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Contractors: Choose the right funding for your home reno business

Contractors: Getting hired for a home renovation job is imperative to a successful business. You must illustrate to clients that you’re reliable and experienced, but you must also have the right financing to back up your business. Homeowners: you want to know that you’re hiring a reputable contractor who has their finances in order. Here’s what you need to know.

Why funding is important for both the contractors and homeowners

Homeowners across Canada who are considering a home renovation project are advised to choose established, financially stable contractors over smaller, cash-only businesses – even if the job pricing is significantly higher. Even legitimate remodeling companies are under scrutiny until they build a reputation of reliability and fiscal strength. The best way for you to earn that trust for your Canadian home renovation business is to choose the right funding products. While it may be tempting to use deposits from one job to pay for materials and other expenses for another, it’s likely this financing method will backfire. Unexpected shipment delays, weather and structural problems can send a project over budget and devastate your company. There are numerous options available to seasoned business owners that will protect their client base and provide growth opportunities.

reliable contractor

As a homeowner, you want to ensure you’re hiring a reputable professional with experience. Contractors, it’s important to secure funding for your business to continue running a successful one.

Conventional Bank Loans

By following a traditional path for financing, you’ll have the potential to obtain low interest rates if you have collateral to pledge, well-established and can prove you have a steady revenue stream. There are some drawbacks to using a bank for funding:

  • Upfront costs to qualify, like appraisal costs;
  • Underwriting fees;
  • short repayment terms that may force you to refinance the loan sooner than is feasible.

The approval process has relaxed a little over the last few years, but the size of the bank will make a difference on how many loans are accepted. Regardless, the processing time can be lengthy and a concern if you need fast turnaround times. You’ll need to provide the lender with all the financial background for your business, such as audited financial statements and tax returns, your plans for future growth, along with your personal data. Loan officers attempt to compile a significant amount of information so the bank can confidently invest in you. You’ll need to demonstrate how you’ll repay the loan and specifics on how you plan to spend the money. An excellent credit score and history, as well as collateral such as equipment or property to back the loan, will help you secure funding from traditional institutions.

small business loan

Proper funding is essential to any business. Just know that you have options!


Crowdfunding is becoming a popular option among small businesses. By approaching a large pool of individuals through social media and crowdfunding platforms, companies are able to pitch their products and services and leverage their networks for greater exposure. This primarily online format provides multiple options for investors across the world to help grow your business.

Companies can secure a great number of small investors by promising rewards or products or large investors who follow an equity-based model. This gives up some share of the business, but with the influx of big money, you may also gain a partner with expertise in your field.

Make sure you research carefully before choosing a crowdfunding platform for your funding. While you won’t need a stellar credit report requirements may include raising the full goal before keeping any money raised, charging a percentage commission for money raised on the site, or charge a payment/processing fee for administrative work. As with any binding agreement, make sure to read the fine print before you sign. 

New to the crowdfunding idea? If you have some time, take a look at this webinar. It outlines everything you need to know about crowdfunding your business:

Here’s a shorter version of what you should know about creating a successful crowdfunding campaign:


Online Lending

Alternative funding options are also becoming more popular for the ease of application and fast funding timeframes. One of the leading alternative working capital providers, Excel Capital Management offers custom-tailored funding solutions for home renovation businesses across the U.S. and Canada. One financing solution such as a merchant cash advance (MCA) or revenue based factoring provides many benefits over traditional bank loans.

The most significant advantage is that MCA and Revenue Based Factoring is not a loan, so no collateral is required to secure funds, and your credit score is not ranked a top priority in the approval process. This alternative product purchases your future sales at a discount collects are made using a small percentage of daily debit and credit sales or for business that do not accept debit and credit cards a small percentage of your average gross revenue, so there is no fixed interest rate or payment. Home remodeling businesses with a strong client base and projects will easily qualify for an MCA.

Unique advantages of a merchant cash advance and revenue based factoring over a traditional bank loan include:

  • Funding disbursement is made in the form of an ACH or Wire in as little as three or four business days.
  • No minimum credit score is required so businesses with a weak credit profile can qualify and gradually improve their score through timely payments to funders.
  • No personal guarantees are required so there is no need to worry about your personal assets in case your business needs to shut its doors.
  • With no collateral requirement, business owners can secure capital and maintain limited assets without worry.
  • Cash advances have no use restrictions, so business owners can secure funds for any business-related upgrade that enhances the operations including advertising, renovations, accounts receivable and inventory control.
  • With no equity obligations you as a business owner never have to worry about giving up a portion of your company to an investor who will eat away your profits for the life of your business.
  • Cash advances never have an upfront cost so you do not have to pay a dime out of pocket to get approved.

This video outlines the specifics of an MCA:

Conventional bank loans, crowdfunding and online lending are just a few of the many funding solutions available for your home renovation business. It’s important to keep ahead of your capital expenditures and investigate each program to find the right one for your needs. By maintaining a strong financial reputation, homeowners will recognize the value you offer and put your renovation company’s name at the top of their list. Excel Capital helps home renovation businesses to obtain working capital quickly and easily, so you can focus on growing your business and working toward financial independence.

As a homeowner, you’ll rest easy hiring a contractor who has taken the right steps to secure financing. How will you know if a contractor has? Their success – and hopefully large portfolio of work –  are a good indicator.

Don’t wait too long to start your next home renovation. Check out our directory of general contractors to find a home renovation specialist you can trust.

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