Luiz Bevilacqua 
Plumbers help us with our clogs and pipework, especially during emergencies.
However, running a home construction and plumbing business takes a lot of money. They would need the best equipment and workers to provide the services people need.
Sometimes they may even need to apply for loans and understand minimum credit score and capital to make ends meet.
Here’s everything you need to know about business loans for plumbers and how they can help those in the plumbing business stay afloat.
Business Loan Types for Those in the Plumbing Industry
There are many ways for plumbing companies to get the funds they need for their business financing. These funding programs can help your plumbing business provide the best service to your customers.
That said, what are the different business loans for plumbers? What’s the difference between an SBA loan from a traditional bank loan? Should you choose an alternative lender?
Many small business loans are available and choosing which would be best for you can be challenging. It’s great to understand each one above finding a reliable lender to help you.
Here are the different business loans for plumbers and small plumbing businesses.
SBA Loans
An SBA loan is a traditional way of funding a small plumbing business. They’re usually offered at a fixed interest rate, making it easier to compute when payment comes.
Unlike traditional bank funding, SBA loans can be easier to apply for, especially for small businesses, since the Small Business Administration backs it.
It allows the SBA loan to cover most of the lender’s losses if needed. However, these can’t be utilised for working capital, a deal-breaker for some plumbing businesses.
- Rates: 6-10%
- Terms: 3-7 years
- Financing: 14-30 days
Banks
A bank loan is usually the first option, especially since they offer lower interest rates. Getting the best loan offers would require strong personal or business credit scores.
However, it can be difficult for plumbing companies with poor credit to qualify. It also takes a while for their loans to be approved.
Its lower rates, reliability, and chance for plumbing companies to build their credit makes it a great financing option for most.
- Rates: 6-10%
- Terms: 3-7 years
- Financing: 14-30 days
Line of Credit
These loans are best for when you need ongoing access to cash flow. It’s flexible enough to get you the funds you need and lets you borrow up to a certain amount.
This loan is appealing because you must only pay the cash you’ve taken out, plus some interest.
- Rates: 5-10%
- Terms: 1-3 years
- Financing: 7-30 days
Cash Advance
Cash advances aren’t actual loans but rather a sale of the future receivables of your plumbing company.
It usually relies on credit card processing or bank account deposits to let you get the funds you need.
These merchant cash advances are great for businesses with low credit, especially since it’s driven by cash flow.
- Rates: 1.16-1.55%
- Terms: 3-24 months
- Financing: 1-3 days
Invoice Financing Options
This cash advance option relies on your customers’ invoices as your business assets. The amount offered will be based on how much their invoice adds up to.
It’s structured as a loan or a line of credit for your small business.
- Rates: 1-2% weekly
- Terms: 1-90 days
- Financing: 1-3 days
Alternative Business Loans
These are a great alternative to the other loans on this list since it uses the interest associated with mid-prime finances.
It’s tax-deductible, making it more appealing to many small businesses.
However, it still has higher interest rates than traditional loans and would still require decent credit to qualify.
- Rates: 6-25%
- Terms: 1-5 years
- Financing: 5-7 years
Commercial Real Estate Equipment Financing
It’s important to maintain your company’s equipment. There are specific options for purchasing new or used plumbing equipment to improve a business’s services.
This way of funding usually relies on other types to finance the necessary equipment for businesses.
- Rates: 10-20%
- Terms: 1-5 years
- Financing: 1-7 years
Unsecured Working Capital Loan
This loan helps you with the daily costs of running these kinds of businesses. The higher your capital, the more funds they can provide for your loan.
The approval rate for this is based on the working capital, making it higher and more common.
- Rates: 1.8-45%
- Terms: 6-24 months
Why Should Those in the Plumbing Business Apply for Loans?
The plumbing industry has a lot of demands which can be challenging to keep up with. You would usually pay a lot to sustain daily operations.
These are the common reasons why there are plumbing business loans and how they can help small businesses with any payment they need:
- Cash-Flow: The fluctuating market and economy heavily influence the plumbing industry. You might need the money to make ends meet if income is down for a few months.
- Payroll: You must sustain your workers’ daily lives and needs. You can retain their monthly payments using small business financing even during slow periods.
- Upgrading equipment and certifications: Plumbers and equipment need to abide by certifications and regulations to stay up-to-date.
- GPS Tracking: It’s important to track your service vehicles to know where they go and to help your plumbing company provide the best service.
- Insurance Costs: Jobs in the plumbing industry can be dangerous, especially with the toxins and waste your people handle. It’s important to keep them safe and insured at all times.
- New appliances: The things people purchase are constantly getting more high-tech. Proper training to repair and get the equipment needed to service them can be expensive.
Frequently Asked Questions (FAQs)
You may have more questions about applying for a business loan for plumbers.
We’ve gathered the common questions to help you further understand their importance.
What is a Good Profit Margin for Those in the Plumbing Business?
Your profit margin is basically what your plumbing business earns for each job you do.
To get the profit margin, you would have to subtract the cost of your service from how much your business charges your clients.
Ensure you include the rent, electrical, and staff needed for the cost to accurately understand your profitability.
All plumbing companies consider this. Otherwise, it may not be advisable to apply for a loan.
Conclusion
Considering financing options is vital for any business plan, especially since you’ll need to purchase and pay a lot of things to keep the business moving.
Reach out to your trusted lender for advice on how to fund your plumbing company sustainably.
