Construction/ Contracting
Secure the funds you need to handle unexpected expenses, maintain cash flow, and complete your projects on time. Explore tailored loan options designed specifically for construction businesses and contractors.
Intro To Small Business Loans For Construction Contractors
Construction projects don’t always go as planned for small business owners. Unexpected expenses, such as the need to purchase additional equipment or supplies, can arise. Various circumstances – from new investors to county codes to inclement weather – can delay the project’s start date. Adding to this pressure on cash flow, contractors often do not get paid until certain project milestones are achieved.
60Day Capital provides access to business loans tailored for construction companies and contractors, ensuring they have the necessary credit to complete projects on time while covering operational expenses in the interim.
In this guide, we’ll answer the following questions and more:
- What Are Construction Business Loans?
- How Do Business Loans For Construction Companies Work?
- What Are The Advantages of Business Loans For Construction Companies?
- What Are The Disadvantages of Business Loans For Construction Companies?
- Who Qualifies For Construction Business Loans?
- How To Apply For Construction Contractor Business Loans?
- What If I’m Declined For a Contractor Business Loan?
What Are Construction Business Loans?
Construction business loans are specialized small business loans designed to address the cash flow cycles and periodic expenses of construction contractors. These loans not only cover short-term needs and significant purchases but also bridge revenue gaps until payments are received.
Small business loans for construction companies can take the form of:
Working Capital Loans
Revenue-Based Financing
Business Term Loans
Business Line of Credit
SBA Loans
Merchant Cash Advance
Equipment Financing
How Do Business Loans For Construction Companies Work?
Each of the construction business loan products can address different expenses or cash flow issues. For example, if a business owner needs extra funds to purchase supplies, new equipment, or cover payroll until the next project phase is completed, solutions include short-term working capital loans or business lines of credit.
The choice often depends on the repayment timeline and the likelihood of needing another loan soon. Sudden expenses and cash flow shortages are common in the construction industry. A business construction line of credit can prevent the need for repeated funding applications by providing ongoing access to funds for short-term expenses.
If you’ve just completed a project and are gearing up for the next one, but compensation isn’t due for a few weeks, accounts receivable factoring might be helpful. In this scenario, the small business loan provider purchases the account at a discounted price and takes on the responsibility of collecting from your customer. Once collected, you receive the remainder of the payment, minus fees.
Construction loans can also be designed to address multiple problems. You might need to hire more workers, pay vendors upfront, or obtain special permits for the same project. We can tailor your loan amount and terms to accommodate various expenses of your contracting business, even if they occur at different intervals.
Business Loan Options Compared
LOAN TYPES
MAX AMOUNTS
RATES
SPEED
- Merchant Cash Advances
- $5k – $1m
- Starting at 1-6% p/mo
- 1-2 business days
- SBA Loan
- $50k-$5.5m
- Starting at Prime + 2.75%
- 8-12 weeks
- Business Term Loan
- $10k to $5m
- Starting at 1-4% p/mo
- 1-3 business days
- Business Line of Credit
- $1k to $1m
- Starting at 1% p/mo
- 1-3 business days
- Receivables/Invoice Financing
- $10k-$10m
- Starting at 1% p/mo
- 1-2 weeks
- Equipment Financing
- Up to $5m per piece
- Starting at 3.5% (SBA)
- 3-10+ business days
- Revenue Based Business Loans
- $5K – $1m
- Starting at 1-6% p/mo
- 1-2 business days
What Are The Advantages of Business Loans For Construction Companies?
Construction businesses can grow by taking on increasingly complex and lucrative projects. Construction loans allow you to say “yes” to these opportunities when cash flow issues might otherwise force you to decline. These loans help manage mounting expenses, long gaps between compensation, or delays in project start dates, ensuring you don’t miss critical opportunities.
Cash flow shortages often make it difficult to retain employees and build loyalty, a major challenge for construction businesses. Construction loans ensure you can always pay your employees on time, even when projects get delayed. Having a larger team allows you to take on larger projects and grow your business.
