeted toward small businesses, are fairly a simple way to ensure smooth cash flow management, provided that your firm is able to repay on time. This type of financing doesn’t require huge sums of financial equity and is less vulnerable to the risks of economic turmoil.
However, the availability of secured loans is still a common challenge in the construction industry. Construction firms often fail to get their loan applications accepted by traditional financing institutes like banks or credit unions. This is mainly because of the high-risk nature of the construction projects. Luckily, you can now seek nationwide construction hard money loans on flexible terms and conditions to keep your construction biz up and running smoothly.
Premium Interest Charges on Loans
Construction companies are typically charged with high interest rates on loans. Unfortunately, most of them don’t have sufficient credit to repay financing entities. Construction contractors generally don’t have widespread capital equity because their money is focused on operating ongoing projects.
This leads to higher, premium interest rate that can negatively impact the debt portfolio of your company. Therefore, we recommend seeking private hard money construction loans instead of taking out a bank loan. Private construction loan lenders in the US, like the Commercial Private Equity, offer flexible terms and conditions. They also offer specialized loans such as bridge loans that can help you fulfill short-term financing needs without having to maintain a stellar credit history.
At Commercial Private Equity, we offer swift and flexible hard money loans and bridge loans, on the best terms and conditions. Trusted for over 75 years, our firm is a top choice of countless businesses and private borrowers.