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Roofing Business Finance

The Ultimate Guide to Financing Your Roofing Business

Anybody who has ever started a roofing business knows that success requires a combination of careful planning, strong leadership, strategy, hard work, and great customer service. It also requires one other thing that drives the rest: working capital. Without enough cash flow to pay overhead expenses and promote your business, it may be impossible to achieve any of your goals.
At Select Funding, we partner with roofing companies every day to help them obtain the working capital they need to pursue their most important business goals. Roofing business financing doesn’t need to be complicated or take a long time, but it’s essential to understand the options and how to qualify for them. With that in mind, we have created this ultimate guide to financing your roofing business. Here’s what you need to know.

Can You Start a Roofing Business with No Money?

A common concern about starting any type of business is how much money you will need to get your new company off the ground. There are a lot of variables that can impact the answer, including whether you intend to rent business premises, purchase or rent equipment, hire employees, and so on.

It’s very difficult to start a roofing business with no money at all. At minimum, you’ll need at least one truck to transport materials and get you and your workers to your roofing jobs. You’ll also need tools and supplies, as well as a contractor’s license from the state where you do business. Because competition in the roofing industry is intense, you’ll also need to budget some money to spend on marketing and advertising.

The average cost to start a roofing business in the United State is between $6,500 and $13,000. If you operate your business from home, you can keep your costs down at first and spend money on attracting customers. Keep in mind that roofing business owners must pay themselves a salary and pay any workers they hire.

Free Download: Roofing Business Financing Infographic

How Can I Borrow Money for My Roofing Business?

Since you do need some start-up money to get your roofing business off the ground and pursue your business goals, here are some options to help you get the money you need. Some options are easier to get than others.

Personal Loan

Personal loans are available from banks, credit unions, and online lenders. If you decide to take out a personal loan to fund your roofing business, you’ll need to make sure that you choose a loan that will allow you to use the proceeds for business expenses.

Qualifying for a personal loan can be difficult to meet for some people, particularly if they have bad credit. As a rule, you’ll need to meet the following criteria:

  • A FICO score of 640 or higher
  • A good payment history (Your payment history is used as part of your credit score calculation, but lenders will look closely at your credit report to make sure you have minimal delinquencies.)
  • A debt-to-income ratio of 43% or lower
  • Regular income
The last item can make it difficult for someone just starting a company to qualify, since you may not have steady customers and predictable income.

Small Business Loan

Small business loans are a popular way to finance roofing companies, and they’re available from the same sources as personal loans. It is far easier to get a business loan for an established business than it is for a start-up, where you may need to turn to private lenders and investors.

Small business loans are often provided in partnership with the Small Business Administration. The SBA loan requirements vary from program to program, with individual lenders providing terms based on their assessment of the business.

Small Business Financing

Small business financing is an option for businesses who may not meet the qualifications for traditional business loans. With financing, you can get the working capital you need to pursue your business growth goals.

For example, at Select Funding we have only a few basic requirements to get financing for your roofing business:

  • You must own your own business
  • You must have a minimum of $100,000 in annual sales
  • Your FICO score must be 525 or higher
There is no collateral required and you can get financing up to $250,000 depending on your revenue. You can use small business financing to pay your employees, meet overhead expenses such as rent and utilities, pay for training for your workers, market your roofing business to potential customers, and much more.

Equipment Financing

Equipment financing is a type of small business financing that may be used to purchase necessary equipment. The term ‘equipment’ is interpreted loosely, and you can purchase a wide variety of necessary items for your roofing business, including the following:

  • Vehicles
  • Roofing tools
  • Business management software
  • Marketing software
  • Office equipment such as computers, printers, scanners, and so on
  • Cell phones and tablets
  • Office furniture
Select Funding’s requirements for equipment financing are the same as they are for small business financing. You may be able to get up to $1 million in equipment financing depending on your annual deposits.

Private Financing Options

The final option you may want to consider is taking out a loan from a private lender or a family member, or persuading someone you know to invest in your roofing business. Private investments are often the only available financing for start-up companies.

One of the benefits of private financing is that you may be able to get the money you need with lower interest rates than you could get with other forms of lending. Keep in mind that you should still get the terms of the loan or investment in writing for your own protection and to protect the person who provides you with money.

How to Prepare to Apply for Roofing Financing

If you intend to apply for roofing business financing, it’s important to be prepared. Depending on what type of financing you want, you may need the following things:

  • Business bank statements
  • A personal FICO score of 525 or above (640 or higher for small business loans)
  • A business credit score (SBSS) of 140 or above
  • A business plan
  • Business financial reports, including a balance sheet, income statement, and cash flow statement
  • Business documents, including articles of incorporation, operating agreements, etc.
  • Business licenses and permits
Having up-to-date and accurate financial reports is essential because most traditional lenders will use these documents to assess the creditworthiness of your business.

As we mentioned above, the requirements for financing with Select Funding are extremely simple. You must own your own business, have a minimum of $100,000 in annual deposits, which we’ll verify with six months’ worth of business bank statements, and a personal FICO score of 525 or higher.

How Long Does It Take to Get Approved for Roofing Business Financing?

One of the things we’re asked most frequently about small business financing for roofing companies is how long it takes to get approved for financing. A related question is how long it will take to receive money after being approved.

If you apply for a bank, credit union, or SBA loan, the approval process may be lengthy. It may take two months or more to get approved, with the one exception being an SBA Express Loan, where approvals are usually granted within 36 hours. 

At Select Funding, we review your application and bank statements using our automated technology, so we can usually provide an approval in as little as 24 hours. 

Receiving funds once you are approved for a loan or financing may also take some time. A bank will typically wire funds to your account after your loan closing, which may occur several weeks after your approval. SBA loans may take up to 14 days to be funded after your approval.

Select Funding small business financing will be deposited into your account in as little as one business day after approval. Equipment financing takes a little bit longer, but typically occurs within three business days of approval.

What is the Best Way to Finance a Roofing Business?

Ultimately, there’s no one-size-fits-all answer to which financing option will be best for roofing businesses. That said, here are a few things to help you choose the best option for your company:

  • Choose an option with requirements you can meet easily to eliminate stress and guesswork.
  • Compare rates and repayment terms from multiple sources, particularly if you are applying for a traditional business loan.
  • Find out how long the application process is and how long it will take you to receive approval for your financing.
  • Determine the waiting periods to receive financing and choose the financing option that will allow you to get funded quickly.

If you need money quickly to fund your business growth goals, then you may want to avoid traditional bank loans and choose alternative financing with Select Funding. As a reminder, we can approve your financing application in as little as 24 hours and provide financing within three business days at most.

roofing business financing infographic

Get the Money You Need to Finance Your Roofing Business

Financing your roofing business is the best way to guarantee that you have the working capital you need to advertise your business to attract new customers, hire the most qualified workers in your area, keep your customers satisfied, and achieve your most important business financial objectives. The information we have provided here will help you understand your financing options and choose the right business financing to help your roofing business succeed.

Are you in need of working capital or equipment financing for your roofing business? Select Funding is here to help! Click here to read about our financing options and begin the application process today.