Plumbing Financing up to $400,000
Interested in plumbing business loans? We’ve helped thousands of plumbing businesses get the funding they need whether they’re looking to expand locations or purchase tools like wrenches, plungers, or even piping. We can approve you for up to $400,000 within 24 hours. Check if your business is eligible online now with no obligations, no impact on your credit score, and no fees.
Plumbing business loans let a small plumbing business gain access to extra working capital for expansion to help the business during slow periods, make capital improvements to equipment and facilities, etc. Even if you are just starting or lack the credit to secure a traditional loan, some alternatives can get you the cash you need to grow your business.
Here are the “ins and outs” of loans for plumbers, as well as some advice regarding how to qualify for plumbing loans or other funding alternatives.
What Are Plumbing Business Loans
Most banks do not offer loans specifically for plumbers or plumbing companies. They offer business loans, usually at a better interest rate than a personal loan. The funds can be used in any manner the borrower sees fit within the constricts of their loan agreement.
New equipment and supplies a plumbing loan can help you purchase include:
- Sealing Tape
- Hand Augers
- Safety equipment (gloves, goggles, heat shields, etc.)
- Business vehicles
- Business software
Uses for Plumbing Business Loans
Depending on the terms of your loan, you can use the loan in any manner you feel is appropriate. Of course, responsible plumbing business owners will only use the money for the purposes under which they borrowed the funds. Still, unless a loan is contingent on securing particular outcomes or has specific reporting requirements, the money lent to you and your business is yours to keep.
Some common applications of small business loans for plumbers are:
- To cover operational expenses
- Making one time expenditures
- Expanding a business, product line, or service
- Paying for promotional plans
- Plumbing equipment financing for upgrades or replacement (tools, piping, safety equipment)
- Office renovations
- Inventory purchases
- Cash Flow
Funding Options Available to Plumbing Businesses
Most small businesses have more than one funding option. Depending on the business’s credit or the type of loan they are looking to receive, alternatives may be more appropriate or the only way a business can qualify to receive an influx of spending. Here are a few loan alternatives.
Equipment loans are funds designated for purchasing equipment, furniture, or tools for your plumbing business, and the loan amount is the value of whatever it is you are purchasing. Typically, the loan amount is based on the estimated time the purchased item will be in service. Because the equipment secures the loan, interest rates tend to be somewhat lower.
Another option is small business loans which are regular bank loans financed by the estimated credit risk of your plumbing business. The lower the risk, the higher the loan amount. Conversely, for businesses at higher risk, the available funds are less and not available in some cases.
Merchant Cash Advances (MCA) is financing that is underwritten by income from future sales. Merchant Cash Advances qualify as a transaction or an advance on anticipated future business. An MCA has no Annual Percentage Rate. Therefore, no debt is incurred against your plumbing business’ books. MCA offers cash advances for individuals with credit scores as low as 500.
A line of credit is essentially a credit card extended to your plumbing business that is available when you need it. Business lines of credit repayment can be a fixed repayment plan or a minimum monthly. Generally, a line of credit is dependent on creditworthiness plus business volume.
Invoice financing is another method of financing that borrows against the anticipated payment of invoiced income or inventory. For example, you secure money based on issued invoice totals or the inventory cost of your plumbing business. This is also knowns as “factoring” and is popular with many trucking companies.
If you had difficulty qualifying for a loan for your plumbing business in the past, you could try a Small Business Administration loan or SBA loan. Small Business Administration or SBA loans are lower interest loans for qualifying businesses and is secured by the government, making it easier to secure.
A term loan covers a one-time expenditure and has associated interest. The loan’s term can be from a few weeks to 25 years.
Tips for Plumbers Trying to Qualify for Business Loans
While there is no trick to getting a loan for your plumbing business, there are several things you can do to increase your chances of qualifying for a plumbing business loan. Here are a few tips.
