Working Capital Loans for Glass Installation Businesses: A Lifeline During Slow Seasons

As the construction industry continues to grow and demand for home renovations increases, the window and glass installation industry is well-positioned to meet the needs of these projects. Because of that, having a glass installation business can be profitable and a sought-after service. However, like many other businesses, there can be slow seasons that can hinder your growth. Working capital loans for glass installation businesses can be a lifeline during these times and provide funds to keep going, business as usual.

What is a Working Capital Loan?

A working capital loan is a type of financing that provides business owners with funds to cover everyday operating expenses. This short-term financing fills any gaps to help cover payroll, buy inventory, manage expenses, etc.

The loan or type of financing can be structured in different ways. As the name suggests, the funds are used for working capital to cover your operational costs and ensure your business needs are met. Similar to equipment loans, which are for equipment or commercial real estate loans to buy property.

How Working Capital Loans for Glass Installation Businesses Help

Working in the window and glass installation industry, you experience seasonal fluctuations. Things may slow down in the winter months and pick back up in the summer months. During some periods, construction may be booming. Other times, not so much.

When you’re in the midst of a slow season, you still have to pay your employees and other business expenses. That can put a financial strain on your business. Working capital loans for glass installation businesses can help:

• Meet payroll needs: With less revenue coming in, making payroll could be tight. A working capital loan for your glass installation business can give you some more breathing room.
• Pay for operating costs: You can use a working capital loan to cover rent for your business property, insurance, maintenance, and other fees.
• Maintain inventory: Stay stocked during seasonal slowdowns and manage and maintain the inventory you need to keep your business running smoothly.

Different Types of Loans Options

Working capital loans for glass installation businesses can come in different forms. Some different types of loans to consider include the following:

Term Loans

Term loans with shorter repayment terms can be used as working capital loans for glass installation businesses. This type of loan gives you a lump sum, which provides an influx of capital to help manage fluctuating cash flow, especially during the slow seasons. Typically, these are fixed-rate loans.

You can get term loans from banks, credit unions, or even online lenders who work with business owners.

SBA Loans

The U.S. Small Business Administration (SBA) partners with approved lenders to offer small business loans that are partially backed by the agency.

Though the SBA has several loan programs, the 7(a) loan option is often the most popular. The SBA 7(a) loan allows borrowers to use the funds for both short-term and long-term working capital.

Some businesses may also qualify for the 7(a) Working Capital Pilot (WCP) program. The SBA is one option for working capital loans for glass installation businesses. While SBA loans can be an attractive option, they also come with a lengthy application process. So, if you’re in the middle of a slowdown right now and need capital quickly, other financing options may be preferable.

Other Types of Funding Options

Invoice Factoring

If your glass business collects payment through invoices, you may be able to leverage those invoices and turn them into funding. Through invoice factoring, your unpaid, outstanding invoices are sold to a factoring company.

That company will give you a percentage of those funds upfront, generally around 80% to 90%. When those invoices get paid, the company will send you the rest of your funds. However, you’ll typically pay 1% to 5% in fees to get that cash up front. This type of financing is sometimes called accounts receivable factoring. Invoice factoring is an alternative financing option if you need working capital loans for your glass installation business.

Merchant Cash Advance

A merchant cash advance (MCA) can provide funding if you primarily accept payment via credit cards. It’s not exactly the same as working capital loans for glass installation businesses, but you can use the capital you receive to pay for your day-to-day business expenses.

Using an MCA, you receive a cash advance, as the name suggests. But it has a different repayment structure than a traditional loan. Instead of a set loan payment, you pay back the cash advance using a percentage of your credit card transactions.

If your glass installation business receives payments through credit cards and you need quick funding, an MCA can provide working capital. However, it’s important to note that merchant cash advances are typically more costly than other business financing options.

Business Line of Credit

Working capital loans for your glass installation business can be a lifeline during slow seasons. When things are down, you have the cash you need to stay afloat until things pick up again. A small business working capital line of credit provides business owners with more freedom and flexibility than a traditional one-time lump sum loan.

A bank or financial institution extends a line of credit and approves a certain amount. You have the option to borrow and draw from that line of credit, but you’re also not obligated to. So, if things are going well, you may not need to touch it. On the other hand, if you need working capital, you can draw funds from the line of credit.

What makes this option flexible is that you can use the amount you need instead of the full amount. Additionally, you can continue to access the available credit as you repay your balance. So, getting a line of credit for your business gives you more accessibility and flexibility.

Alternative Options for Small Business Loans

Working capital loans for glass installation businesses can help you manage cash flow effectively. But they’re short-term loans and may not be the best financing option, depending on your situation. Small business owners can also look into the following financing options.

Equipment Financing

Glass installation businesses often need the right tools and equipment to do the job. Whether it’s glass cutting tools, power tools, or glass lifting and handling equipment, you need specific items to perform your duties.

These items can come at a steep cost, but equipment financing makes purchasing what you need more manageable. Equipment loans give you the capital to buy the equipment with the monthly payments spread out, which can help preserve your cash flow. The main benefit is that you own what you buy once you pay the loan off.

Equipment leases are another option that may be better suited for startups getting off the ground. You can essentially rent what you need. Once you reach the end of your term, you may have the option to buy the equipment, return it, or extend the lease.

Business Credit Cards

If you need access to revolving credit and short-term financing, business credit cards may be a good option. You can charge expenses on your card now and pay later, buying you some additional time. If you’re able to pay your full balance by the due date, this can be a smart financing solution. However, if you can’t and need to carry over the balance, be aware of the hefty interest rates.

Final Thoughts

Working capital loans for glass installation businesses can help you keep operations running without any disruptions. Seasonal slowdowns or unexpected expenses can majorly impact your cash flow. But working capital loans are a lifeline.

Business owners should evaluate their needs and desired loan amount to decide which type of working capital loan would be the most beneficial. As part of the process, check out various lenders and compare eligibility requirements, minimum and maximum loan amounts, interest rates, and repayment terms.

Choosing the right working capital loan for your glass installation business means smoothing out potential cash flow issues with a repayment term and structure that works for you.

FAQs About Working Capital Loans for Glass Installation Businesses

For more information on working capital loans for glass installation businesses, read answers to frequently asked questions.

What Are Working Capital Loans for Glass Installation Businesses?

Working capital loans for glass installation businesses are a short-term financing solution to help cover operating expenses, including payroll, inventory, and other day-to-day expenses. They can come in different forms, such as term loans, lines of credit, or SBA loans.

Can You Get Working Capital Loans with Bad Credit?

Borrowers with bad credit may still qualify for working capital loans for glass installation businesses. Lenders’ eligibility requirements vary, and some may accept a lower credit score. However, these loans typically come with higher interest rates.

What Financing Options Are Available for Glass Installation Businesses?

Various financing and loan options are available for glass installation businesses, including term loans, SBA loans, equipment financing, lines of credit, invoice factoring, and business credit cards. Each option has a different maximum loan amount, interest rate, and repayment term and unique advantages and disadvantages to be aware of.

What Are the Underwriting Criteria on Small Business Loans?

Lenders have different underwriting criteria for small business loans, but many look at credit score, annual revenue, business history, and financial statements to determine whether you qualify for a loan.

What Are the Eligibility Requirements for Capital for a Business Loan?

Eligibility requirements differ by lender as well as the type of loan. Many lenders tend to have minimum credit score and revenue requirements and look at time in business and the financial health of your business. Some loans may require a down payment or collateral.

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