Choosing the Best Electrician Business Loan Program
The 8 Best Business Financing Options for Electrical Contractors
There are many business financing options that electricians can use to their benefit. Electrical contractors can fulfill a wide range of funding needs. Finding the right financing that works for your electrician business may take some guidance. That’s why we put together the eight best business financing options for electricians. Each of these electrician business loans offers unique benefits and qualities that may work best for your business based on need. Take a look at which one is for you.
Long-Term Small Business Loans for Electricians
- Low-interest rate starting from 7%
- Term loans from 2 to 7 years to repay
- Accommodates a more significant loan amount
- Monthly payments
Learn More About Long-Term Business Loans
Short-Term Small Business Loans for Electricians
- Allows for substandard business credit with good and bad credit accepted, meaning all credit considered
- Low monthly or annual revenue requirements
- Easy process; same to next day business funding available
Learn More About Short-Term Loans
Business Line of Credit for an Electrical Contractor
A business credit line has the flexibility that a short-term loan does not. It operates more like a credit card in that it acts as a revolving credit line and allows you to draw out as needed. You also only pay principal and interest on your outstanding balance. This funding option is excellent for electricians with cash flow problems due to unpaid invoices and a perfect working capital funding solution.
- The flexibility of drawing out when needed
- Only required to pay interest on the outstanding principal balance
- Lower costs and fees than that of other loans
- Monthly and weekly payments depending on the lender
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Business Lines of Credit
Merchant Cash Advance for Electrical Contractors
Merchant cash advance or future receivables purchase and sale agreements provide an upfront lump sum of money or funding to the business in exchange for a fixed percentage of the businesses’ future sales. Repayment is typically made daily or weekly. Either ACH payments are auto deducted from a business’s bank account, or the percentage is taken out of future credit card sales until the payback obligation is met. Terms are expressed as a future sale, so you are given a fixed amount and then are responsible for paying back a more significant amount through a fixed percentage of future sales. The difference between the amount given and the amount paid back to complete the agreement is your fixed cost. The estimated time to repay is typically 6 to 18 months, but there are no term limits as the repayment is based on future sales. A merchant cash advance is not considered a term loan but a business funding.
- Flexible repayment terms attached to future sales
- Excellent to poor credit score considered
- Provides funds to owners with subprime credit
- Payments fluctuate to future sales controlling the margin of profit
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Merchant Cash Advances
Equipment Financing for Electrical Contractors
An equipment loan or equipment leasing is used to purchase specific equipment put up as collateral as you would when buying a truck or automobile. An equipment loan or financing is usually structured as a lease to purchase or a fixed-term loan. Electricians use this type of equipment financing when they want to save money versus renting equipment.
- Minimal paperwork require
- Instant funding
- Repayment terms from 12 months to 5 years
- Affordable monthly payment
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Small Business Administration (SBA) Loans for Electrical Contractors
The United States Small Business Administration administers SBA loans through approved SBA lenders. This federal agency sets the guidelines lenders must follow to ensure the loan’s legitimacy. The Small Business Administration (SBA) works with lenders to provide loans to small businesses and does not lend money directly. A Small Business Administration (SBA) loan provides long-term, fixed interest rate financing at desirable rates and terms. This product is very popular with electricians. Although popular, the process is lengthy with extensive paperwork, including a business plan, possible collateral, and high credit score standards. Electricians use this product for significant business expansion projects. SBA 7(a) is the most popular program but is one of many available to electricians.
- Interest rates from 4% to 7%
- Terms from 3 to 25 years
- Attractive repayment terms
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Invoice Factoring / Financing for Electrical Contractors
Invoice financing, also known as invoice factoring, allows the electrical contractor to leverage outstanding invoices and receive advances off those invoices a day ahead of the “net” terms of 30, 60, or 90 days the invoices usually take to get paid. This is an excellent option for electricians who are in a growth phase and need to get cash fast off work completed but not paid for yet. This is invoice funding and not a loan.