Explain in Detail Your Plans
It is always easier to lend money to someone with a plan for spending the money. Map out what you want the loan for, how you will repay it, why you think repaying it will be easy, etc. For example, if your tools are outdated and need to be replaced, outline exactly what tools you plan on purchasing and how you plan on paying them off. The more information you can put in a plan, the greater your chances of success.
Choose Your Loan Wisely
Understanding the type of loan you want or need helps avoid processing issues once you apply. Figure out what you need the money for (new tools, advance on materials for a job, repairs on company vehicles, etc.) and how you will repay it. Explain in detail what you want, why it makes sense, and why you are a low risk to default on the loan.
Understand the Process
Every type of funding has specific requirements, but there are commonalities:
- Collateral: This Lets you secure the amount to the loan.
- Cash Flow and Industry: Some industries are at a lower risk of injury or death than others. Likewise, some always have cash on hand. In both cases, the risk is lower.
- Credit Score: You will gain approval easier with a decent credit history.
Every part of a loan application has a specific role and definition. Each document factors into the final decision. Make sure you provide a lender with any documentation they require.
Some documents you may have to provide:
- Business plan
- Financial statements (my local business)
- Business and personal taxes and credit report
- Legal compliance
How to Apply for the Best Plumbing Funding
For mCashAdvance™ funding consideration, your plumbing business must meet the following requirements.
- U.S. citizens and legal residents only
- Must be 18 years old or older
- Your plumbing business must be at least six months old
- 500 or higher credit score
Depending on your revenue and financial health, your plumbing business may be eligible for up to $350K in funding.
Depending on the amount you need and your plumbing company’s sales, repayment periods may range between one and five years.
Plumbing Business Loan Pros and Cons
As with any business transaction, there are pros and cons to obtaining business financing as a plumber.
A significant benefit of a business loan for plumbers versus a personal loan is lower interest rates. Lower interest rates lower the cost of the loan to the consumer. The interest rate amount is also tax-deductible.
In addition, many lenders make the application process as easy as possible. Lenders make it easy because the more money lent to low-risk customers, the more money the lender makes.
Finally, you will have access to cash to help you successfully run your business.
The first disadvantage to consider is that qualifying can be challenging unless you are ready to leverage your business. You likely must provide collateral capital to secure a loan.
Your personal credit history can be an issue in securing a business loan. One way to address that is to understand the lender process before applying.
Plumbing Business Loans Frequently Asked Questions
The following are frequently asked questions about plumbing financing and loans.
There are multiple reasons a plumbing business may need financing, including expanding the business, buying or replacing equipment, hiring new employees, covering costs during a cash crunch or slow work period, business or legal expenses, etc. However, why a business needs money is less important than how that business will use the money and pay back any loans.
At a minimum, starting a plumbing business entails paying for:
Education and Certification: $15,000
Tools and equipment: $8,000
Miscellaneous businesses expenses (legal, rent, office equipment, etc.): $4,000
Using those cost estimates as a minimum, your new plumbing company will cost about $50,000. Startup costs are much more if your goal is to become a plumbing industry leader in your area. The high cost of starting on your own is why most plumbers start as apprentices.
Most banks will want to see a credit score that is 720+ to consider a plumbing business for a loan. However, for those with less than perfect credit, organizations like Merchant Cash Advance will work with scores of 500 and above.
The answer to this depends on the state of your business. If you are struggling with credit, you want a lender that will work with you. Focus more on the terms the lender offers if your credit is good. Choose a lender that understands your industry enough to know what to expect and how to meet your needs.
As long as your expenditures do not violate the loan terms, you can spend the money as you see fit. Most loans only have very generic requirements, such as prohibiting you from using the loaned funds to break the law. If you use the money for new hires, make sure your growth plan is sound, including your repayment plan. You will have to pay for those employees after the loan money is gone.
Funding Your Business Is Our Business
Plumbing Business Loans Can Grow Your Business
The right plumbing business loans can be a game-changer for your small business in the plumbing industry. It can ensure you have the funds you need to expand, buy new equipment, or address a business need without depleting your assets. The key is having a plan to show a lender and then sticking to it once you get the loan or advance.
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