Best Business Loan for Your Plumbing Business
Construction and subcontracting sectors such as the plumbing industry have seen high demand and grown by leaps and bounds in 2021. Expectations are that the customer base will continue to grow through 2022. There is an abundance of work and potential new customers right now for plumbers and plumbing companies and opportunities in the immediate future for any plumbing business. With the added growth in business comes a greater need for funds to support that growth. That’s when plumbing companies start to look for financing.
The contracting business and specifically a plumber are always in need of working capital due to the industry’s nature and how plumbing projects get paid. Getting small business financing to help run plumbing operations is essential to balance multiple jobs simultaneously.
You often have to purchase supplies and meet payroll and other business expenses while waiting to get paid by general contractors or customers. Traditional bank loans and other conventional lending routes have always posed a challenge in getting funding for the plumbing business. Luckily, that’s where AdvancePoint Capital can help.
AdvancePoint has a variety of loan products for a plumber, unlike banks. Let’s look at what type of plumbing business financing is available in our lender marketplace.
The 8 Best Business Financing Options for Plumbing Companies:
There are many business financing options that a plumber can use to their benefit. Plumbing contractors can fulfill a wide range of funding needs. Finding the right financing that will get you the best return on investment for your business may take some guidance. That’s why we put together the eight best business financing options for clients. Each of these financing options offers unique benefits and qualities that may work best for your business based on need. Take a look at which types are best suited for you.
Long-Term Small Business Loan for Plumbing Companies
A long-term business loan is one of the most desirable in the plumbing business because it offers the most extended repayment terms. Typically these terms range from 2 to 7 years. Long-term loans are a lump sum provided upfront with an interest rate starting at about 7%, with monthly payments repaid over a fixed period. This type of loan requires high credit standards for established plumbers with at least two years in business and a significant amount of paperwork for approval. This loan requires commitment on the part of the applicant to provide necessary documents for approval.
Benefits of Long Term Business Loans:
- Low-interest rate starting from 7%
- Term loans from 2 to 7 years to repay
- Accommodates a larger loan amount
- Monthly payments
- Great for consolidating business debt
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Long-Term Business Loans
Short Term Small Business Loans for Plumbing Companies
Short-term business loans are a financing option that provides a fixed amount of money, with a fixed cost that is paid back over a term from 6 to 18 months. This product is one of the easier business loans to acquire as the standards are easier for approval than traditional long-term financing for plumbers. Bad credit is accepted, and options are available for this type of financing.
Highlights of Short-Term Business Loans:
- Allows for substandard business credit with good and bad credit accepted (all credit considered)
- Low monthly or annual revenue requirements
- Easy process – same day to next day funding available
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Business Line of Credit for Plumbing Companies
A business credit line has the flexibility that a term loan does not. It operates more like a credit card in that it functions as a revolving credit line and allows you to draw out as needed, and you only pay principal and interest on your outstanding balance. Business lines of credit are an excellent option for plumbers with cash flow problems due to unpaid invoices, as it gives you a great working capital funding solution.
Highlights of Business Lines of Credit
- Flexible ability to draw out funds when you need them
- Only required to pay interest on the outstanding principal balance
- Lower costs and fees than that of other loans
- Monthly and weekly payment (depends on the lender)
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Business Lines of Credit
Merchant Cash Advance for Plumbing Companies
Merchant cash advance (also now as Future Receivables Purchase and Sale Agreements) provide an upfront lump sum of money(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 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.
TTerms are expressed as a future sale, so you are given a fixed amount and then responsible for paying back a greater 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 funding.
Benefits of Merchant Cash Advances:
- Flexible repayment terms attached to future sales
- Excellent to poor credit score considered
- Provides funds to owners with sub-prime credit
- Payments fluctuate to future sales controlling the margin of profit
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Merchant Cash Advances
Equipment Financing for Plumbing Companies
An equipment loan or equipment leasing is used to purchase specific equipment. The equipment itself is used as collateral, just as you would when buying a truck or automobile. An equipment loan or financing is usually structured as a lease to purchase or fixed-term loan. Plumbing businesses use this type of financing to save money instead of renting equipment and expensive plumbing tools.
Highlights of Equipment Loan Terms:
- 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 Plumbing Companies
The United States Small Business Administration is a federal government agency that administers SBA loans through approved SBA lenders. This federal agency sets the guidelines lenders must follow to ensure the loan’s legitimacy. The 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 a lengthy process with extensive paperwork, a business plan and may require collateral and high credit standards. Plumbing businesses use this product for significant business expansion projects. SBA 7(a) is the most popular program, but one of many plumbing businesses consider.