- Lightning-fast access to funding
- Credit requirements based on your customer rather than your own
- No payments or long-term debt obligations
- Not based on what is in your business bank account
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Business Credit Cards for Electrical Contractors
A business credit card is a small plastic card issued by a financial institution. The cardholder can use the card to purchase or pay for items on demand instantly, both off and online. The card operates as revolving credit with a credit limit and charges principal and interest on the account’s balance every month. This is a prevalent choice as the card is flexible in repayment with lower monthly payments than a business loan. Electricians use this product in conjunction with other options and are one of many electrician loan products in the financing toolbox.
- Principal and interest based on the prime rate
- No prepayment penalties
- No limitations on the use of funds
- Low monthly minimum payment with no set amount
Benefits of Business Loans for Electrical Contractors
Cash Flow/Working Capital Loan
One of the significant challenges of electrician businesses is managing the flow of receivables. Most projects that an electrical contractor takes on have completion dates and time frames that can fluctuate with delays in the overall projects, which are out of an electrical contractor’s control, causing incoming revenue unpredictability. Coupling that with day-to-day expenses like building materials and other payments creates issues in the bank account. An electrical job can be unpredictable by nature. Electrician business loans solve that problem by filling immediate issues like customer payment delays, supply and equipment purchases, payroll, and general operating expenses that commonly occur in the electrician business world. If you own an electrical contractor business, you know how vital these electrician business loans can be to operational costs, progress, and growth. Electrical business loans and other financing options give the electrical contracting company the freedom and funding power to take on new opportunities to grow their businesses.
Owning Your Equipment
Equipment financing allows contractors to own their equipment, saving money long-term on renting equipment for jobs they are working on, making higher margins of profit on work for their businesses. Whether it’s a small or large operation, owning equipment plays a significant role in savings and cost-effectiveness. Regardless of your time in the industry, considering equipment loans is always an excellent long-term investment that can make a real impact over time for any electrical contractor business.
Hire Employees and Managing a Growing Team
It starts with great people. Hiring a great team is the lifeblood of an electrical contracting company. Recruiting can cost funds because the workflow is not as steady as other businesses. Salaries, signing bonuses, and training staff on new technologies can burden businesses without contractor loans to ensure cash flow issues. An electrician loan is a great way to grow and utilize funding for onboarding people. Contractor loans offer a ton of stability in cash flow during the hiring and growth process.
We’ve helped countless electricians find contractor loans that work best for their business. Our simple diverse range of electrician business loans and funding opportunities gives our customers the freedom and flexibility to find a loan solution that works for them. Our simple application process and instant cash on hand are just around the corner.
With AdvancePoint Capital, you’ll benefit from electrician industry professionals, experienced specialists, and a trusted name in the funding industry. We make it easy to get small business loan offers with a fast approval process.
- Experience – We have been funding the electrical business for years and have the experience to back it up.
- Trust – Excellent reviews and feedback from electricians.
- Loan Specialist – Experienced funding experts who know the electrical contractor industry.
- Free to Find Out – No cost and no commitment quotes.
- Products – A variety of electrician business loans. We don’t just offer what we have; we offer what’s available in the marketplace.
- Service – Excellent customer service and responsiveness. Easy 1-page loan application.
Getting electrician business loans from a lender can be intimidating, but it does not have to be. At AdvancePoint Capital, we can find a funding solution that works with your electrical contracting business instead of against it. Go to our website to fill out our form to apply, so you can find out what your small business loan terms would be!
Frequently Asked Questions
The electrical contracting industry varies significantly on how much you can make by the cost of building in a specific geographical area, respective economy, and consumer spending. Check local electrical contracting companies and unions for information related to going wages. It’s quite simple. The more projects, contracts, or service calls you have, the more money you can make.
Experience and training are crucial to getting started. Once you have mastered your craft, then the next important thing is winning contracts, projects, and acquiring customers. After you have the work, then the process of hiring employees and electricians begins as work grows.
If working independently and not looking for business from general contractors, you will have to advertise your services.
- General contractors
- Internet marketing (SEO and Pay-Per-Click on Google Advertising)
- Online referral services (Task Rabbit, Angie’s List, Craigslist)
- Radio ads
- Referrals from satisfied customers
An electrical contractor or electrician is the same profession.
The short answer is yes, but options will be limited for companies with poor credit. Lender-approval and terms will also vary.
The fast, convenient, and straightforward way to get the money you need for your small business – now!
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