The engineering and construction industry has seen better times. The demand for construction has decreased since the sudden collapse of oil prices in 2015, that led to most energy companies slowing down, postponing, or simply canceling major projects.
General contractors in the construction industry are also facing growing competition from firms in low-cost nations. While all of this has led to lower profitability from 2008 all the way into 2015, the engineering and construction industry is seeing positive growth with new trends emerging that are leading to many general contractors finding their niches.
All businesses must invest money in order to make money. Some, however need to spend a lot of money just to stay afloat, and as luck would have it, these are the same businesses that do not get paid immediately after their work is done. Construction contractors often have to wait up to 120 days to be paid in full.
Bids take weeks to approve, and then contract details must be ironed out. How are contractors supposed to pay their workers, fix their equipment, or finance their next project when their funds are tied up?
Construction projects are time sensitive, with no room for negotiation. If the contractor cannot come up with the money for the upcoming project in time, the client will simply find someone else who can have it completed by the desired date.
Contractors face a lot of milestone payments and unexpected spendings. Especially, those that are new and have just started out need some time before understanding which investment is better than the other.
Contractor business loans are not easily achievable for small starting businesses because banks and other lenders need to make sure of security with business. Online business loans are much easier and faster to get than bank loans, though they come with higher rates.
Other than banks and online lenders, small business administration options are also available. Government agencies partner with lenders to guarantee loans up to a certain amount.
Having access to flexible financing options can make the difference between getting a contract or filing for bankruptcy.