Construction Business in British Columbia

To start a construction business in BC, you will need a detailed business plan, financing, permits, and good understanding of the construction industry.

Plan Your Business

The first step is to do market research and learn more about your target market, potential customers, current trends, competitors, and more. Think of the type of structure for your business, i.e. whether a co-operative, corporation, partnership, or sole proprietorship. Consider different options when it comes to setting and location as well.

Business Plan and Details to Cover

Companies that need external financing benefit from a detailed business plan which shows financial institutions that they are serious about succeeding in the construction field. A good business plan includes information about the company and services offered, including utilities installation and repairs, remodeling and design, plumbing and painting, etc. Additional services include building cement foundations, alterations, carpentry services, permitting, and others. You may want to include sections on your mission and goals, keys to success, past performance, potential customers and buying patterns, and anything else you can think of. Finally, it is important to outline your sales and marketing strategy to convince financial institutions that you are on the right track.

Financing Offered by Private Providers

There are different sources of financing for your construction business, including finance companies, caisses populaires, credit unions, banks, peer to peer lenders, angel investors, and others. Credit unions usually offer low-cost loans with flexible terms and schedules. Banks also offer competitive rates which are higher than credit unions, but they advertise a large selection of products to choose from. There are various financial products to choose from, including commercial mortgages, secured and unsecured business loans, start-up loans, and others. Different financial institutions offer loans to help businesses invest in land and purchase equipment and machinery. They offer start-up financing and access to working capital.

Funding through the Canada Small Business Financing Program

Another option is to apply for funding through the Canada Small Business Financing Program. Businesses benefit from low-cost financing of up to $1 million. Borrowers apply through financial institutions participating in the program, including credit unions, banks, and other providers. Participating financial institutions include Scotiabank, Toronto-Dominion Bank, Bank of Montreal, ATB Financial, Servus Credit Union, and many others. The loan can be used to purchase production equipment, software, hardware, and computer equipment, leasehold improvements, land, etc. When reviewing applications, financial institutions take different factors into account. These include credit history, number of years in business, number of employees, type of collateral offered, and others.

The interest rate varies from one institution to another and can be fixed or variable. Some financial institutions offer different options for applicants to choose from. Some banks, for example, offer fixed rate principal that includes interest, interest plus fixed rate principal, floating rate that includes interest, and interest plus floating rate principal. The term and schedule depend on the type of loan. Some banks offer real property loans with a term of up to 15 years, leasehold improvements with a term of up to 7 years, and equipment loans with a term of up to 10 years.

Fees and Other Details

A registration fee applies and is 2 percent of the loan amount. Keep in mind that some financial institutions charge additional fees, including administration and registration fees and renewal, application, and document preparation fees.

Businesses applying with participating institutions are also asked to offer some asset as collateral. This means that you will get a secured loan that goes with a competitive interest rate. The federal government guarantees up to 85 percent of the loan amount.

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