(New) SBA Paycheck Protection Program (PPP) loan
The United States Small Business Administration (SBA) has established the SBA Paycheck Protection Program loan that will provide loans to small business owners (including the plumbing industry) throughout the country, affected by the COVID-19 crisis and need financial help.
*Advancepoint Capital has no government affiliation. We are not the Small Business Administration.
Benefits of SBA Loans:
- Interest rates from 4% to 7%
- Terms from 3 to 25 years
- Attractive repayment terms
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Invoice Factoring / Financing for Plumbing Companies
Invoice financing, also known as invoice factoring, allows the plumbing business to leverage outstanding invoices and receive advances off those invoices in a day ahead of the “net” terms of 30, 60, or 90 days that the invoices typically take to get paid. Invoice factoring is an excellent option for businesses in a growth phase and needs to get cash fast from work completed but not yet paid. This product is an invoice funding option and not an actual loan.
Highlights of Invoice Financing:
- Lightning-fast access to funding
- Credit requirements based on your customer, not your credit scores
- No payments, no long term debt obligations
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Business Credit Cards for Plumbing Companies
A business credit card is a small plastic card issued to a business owner through a financial institution that allows the holder to use the card to instantly purchase or pay for items on demand instantly offline and online. The card operates as revolving credit, so it has a limit and charges principal and interest on the account balance monthly.
This product is a prevalent choice as the card is flexible in repayment with lower monthly payments than a business loan. Plumbers use this product in conjunction with other options, and it is one of many products in the complete Advancepoint Capital financing toolbox.
Highlights of Business Credit Cards:
- Principal & Interest based on prime rate
- No prepayment penalties
- No limitations on the use of funds
- Low monthly minimum payment, no set amount
Benefits of Business Loans for Plumbing Companies
Cash Flow/Working Capital Loan
One of the significant challenges of a plumber is managing the flow of receivables. Most projects that a plumbing company takes on have completion dates and time frames that can fluctuate with delays in the overall projects, which is out of a plumbers control, causing incoming revenue unpredictability. Couple that with day-to-day expenses like building materials and other business debt creates issues in the bank account.
A plumbing job can be unpredictable by nature. Business funding is a way to solve those problems by filling immediate issues like customer payment delays, supply and equipment purchases, payroll, and general operating expenses that commonly occur in the plumbing business world. If you own a plumbing contractor business, you know how important these business loans can be to the operations and making everyone, including customers and clients, happy. 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 Own Equipment
Equipment financing allows contractors to own their equipment saving money long term on renting equipment for jobs there working on, making higher profit margins on work for their businesses.
Whether it’s a small operation or a large one, owning equipment plays a significant role in savings and cost-effectiveness. Regardless of your time in business, 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 a plumbing 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 in place to sure up any funding issues. A plumbing company loan is a great way to grow and utilize funding for onboarding people. Plumbing business loans offer a ton of stability in cash flow during the hiring and growth process.
Payroll can grow into something that must be managed and maintained with zero tolerance for cash flow shortages. Unexpected issues related to receivables can put a business in a position they can’t afford to be in, which is missing a payroll. Having access to a broad and diverse range of financing gives electricians the freedom to make sound financing decisions and eliminate payroll as a problem.
Get started today. We can provide access to a wide range of business loans and lines of credit options that you can take advantage of when needing funds fast. Finding the right funding solution can be difficult, but here at AdvancePoint Capital, we make it easy to get the funds you need.
The Bottom Line. Why AdvancePoint?
- Experience within the plumbing industry – We have been funding plumbing companies for years.
- Trust – Excellent reviews and feedback from plumbers
- Loan Specialist – An experienced team of funding experts who know the plumbing industry and provide solid business advice.
- Free to find out – No cost, no commitment quotes
- Products – A Variety of Small Business Loans – We don’t just offer what we have; we deliver what’s available in the marketplace with an extensive network of third-party lenders.
- Service – Excellent customer service and responsiveness with a high approval rate with credit decisions in just a few hours for most products.
AdvancePoint CapitalThe fast, convenient and straightforward way to get the capital you need for your plumbing company – now! Get your quote today by filling out our simple form.
Frequently Asked Questions
The electrical contracting industry varies significantly on how much you can make by building in a specific geographical area and the respective economy and consumer spending. Check local electrical contracting companies and unions for information related to going wages. It’s pretty simple. The more projects, contracts, or service calls you have, the more you can make.
Experience and training are vital to get 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)
- Social Media
- Online Referral Services (Task Rabbit, Angie’s List, Craigslist, etc.)
- Radio Advertisements
- Referrals From a Satisfied Customer Base
The fast, convenient, and straightforward way to get the money you need for your small business – now!
Get your quote today by filling out our simple form.