What To Know About Getting a Loan as a Contractor in Texas
February 10, 2022
Construction jobs come in all shapes and sizes. Whether you’re supporting a residential home remodel or a large scale commercial real estate project in Texas, you will likely need to obtain funding to support the project.
It can be challenging to find the right source to help you with your financing needs for each project, though. Consider some of the fundamental aspects of getting a loan as a contractor so that you can be more informed about how the loan process works.
Basic Qualifications For Contractors to Obtain a Loan
The state of Texas is unique in that it does not require licensure for every type of contractor. However, most cities in Texas have a local licensing body that requires you to obtain a license to perform specific work.
For example, in Houston, the City of Houston Permitting Center offers permits on a job-by-job basis for the construction businesses.
Why is this important? From a lending perspective, your ability to obtain a permit helps prove that you are a bonafide business and that you are authorized to perform the project work. This is a good starting point on the path to receiving funding for the project.
Overall, the typical qualifications for a contractor to get a loan include having more than 5 years of experience in construction. Contractors should also have proven knowledge and ability in supporting the execution of construction jobs.
Financially, contractors should have sufficient liquidity to commit as collateral for each project. The amount committed should be enough to carry the project until there is sufficient cash-flow for the business to be self-sustaining, is completed, or sold.
Documentation Required to Prove Viability for a Loan
When applying for a loan, a bank looks for specific proof that your company is credible and that the project is worth funding. A sample of required documentation includes the following:
- Proof of your company’s standing as a legitimate business.
- A complete budget for the project that you want to fund.
- Company: tax returns and financial statements from the past two years.
- Personal: tax returns from the past two years, an updated personal financial statement, and potentially a review of your credit score and credit history.
Depending on your longevity and financial standing, you may also be required to provide additional documentation. This could include, but is not limited to, information about whether you have taken any recent cash advances, a summary of recent business expenses, and information about other loans for which you have recently applied.
Apply for A Loan Through Texas Gulf Bank
When going through Texas Gulf Bank to apply for a loan, we strongly encourage our contractor customers to provide as much information as possible.
You can increase your chances of being approved for funding by ensuring that you supply all of the information required at the application stage, especially the budget for the project. We place great emphasis on reviewing your budget to ensure that you are properly accounting for expenses that will be incurred during the project.
At Texas Gulf Bank, the typical application process takes up to two weeks once we receive a completed loan application package. Providing thorough and complete information can also help expedite the loan review and approval process.
Our team will perform a thorough review of your application, then inform you of our decision. If you are approved for the loan, then we will provide you with information such as the loan amount, the terms of the loan, interest rate, monthly payments, and other details.
– As an independently owned and operated community bank, we appreciate the opportunity to help local contractors obtain funding for their projects. With locations in Harris County, Brazoria County, and Galveston County, we are a strong supporter of businesses in the Texas Gulf Coast community.