Approval for construction loans does not require entirely consistent cash flow, a substantial bank balance, or excellent personal credit. You can still get funded in a matter of days, even if most of your operating capital is tied up.
Many contractors also use small business loans during the slow season to maintain funds and prepare for the busy season. In such cases, we recommend a construction loan with terms that don’t require sizable payments shortly after funds are distributed, allowing you to manage cash flow more effectively.
What Are The Disadvantages of Business Loans For Construction Companies?
While construction loans offer numerous benefits, many small business owners hesitate due to the risk of accumulating too much debt. In the construction and contracting industry, receivables can be inconsistent. With so many factors beyond your control, predicting when you will receive payment for services can be challenging. Adding a loan payment to your financial obligations might do more harm than good in some cases.
Additionally, if your business or personal credit isn’t optimal, the best construction SBA loan programs may be out of reach. SBA loans typically require excellent credit because they offer the best interest rates and loan terms, often up to 25 years. Some programs allow the use of real estate as collateral to help secure an SBA loan, but this may not be a viable option for every business.
Who Qualifies For Construction / Contracting?
Approved businesses generally met the following criteria:
ANNUAL REVENUE
$75K+
CREDIT SCORE
550+
TIME IN BUSINESS
6 months+
How To Apply For Construction Contractor Business Loans:
The amount of paperwork required for the application process depends on your chosen product. For most products, funds can be approved and distributed in up to three business days. To get started, here’s how to apply:
Step 1: Choose the Right Product
Begin by choosing the most sensible solution for your specific needs. This requires thorough research, as each product is designed for different types of expenses and cash flow cycles. Are you looking to cover a short-term or long-term cost? What is the project’s billing schedule? Considering the financial purpose will also help us determine the best lender and terms for your needs.
Step 2: Gather Your Documents
Here are the documents and information required for all construction loan types:
- Driver’s license
- Voided business check
- Bank statements from the past three months
- Invoice for equipment (for Equipment Financing)
- Credit card processing statements from the past three months (for Merchant Cash Advance)
- Accounts Receivable Aging Report (for Accounts Receivable Factoring)
- Debt Schedule (for Accounts Receivable Factoring)
- Additional documents and information are required for SBA Loans. Visit our SBA Loan page to learn more.
Step 3: Fill Out Application
You can begin the application process by calling us or filling out our one-page online application. You’ll be asked to enter the information from the previous section along with your desired funding amount.
Step 4: Speak to a Representative
Once you apply, a representative will reach out to you for a one-on-one consultation to explain your available options, repayment structure, rates, terms, and conditions. This way, you won’t have to worry about any surprises or hidden fees during the repayment process.
Step 5: Receive Approval
If and when you’re approved, funds for Business Term Loans, Business Lines of Credit, Working Capital Loans, Equipment Loans, Merchant Cash Advance, Revenue-Based Business Loans, and Accounts Receivable Factoring should appear in your bank account within 1-3 business days. For SBA Loans, it usually takes 3-5 weeks to receive funding.
Your Construction Loan Gets Set Up – Now What?
Your construction business loan isn’t just a way to get financing for your business; it’s also an excellent opportunity to start building or improving your credit.
Regardless of the type of construction loan you get, make all of your required payments on time and in full. If you get a business credit line or another form of revolving credit, keep your balance below the credit limit.
Consistently making your payments will positively impact your credit. This means preferred interest rates and terms when you next need business financing.
What If I’m Declined For a Contractor Business Loan?
If a lender determines that a construction loan might harm your cash flow at this time, they may decline your application. In such cases, we might recommend other financing tools like a business credit card or a personal loan. These options are usually easier to qualify for than small business loans. While business credit cards may not provide the credit limit you need immediately, they can help improve your credit scores over time.
For those looking to enhance their credit score before applying, consider using credit repair services. We can assist in identifying the issues affecting your credit score and developing effective solutions to resolve them.
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