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4 Reasons to Use Funding Circle For Upfront Costs

Why Funding Circle?

4 Reasons to Use Funding Circle For Upfront Costs

Updated: February 20th, 2024

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Businesses in industries like construction and web design typically rely on big projects for income, but those projects come with hefty upfront costs. 

When you’re debating an opportunity, you have to weigh the project costs against the potential return on investment. After all, taking on a big project can help you increase profits, enhance your portfolio, or establish authority in your industry. On the other hand, large projects require more time, energy, and upfront spending.  

Depending on the project in question, you might have to cover the cost of:

  • Raw materials 
  • Supplies
  • New equipment 
  • Equipment upgrades or maintenance checks
  • Contractors 
  • Travel 
  • Permits 

Fortunately, there are ways to improve your cash flow to prepare for big projects, including securing financing. Before you bid on a project, though, it’s crucial to evaluate the opportunity from a financial perspective. 

3 steps to figure out if a project is worth it

Getting an accurate picture of what a project will cost — in upfront expenses, time, and effort — can help you better understand your financing options. Follow these three steps for project clarity.

1. Total your upfront project costs 

Compiling a comprehensive list of project expenses is the first step to figuring out how much money you need. Make sure you understand the project scope and timeline, then make a list of every raw material, supply, or piece of equipment you’ll need, as well as its cost. Don’t forget to include expenses like hiring a freelance graphic designer or getting a maintenance check on your excavator.  

2. Review your business financials

Next, review your business’s financials, including your cash flow, monthly expenses, accounts receivable and payable, and projected cash flow for the next few months. If you have enough money coming in to cover upfront costs in materials and labor while still maintaining operations, you may not need financing. 

However, if cash flow is tight, you should take the time to figure out exactly how much capital you would need to cover project costs — including unforeseen expenses or emergenciesand stay operational. After you account for regular expenses like rent and utilities, make sure you detail what you plan to use the money for and why. You don’t have to submit a business plan for every loan, but most lenders appreciate an explanation of how each portion of the funding will help your business grow. 

3. Assess your schedule, staff, and resources

Cost is just one component of taking on a big project. Not only do you need to figure out whether or not you have the money to execute the project, but you also need to determine whether you have the time and workforce. Starting a big project without adequate resources is risky; it could affect your quality of work, take longer than you planned, or set you back financially. 

Review your company’s current projects and deadlines, then check in with your team to ask about their workload. If your employees are already stretched thin, working on multiple projects, your business may not have the bandwidth to take on a new one. On the other hand, if you have a flexible schedule or enough cash to hire outside help, saying yes to a new endeavor could pay off. 

Comparing your financing options

Financing can give you the cash flow to bid with confidence, secure a project contract, and cover all your expenses. Here are four popular options for paying upfront costs. 

1. Equipment financing

If you need to buy equipment for a project, equipment financing is a great solution. You can purchase anything from medical equipment and heavy construction machines to vehicles and software. 

Depending on the lender and equipment you’re interested in, you may be able to borrow enough money to finance up to 100% of the cost of the equipment. From there, you’ll make monthly repayments until you own it outright. 

It’s relatively easy to qualify for equipment financing; most lenders consider the price of the equipment when determining the amount you’re eligible to borrow, rather than just looking at your credit score and business financials. However, the interest rate can be high depending on the lender, with average APRs ranging from 5% to 30%

2. Line of credit

A business line of credit is an excellent option for covering short-term costs or bridging a temporary gap in cash flow. Depending on the project budget, you could use a line of credit to cover upfront inventory expenses or pay for operating costs like rent or utilities. 

Unlike a term loan, a line of credit gives you access to a certain amount of money on an ongoing basis. The credit is revolving, meaning you can use your funds repeatedly as long as you bring your balance to zero each month. Average APRs for a line of credit range from 8% to 80%, depending on the lender. 

You can qualify for a business line of credit with a decent credit score, but you should be cautious with your spending. If you don’t have enough cash coming in to pay down your balance at the end of the month, you risk racking up a lot of debt in interest. 

3. Invoice factoring 

If you have outstanding invoices from past projects, consider invoice factoring. Here’s how it works: Instead of waiting 60 or 90 days for your client to pay their invoice, you sell your accounts receivable to a factoring company in exchange for money upfront. You’ll get an advance on a portion of an unpaid invoice, usually around 80%; then, once the client pays the invoice, the factoring company gives you the rest of the money minus any fees you owe. 

The appeal of factoring is that it’s easy to qualify for and gives you fast access to cash. However, the fees can be steep. Average APRs are anywhere from 13% to 60%

4. Term loan

Another option for covering upfront project costs is a term loan. Term loans are great solutions for businesses that need capital for large purchases or investments, like acquiring a competitor or buying inventory in bulk.

A term loan gives you a lump sum of money that you have to pay off over a set period. Terms and rates vary depending on the lender, but you could receive anywhere from $5,000 to $1 million with interest rates ranging from 4-5% for traditional lenders to 20% for alternative lenders

4 ways Funding Circle can help with upfront projects costs

You have options when it comes to financing project costs, but Funding Circle stands out for our transparent pricing and attentive service. You always know what you’re getting with us, and we’re here to help guide you every step of the way. Here’s what you can expect when you get a loan with us:

1. No prepayment penalties

When you’re shelling out cash to cover project costs, the last thing you want to deal with is extra fees. With a Funding Circle term loan, there are no hidden fees or prepayment penalties. You just pay a simple one-time origination fee in addition to your once-monthly payments. 

Then, if you have a healthy chunk of cash after finishing the project and want to pay off your loan early, you can — no fees included. You’ll only pay interest on the time you borrow, so you can allocate the money you save towards your next project. 

2. Fast process

When you’re trying to lock down a project and complete it within your client’s preferred timeline, speed is everything. Our entire loan process — from applying to underwriting — is designed to be as efficient as possible. 

You can apply online in just a few minutes and hear back in as little as 24 hours. If you’re approved, you can receive the funds in your account in only five business days. 

3. Payment flexibility

Funding Circle’s flexible payment timelines let you plan for the future without having to stress or shuffle cash flow. We offer payment terms from six months to five years, so you can continue to make monthly repayments while setting aside money for new opportunities. The best part? We have fixed rates that start at just 7.49%, so you always know how to budget. 

4. Variety of uses

When you’re juggling multiple projects, flexibility is critical. Unlike lenders who require you to use your funds in specific ways, we let you decide what’s most important. You can use a Funding Circle term loan for a variety of different needs, including equipment, inventory, payroll, or labor.

At Funding Circle, we’re passionate about seeing small businesses succeed. If you think financing could help your business secure the next big project, apply today, or learn how we compare to other lenders


Affordable business financing. Crazy fast.

Funds delivered in days, not months.

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