If you’re thinking about starting and funding a construction business in California, there are a few things you should know before you take the plunge. Firstly, having hands-on experience in construction is best but if you are not well versed in the industry, I suggest educating yourself as much as possible before starting a business. Take classes, participate in workshops, and use research sites like IBISWorld and First Research to study the industry. Once you have a thorough understanding of the industry, the next step is registering the business in the state of California, getting a surety bond, and insurance. A surety bond is needed before you can obtain the proper license to operate as a construction company in the state. Operating without the proper license (and insurance) will result in fines and possible imprisonment. Furthermore, the type of insurance you need to obtain depends on the nature of your work.
What’s Next: The Planning Stage
Once you have educated yourself on the industry and completed the first steps (registering the business, becoming licensed, bonded, and insured), it’s time to plan how your business will make money. Technically, writing your business plan could be your first step before you register the business, however, you can decide what you want to do first. Usually, my clients have me register their business for them and write their business plan simultaneously while they work on getting a surety bond, licensing, and insurance. (The process goes faster when you do things simultaneously).
The purpose of the business plan is to ensure you have a guide to follow for growing the business and show a lender and/or investor if you will need to apply for outside funding. Since startup businesses don’t have a track record, a business plan will suffice (in most cases) for banks and investors. There are ways you can start and fund a construction business in California without a business plan (although I still suggest you write a business plan or have one written for you with your input).
The Funding Stage
If you want to apply for funding for your construction company without a business plan, it is possible. If you have a good credit history, you may want to consider applying for an unsecured business line of credit. Often times, applying for a small business loan can take a considerable amount of time and effort. Furthermore, the construction industry is often viewed as a “high risk industry” by many banks and lenders, so it can be near impossible to get a traditional small business loan for a startup in the industry. Your best bet may be an unsecured business line of credit. With unsecured business lines of credit, your business doesn’t need to have a track record. Your personal credit history will be used as your “track record” by lenders.
If you have a decent credit history and are interested in learning more about getting an unsecured business line of credit to fund your construction startup (or existing business) in California, please contact the experts here at LenCred. They will help you determine if unsecured business lines of credit are right for you. You could get up to $250,000 in funding for your construction business in as little as the next 30 days!