According to a report focused on California’s economic growth in 2024, the state’s housing market is expected to rebound from 2023’s sharp construction slump, especially in the second half of the year, as lower mortgage rates and limited supply spur residential construction. Single-family construction is expected to lead residential construction; multi-family housing starts are expected to pull back but their impact on overall housing supply will be limited as they’re a smaller share of the overall market.
What this means for residential construction companies is that the work will be there but they’ll need to be in a position to compete for it. In some cases, that may mean seeking a business loan to use for any number of reasons, including:
- Competing for bigger jobs
- Hiring more workers
- Marketing and advertising
- Managing cash flow
- Purchasing equipment and materials
- Making payroll
Since every residential construction company’s situation is unique, there’s no one-size-fits-all business loan that will be right in all cases. The good news is that there are plenty of alternatives available to look into if you’re in the market for a business loan for your residential construction company, including:
- Working capital loan—Providing the cash you need to cover ongoing, everyday operational costs, typically repaid within three to 18 months
- Equipment financing loan—Supporting your ability to purchase equipment, typically using the asset as collateral
- Business line of credit—Functioning almost like a business credit card, providing you with a credit line to draw from as you need it
- Term loan—Securing a lump sum that can be used for a variety of purposes—typically by established contractors—that must be repaid within a specified period
- SBA loan—Funding secured through a bank, credit union or alternative business financing facilitator that’s guaranteed up to 75% or 85% by the Small Business Administration
- Real estate financing—Using an asset such as land or buildings as collateral to secure a business construction loan with more favorable terms
While every lender may have its own set of requirements to apply for business loans for residential construction companies, in addition to an application, the following documents are usually needed to apply:
- Recent tax returns
- Current P&L statement
- Debt schedule
- Recent bank statements
The Bottom Line
Competition for jobs among residential construction companies is likely to be quite spirited this year, especially in the single-family home arena. Companies that are successful in securing work are going to be those who’ve gone all out to ensure they’re ready to jump right in—so it’s critical that they have the necessary staff and equipment for ongoing work. With the availability of so many types of business loans for residential construction companies, there’s no reason to have to sit on the sidelines and watch other companies grab the business.
Clear Skies Capital has helped many residential construction companies determine the business loan that’s best for them and get the financing they need in a timely fashion. Contact us today at 800-230-9822 to discuss your company’s needs.