5 Simple Ways for Builders to Fund Their Building Projects

by with No Comment Construction FinanceInventory Funding

Are you a builder with big dreams but a not-so-big wallet? Don’t worry; you’re not alone. Building projects require money, and sometimes, that money can be hard to come by.
But fear not, because in this article, we’re going to talk about five simple ways builders like you can get the funds you need to bring your construction dreams to life.

1. Project Finance

One of the most common ways builders get money for their projects is through Construction Finance loans. It’s a bit like borrowing money from a bank, and you’ll need a solid plan and good credit. But if your project is sound, banks are often willing to lend you the funds you need.

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2. Private Investors

Think of private investors as your project’s fairy godmothers and godfathers. These are individuals or companies who believe in your project and are willing to invest their money in it. They might want a share of the profits in return, but it’s a way to get the funds you need without going through a bank.

3. Government Subsidies

Governments often offer grants and subsidies for specific types of building projects. These can be a bit tricky to find and apply for, but they can provide a significant financial boost to your project, especially if it aligns with government goals like affordable housing or sustainability.

4. Sales Proceeds

If you have funds already set aside for your project, here’s a straightforward plan: once you’ve gotten all the necessary approvals, you can start selling the flats you plan to build. The funds you get from these sales can then be used to construct the slabs you need. It’s a smart way to finance your project without relying on outside sources, keeping everything self-sufficient and on track..

5. Partnership/ JV

Sometimes, teaming up with experienced developers or investors can be a great idea. It’s like a partnership where everyone wins. You not only get the money you need but also valuable knowledge and connections in the property business. This collaboration isn’t just about funds; it’s about combining skills and resources. It can make your project more likely to succeed and spread out the risks. In simple terms, it’s a smart move that benefits everyone involved.

Inventory Funding

Inventory Funding for Builders made easy | Inventory Funding Pros and Cons

by with No Comment Inventory Funding

 

Inventory funding helps businesses by providing financial support. It allows businesses to use their inventory as collateral to get money when they need it. This money can be used to buy inventory or materials that will be used in the business later, even if they are not selling them right away. The benefits of inventory funding include not having to worry about credit history or how much money the business has, being able to sell products for a longer time, and being open to new businesses. 

The Good Side of Inventory Funding (Pros):

  1. No Credit Worries: Unlike regular loans, inventory funding doesn’t care too much about your business’s credit history or how much money you have. This makes it a good option for lots of different businesses

2. More Sales Time: Inventory funding lets you sell products for a longer time. You can keep your business going even when the market changes or the seasons shift.

3. Open to New Businesses: Even if your business is brand new, you can usually still get inventory funding. Some lenders only ask that you’ve been running for as little as six months to a year

The Not-So-Good Side of Inventory Funding (Cons):

  1. Paying back the money you borrowed can be difficult if your firm is new or suffering.

2. Full Funding Isn’t Always Available: Lenders might not always grant you full funding. This suggests that you might not be able to purchase as much stock as you would like.

3. Costs Can Be High: Because lenders view struggling or new firms as riskier, they may have to pay more fees and interest.

What is Inventory Funding?
A customized credit product called inventory funding is made to specifically address the requirements of real estate developers. It enables developers to borrow money against a sizable chunk of their inventory, often between 80 and 90 percent of the properties that are either offered for sale or a component of a project that has gotten its occupancy certificate (OC). With the help of this financial tool, developers can profit from unsold inventory without having to wait for the full project to be sold out.

Inventory funding serves more than merely closing financial shortages in the field of real estate development.

These include the following:


1. Acquisition of New Projects: Developers can increase their portfolio and market presence by acquiring new projects using the money they get from inventory financing. In a cutthroat industry, this agility might be a game-changer.

2. Approvals for Ongoing Projects: Occasional funding constraints may cause ongoing projects within a development group to experience delays. Inventory funding can supply the money required to obtain permissions and maintain the progress of projects.

3. Project-Related Expenses: Real estate ventures frequently involve a variety of financial requirements, from construction expenditures to marketing charges. These costs can be paid for with inventory funding, guaranteeing a steady project progression.

How Inventory Funding Differs from Traditional Loans?

Unlike traditional loans, such as loans against property, Inventory Funding takes a different approach when assessing eligibility. Instead of scrutinizing the developer’s income, this financing option places more emphasis on the marketability and sales velocity of the project for which funds are being raised. In other words, the feasibility and potential success of the project in terms of sales are paramount. This shift in focus recognizes that the value of real estate projects is often tied more to their market demand and sales potential than to the developer’s personal financial status.

Why Businesses Rely on Inventory Financing:

1. Inventory finance aids companies in keeping their cash flow consistent, particularly during both busy and slack times of the year.

2. It enables companies to routinely change their product ranges to match shifting consumer preferences.

3. Companies can increase their inventory levels to make sure they have enough product on hand to meet customer demands.

4. When client demand spikes, inventory finance offers the resources needed to act quickly and boost sales.

If you have any queries regarding Inventory funding, feel free to reach us!