Expansion Loans for Pool Installation Businesses: How to Grow Your Services and Team

During the busy season, pool installation businesses often face more demand than they can handle. Unfortunately, this means turning jobs away and leaving money on the table. If you’re stretching your crew too thin, it might be time to scale and get an expansion loan.

Many pool contractors delay their growth strategies because they’re worried about the upfront costs. But you can take on more projects with the right financing and increase your business's ROI while being more competitive in your local market.

This article explains how expansion loans work, what to look for in a lender, and how to decide when it's the right time to seek financing.

How Funding for Your Pool Installation Business Can Facilitate Growth

An expansion loan can significantly accelerate the growth of your pool installation business. Getting funding for your pool installation business can open the door to real growth and help you take your business to the next level.

Here are some ways an expansion loan can help you grow your pool business:

• Hire and Train Staff: You can hire and train more crew members, enabling you to handle multiple jobs simultaneously.
• Invest in Premium Equipment: A loan can help you purchase superior tools, vehicles, and machinery, which can expedite installations and enhance the quality of your work.
• Expand Your Customer Base: You can invest in advertising to reach new markets or open new locations in nearby towns to attract more customers.
• Diversify Offerings: Financing can help you broaden your offerings by adding new products and services, such as specialized pool cleaning, repairs, maintenance services, installation of water features like fountains, smart pool automation systems, or even hot tubs, outdoor lighting, and steam rooms.
• Expand Your Fleet: You can grow your fleet of service vehicles or rent or purchase a larger yard or warehouse for storage.

An expansion loan can help you grow with confidence instead of stretching your working capital too thin. In turn, you can stay ahead of competitors who haven’t scaled up.

Types of Alternate Financing and Business Expansion Loans for Pool Installation Contractors

Small business loans serve varying types of business needs. So, it’s essential to choose the right type of financing for your current needs and goals.

Here’s a look at some common business expansion loans as well as some alternate financing options:

Equipment Financing

An equipment loan can help facilitate the purchase of new equipment for your business, including company trucks and trailers to transport pool installation materials, tools, and machinery and equipment to complete your installations.

The equipment acts as collateral, making it easier to qualify for the loan. Interest rates are also typically more affordable than with other types of business loans.

Business Lines of Credit

A line of credit isn’t a loan, but it can still provide your pool business with access to funds that you can draw from as needed, making it perfect for helping with emergency expenses or to help with your business’s cash flow during the off-season. Lenders usually give you a credit limit, and you’ll only pay interest on the limit you draw from. Once you repay the amount you’ve borrowed, the credit limit resets.

Term Loan

A term loan is a type of expansion loan that provides a lump sum of money that is repaid with fixed monthly payments. Term loans are helpful when you need to make a significant investment in your business, such as expanding your service territory or hiring new staff.

SBA Loans

The U.S. Small Business Administration (SBA) loan programs are backed by the federal government and underwritten by SBA-approved lenders that include banks, credit unions, and online loan platforms.

SBA loans offer longer repayment terms and lower interest rates than just about any other type of small business loan if qualified.

SBA expansion loans are great for pool contractors who are ready to make major upgrades to their businesses.

Commercial Real Estate Loans

A commercial real estate loan is the perfect financing option if you want to purchase a new business space or buy commercial land and a shop to run your company from. Commercial real estate financing can only be used towards renovating or purchasing property for your business operations.

Tips for Choosing the Right Expansion Loan

Choosing the right loan type for your pool installation business depends on your goals, budget, and how fast you need the money. A business loan should help your expansion plans without putting too much strain on your day-to-day operations.

Here are a few tips to help you choose the best loan for your needs:

1. Know your numbers

Have a clear understanding of your credit score, income, and expenses to know which lender’s eligibility requirements you’re more likely to meet.

If you have low credit, lack a business credit history, or have been in business for less than two years, it will be harder to get a regular term loan or financing from a bank. But an online lender has more flexible financing options geared for businesses with slightly less time in history or less-than-stellar credit.

2. Match the loan type to your business goal

You can use equipment loans for pool installation gear, lines of credit for short-term needs, and term or SBA loans for bigger, long-term plans.

3. Compare terms and interest rates

Shop around and read the fine print. Low monthly payments may seem appealing upfront, but can result in higher total loan costs due to longer terms or higher interest.

4. Think about repayment

Be realistic about what your business can handle. Business growth takes time, so make sure the repayment plan fits your cash flow and doesn't make it harder to meet all your debt obligations.

5. Consider how fast you need capital

Banks and SBA loans have a slower underwriting process. So they may not be the right option if you need fast funding. On the other hand, online lenders can sometimes approve and fund a business loan in just a few days.

How to Qualify for a Business Expansion Loan

Qualifying for business financing depends on a few key factors that lenders consider when reviewing your application.

• Credit Score: Both your personal and business credit scores matter. A higher score shows lenders you're responsible with paying your debt. Banks and the SBA will look for personal FICO credit scores of 680 to 700 and a business credit score of at least 165. Some online lenders, however, have financing solutions for small business owners with lower credit thresholds.
• Time in Business: Most traditional lenders prefer businesses that have been operating for at least two years. Some online loan platforms have financing solutions for businesses in operation for as little as 12 months.
• Business Revenue: Having steady revenue and a solid track record can make it easier to get approved and secure better loan terms. Many lenders prefer $250,000 or more of annual business revenue, depending on the type of loan.

• Business Plan: Be ready to explain how you'll use the loan funds and how it will help your business grow. Lenders want to see a clear plan of action and strategy.
• Documentation: Many lenders want to see a borrower’s business licenses, insurance, and business registration. You'll also need to have your financial records in order as they're often required during the application process. Financial documentation that may be required includes balance sheets, profit and loss statements, accounts receivables, business bank accounts, and tax returns.

Being prepared before you apply can speed up the loan application process and increase your chances of approval. It also shows lenders that you’re serious and organized, two qualities that matter when you're asking for funding.

Conclusion

Expansion financing can be a powerful tool if you're a pool installation contractor who is ready to take your business to the next level. Successful expansion starts with smart decisions. Take the time to evaluate your goals, compare financing options, and prepare the right documents to qualify.

By choosing a loan that fits your needs and planning ahead, you can position your business for steady, long-term growth.

When used strategically, an expansion loan can help you build a stronger, more profitable pool installation business that's ready to meet demand, outpace competitors, and grow year after year.

FAQs About Expansion Loans

1. What is the ideal type of loan for buying pool installation equipment?

An equipment loan may be an ideal option because you can use the pool installation equipment as collateral. The loan may be easier to qualify for, and you may not have to come up with any additional collateral.

2. What do the best pool companies have in common?

The best pool companies take the steps needed to outshine their competitors and grow their businesses to meet more customer needs. For example, they invest in the latest pool installation equipment, hire more installers to complete more jobs, and even operate in multiple cities to extend their reach.

3. How much funding can I get for expanding swimming pool construction companies?

If you can justify the loan amount and qualify for the loan, you may be able to get up to $5 million through the SBA. Some online lenders also have financing solutions that can meet or exceed that.

4. Can a startup get an expansion loan?

To expand a business, it already has to be operational. But many lenders consider startups to be companies that have been in business for less than two years. If you meet the underwriting criteria, chances are you can get funded.

5. How quickly can I get my loan funds after getting approval for an expansion loan?

It depends on the lender, the type of financing, and your business, credit, and financial credentials. Banks and the SBA can sometimes take a few weeks.

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