How to Utilize Loans to Mobilize Your Restoration Team
Weather and climate disasters have cost the United States over $2.195 trillion since 1980 due to 323 disasters, according to the National Centers for Environmental Information. In 2021 alone, there were 20 events throughout the nation, from a major wildfire to four tropical cyclones. As a restoration company, you have the tools and expertise necessary to help rebuild communities after one of these events.
Unfortunately, you don’t know where disaster may strike. Once an event occurs, it requires a significant amount of financing and planning to relocate your entire business operation.
See how loans for restoration companies can help you ease the financial burden of moving your team and heavy equipment to meet the needs of communities affected by weather and climate disasters. Review current transportation challenges, types of available loans, and ways to utilize these loans to mobilize your restoration team.
How to Utilize Loans
Make the most of your financing by identifying the key financial difficulties of transporting your crew and equipment to the next disaster site. Loans for restoration companies can be used for a variety of purposes, so consider which of these uses can best help you grow your company and provide essential services:
- Secure transportation: Because you don’t know where the next disaster will occur, you don’t know how much transportation costs will be. A loan can help you cover coast-to-coast transportation.
- Hire personnel: Overcome your own labor shortages and increase your capabilities by hiring additional personnel as you mobilize your company.
- Update equipment: The COVID-19 pandemic has changed restoration requirements and best practices. Invest in the latest restoration equipment before taking on a national disaster project.
Cover operating expenses: You may have to wait months to receive payment for your restoration services, so use a competitive loan or line of credit to cover these costs.
Loan Options for Disaster Site Transportation
Thankfully, there are loans for restoration companies to cover these specific instances. Review your loan options to see how a financial institution, like Capital Bank, can help you coordinate your services and deliver disaster recovery where it’s needed most.
Two common financing options for small businesses are U.S. Small Business Administration (SBA) loans and business lines of credit. Review both options and see how leading financial institutions can tailor loans for restoration companies like yours. An industry-specific lending option can offer the terms, application process, and loan amount needed for your transportation.
SBA loans are provided by financial institutions and guaranteed by the Small Business Administration. They’re designed to cover startup costs, equipment purchases, commercial real estate expenses, operating costs, or other business needs. Typically, they start at $150,000 but can be customized to your specific financial situation.
The lending process varies depending on the lender you choose. The Capital Bank MD lending process follows five basic steps:
- Connect with a loan officer: In order to best personalize your small business loan, you’ll discuss the specifics of the transportation costs for your next disaster site operation.
- Process the necessary paperwork: Capital Bank MD seeks to make underwriting as hassle-free as possible, so a team of loan officers will guide you through the process and assist you with finding the correct documents.
- Wait for your credit review: Your application needs to align with specific credit requirements, so your SBA loan requires a short credit review process.
- Prepare for the closing date: As long as you pass the credit review, you can schedule a closing date at your convenience.
- Enjoy ongoing assistance: Remain in contact with your loan officer to receive answers regarding any of your SBA loan questions.
Be sure to ask about restoration industry small business loans. Working with a lender to acquire an industry-specific loan can help you receive competitive terms and the freedom you need to use it for your disaster site transportation expenses.
Business Lines of Credit
While you may have an estimate of your disaster site transportation costs, the final bill may be significantly higher or lower. Avoid the stress of estimating these costs in the face of major industry changes by utilizing a commercial line of credit.
A line of credit enables you to borrow only the amount that’s necessary to cover your transportation and operating expenses until you receive payment for your services. With Capital Bank MD as your lender, you have three options for a business line of credit:
- Revolving line of credit: As a secured line of credit option typically comes with higher credit limits and lower interest rates than unsecured lines. You only have to pay interest on the money you borrow, and you can renew your line of credit on a yearly basis. It will, however, need to be secured with non-real estate assets as collateral.
- Secured line of credit: Access up to $1 million with long payment terms and no annual renewal requirements. This line of credit option also needs to be secured, typically by real estate or receivables. The term is generally based on the lifespan of the asset.
- Capital reserve line of credit: Don’t worry about tying up assets or filling out lots of paperwork with this lending option. The monthly repayment of principal is automatically recalculated for a 36-month payment term. Unlike secured lines of credit, capital reserve lines of credit typically only allow you to borrow between $2,500 to $50,000.
Thanks to the highly flexible nature of lines of credit, you don’t need to worry about securing one that’s industry specific. Work with your chosen lender to determine the best line for your specific financial situation, estimated transportation costs, and project timeline.
Transportation Challenges in the Restoration Industry
Your restoration company needs more than a few moisture meters and dehumidifiers to deal with disaster remediation. It takes a dedicated team, boxes of tools, and large equipment to successfully handle the challenges faced by a major disaster event. Transporting your entire team and necessary equipment has become a greater challenge recently due to labor shortages, logistics constraints, rapid inflation, and financing difficulties.
According to the American Trucking Association (ATA), the transportation industry had a shortage of over 80,000 drivers in 2021. If trends continue, ATA warns that the shortage could reach 160,000 by 2030. This means that finding the necessary personnel to transport your heavy equipment may be even more difficult than it was in the past.
Logistics constraints, from delayed cargo ship unloading to shortages of warehouse workers, have constrained the entire transportation and logistics industry. Increased demand for transportation and delays in other forms of transportation creates a competitive environment for you to secure the vehicles, navigate the routes, and find accommodations at your future restoration work site.
Inflation affects your ability to prepare for a cross-country relocation as you seek to assist communities in disaster-affected areas. The annual inflation rate in the United States reached 8.5% in March 2022, which was a 41-year high point. According to FreightWaves, the cost of a Class 8 truck that’s three years old has increased 70% in one year.
Rapid inflation means you’ll need to secure greater levels of financing to cover the cost of transportation and operating expenses as you work with community relief organizations and provide remediation services. Whether you’re contracting with FEMA or providing disaster relief to business owners and homeowners directly, it’s essential that you have the necessary working capital to cover operating expenses until you receive payment for your services.
Approximately 84% of the remediation industry consists of independent contractors, according to the State of the Restoration Industry in 2021 report by Restoration & Remediation. As a small business owner, you may not have the loans for restoration companies you need to cover the transportation and ongoing costs involved with a major disaster project.
Learn More About Loans for Restoration Companies With Capital Bank
There were 20 major disasters in the United States last year. Prepare your company to respond to the next weather and climate disaster with a solid transportation plan. Overcome recent transportation and logistics challenges, like inflation, driver shortage, and changes in restoration requirements, with a restoration industry loan.
With Capital Bank MD, you can find loans for restoration companies that fit your unique situation. Explore SBA loans, lines of credit, and other opportunities to cover logistics expenses. Contact us to learn more about your financing options and take the next step in mobilizing your restoration team.