Best Financing options for Electricians: Funding Your Business Growth

According to recent data from the Bureau of Labor and Statistics, there are more than 712,000 electricians in the U.S. today, and this field is expected to grow faster than average between now and 2033. With more and more people entering the electrical services industry than ever before, there’s also a growing need for funding options for new electricians.

Having the right financing can help electricians grow their business, purchase equipment and tools, hire staff, advertise, and more. Here’s a look at some of the financing options for electricians today, what you can use these business loans to buy, and the best lenders to consider when trying to start or grow your electrical repair business.

Traditional Bank Loans

One of the most common financing options for electricians, new and old, is a standard business loan. Traditional business loans are available through most banks, credit unions, online banks, and business lenders, and can either be unsecured or secured by a collateral asset, like equipment or real estate.

They offer a lump sum loan that small business owners can use to purchase vehicles , cover payroll, and everything in between. They tend to have lower interest rates than many other financing options for electricians, as well as flexible payment plans so you can choose the affordable monthly payment that works best for you.

Traditional business loan approval is usually based on your business and/or credit score, as well as your business history. If you aren’t already an established electrician with a steady cash flow, it may be difficult to get approved for one of these loans.

Small Business Administration (SBA) Loans

Another financing option for electricians, and even some electrical contractors, is a small business loan through the Small Business Administration (SBA). As these loans are government-backed, they often come with lower interest rates, lower down payments, and even easier eligibility criteria for small business providers and electricians. They can also provide eligible electricians with as much as $5 million with various payment options.

Equipment Financing

Another financing option for electricians is an equipment loan. Equipment financing is a form of secured business funding that offers electricians a lump sum that they can use to buy specific equipment for their business.

Equipment financing is generally intended for large purchases and costly materials, since this debt is secured by a collateral asset that you own (usually the equipment itself). Rather than use these funds for ceiling fans and electrical panels for your clients, you could use an equipment loan to buy a forklift, which is perfect for moving HVAC units around your warehouse. An equipment loan could help provide the necessary financing for contractors’ work trucks.

Since equipment loans are secured, they are often easier to qualify for and offer flexible repayment terms. However, pricing for these loans can be higher than standard business loans. You’re also limited in what you can buy with an equipment loan, so look elsewhere if you need cash for operational expenses, small home service materials, advertising, and such.

Lines of Credit

A business line of credit can be a great financing option for electricians who want on-demand and ongoing funds for any sort of business expenses that arise, now or in the future.

Unlike a loan, business lines of credit work like a business credit card: You’re offered a credit limit upon approval, which you can then pull from and use as needed when expenses arise. You only pay interest when you withdraw from your line of credit and use the funds, which you’ll then repay back with interest. As you repay your line of credit, the credit will once again become available so you can withdraw again.

The cash from a line of credit is versatile, so you can use it to buy materials for a planned home improvement project for a client or cover unplanned costs related to an emergency service. Do you offer generator installation? Your line of credit can front you the cash necessary to purchase generator units and cover your operating expenses while you install the electrical system for homeowners. Once you’re paid by the client, you can pay down your line of credit so it’s ready for next time.

Invoice Financing

If your clients pay net 30, net 60, or sometimes later, you could find yourself with cash flow problems until those invoices get paid. For these situations, one possible financing option for electricians is invoice financing.

With invoice financing, you’re essentially taking out a loan against your outstanding invoices. Rather than wait for your clients to pay the invoice for their new hot tub rewiring or circuit breaker upgrade, you could sell them to an invoice financing lender. You’ll receive cash upfront against that outstanding balance, without waiting for customers to pay up.

Invoice financing can help manage cash flow issues and keep you afloat even if you have outstanding invoices due or clients who take a while to pay. It’s not an ideal option for long-term financing, though, as it can be costly: You’ll typically sell your invoices to a lender for less than you’re owed.

Business Credit Cards

A short-term and everyday financing option for electricians is to use business credit cards. Credit cards can be used to pay bills, cover emergency expenses, or purchase equipment for big jobs, like outdoor lighting equipment or a new home generator for a client. Once the account is opened, business credit cards provide you with immediate, on-demand access to funds, and you may even be able to earn rewards or cash back on your purchases.

Credit cards can be a slippery slope, though. If you don’t pay off balances in full each statement, your business may begin to accumulate debt. The interest rate on credit cards is usually much higher than with loans, too, so accrued debt will be costly.

Final Thoughts

There are many different financing options for electricians, whether you’re looking to build and grow your business, cover upfront expenses, purchase equipment, and more. The right financing option for you depends on the specific needs and goals of your electrical business, what you qualify for (in terms of your business credit score), and how quickly you need the funds. Finding the perfect electrician funding often means comparing lenders, loan options, interest rates, and fees.

FAQs About Financing Options for Electricians

Can I get business funding for contractors?

You can use the funds from a business loan or line of credit to pay employees or contractors who work with your company and cover other cash flow needs. These business funding options may also be used to purchase equipment and materials upfront, advertise your company, and more.

Can I offer financing for electrical work to my customers?

Electricians may opt to offer financing options, which their customers can use to pay for costly electrical needs and equipment. Whether you’re installing a home generator, EV charger, or completely updating a property due to electrical issues, offering financing to customers can help you lock in jobs while allowing for payments over time.

Is the electrician field growing?

There are about 780,000 electricians in the U.S. today, and the field is expected to grow 11% between 2023 and 2033. This is an above-average rate of growth, demonstrating that electricians are in-demand and that the field is growing healthily.

What sort of services can I offer as an electrician?

Licensed electricians can help customers with a wide range of electrical problems, from troubleshooting home issues and installing ceiling fans to rewiring large commercial buildings, installing backup generators for hospitals, and more. You can choose which services you want to offer as an electrician and what you want to specialize in, depending on your experience, demand in your area, and what interests you most.

Why would an electrician need a business loan?

There are many reasons electricians might take out a loan or line of credit. Financing options for electricians can be used to pay for additional licensing, hire employees, purchase equipment or machinery, advertise the business, or even maintain cash flow while waiting for invoices to be paid. Electrician funding options include everything from small business loans to lines of credit, equipment financing, business credit cards, and more.

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