Large Construction Companies Are Avoiding Debt-Based Financing

March 21, 2019 by CNH Finance, LP in category “Financing”

Currently, large construction companies are poised for growth across the country. New construction projects in big metro areas like NYC and Dallas, infrastructure contracts, repair, and more all require a source of working capital. However, large construction companies are pivoting away from traditional debt-based financing to get the working capital they need to promote growth and take on big projects.

Learning from the Past

After the big economic recession a little over a decade ago, the financial landscape completely changed, and large construction companies were severely impacted. Suddenly, lenders were raising requirements for loans, interest rates were higher, more collateral needed to be put up, and loans were subject to arbitrary interest rate hikes from the Fed. The inability to access adequate financing placed major constraints on working capital for large construction companies. At the same time, large construction companies were rethinking their relationships with traditional lenders, because another recession – even one not as severe – could still slow down business and make it even more challenging to get the capital necessary to see projects through from start to finish.

Rethinking Financing for Large Construction Companies

With loans being more of a hassle than they’re worth, construction companies started using a smarter form of financing that put more control back in their hands. Large construction companies started using the value of assets such as equipment, receivables, facilities, and more to create revolving lines of credit. Asset based lines of credit provide a reliable, secure, and renewable source of working capital without placing debt on the balance sheet, and without the red tape and prohibitively high requirements of traditional loans. Additionally, the line of credit promotes growth for large construction companies. As a construction company acquires more equipment and takes on larger projects with more receivables, the amount of financing available through the revolving line of credit also increases. By leveraging what they already own for capital without divesting, large construction companies can move forward independently of banking trends and rate hikes from the Fed.

CNH Finance is a national leader in asset based solutions for large construction companies. Our team unlocks the value of assets which are overlooked by traditional lending channels. Contact our offices today to get the capital your business needs to complete large projects and growth.

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