Construction Business Loans
How much are you looking for?
With SMB Compass, the entire loan process is conducted online — quickly, simply, and securely
From $25,000 to $5,000,000, with terms up to 10 years
Funding in as soon as 24 hours
Competitive fixed rates,no collateral, no surprises
Benefits of working with SMB Compass
Financing for the Construction Industry
The construction industry is notorious for being capital intensive. Running your own construction firm takes hard work, expertise, and a lot of resources. Contractors always need capital available to start new projects and fund the working capital for existing ones. Contractor financing is important to keep up with the need to purchase materials, buy new equipment, and to hire employees.
It’s commonly known that contractors are always waiting to get paid by their customers. Based on the payment waterfall, sub-contractors are usually waiting for the longest. Most contractors are paid when paid, which means they are not paid until the GC is paid. This typically causes a constant need for working capital to bridge the payment gap.
SMB Compass goes the extra mile to provide you with personalized construction business loans. By using the right financing solution, you can continue to grow your business without thinking about having the capital available to you.
The Best Financial Solutions for Contractors
Construction businesses need working capital to bridge the gap between cash payables and cash receivables. SMB Compass offers construction business loans to contractors in the United States. One of our reliable lending advisors will help you find the best construction business loan specific to your needs.
Bridge Loans for Contractors
A contractor bridge loan is perfect for contractors who need immediate financing. When your business needs to fund a short-term business need, make sure you apply for a loan that offers instant funding, like a contractor bridge loan. The following are some of the reasons why contractors use a bridge loan:
Hiring new employees
Equipment Financing for Contractors
Construction companies rely on heavy equipment, such as loaders, excavators, bulldozers, etc., to conduct daily operations. You can use equipment financing to purchase or rent basic office equipment (phones, tablets, printers, furniture, etc.) to more expensive construction equipment and/or vehicles. Contractors often use equipment financing because of the following:
Lease new equipment
Replace construction software
Upgrade customer management systems
*Below is a list of common equipment that contractors us contractor equipment financing programs for.
Purchase commercial real estate
Refinance existing real estate mortgage
SBA Loans for Contractors
SBA loans for contractors are widely used by construction firms. Utilizing SBA loan programs for contractor’s business owners are able to take advantage of long terms, low rates, and low monthly payments. Here’s a list on how you can use an SBA loan for the construction industry.
Air Compressor Financing
Welding Equipment Financing
Wood Chipper Financing
Concrete Paver Financing
Business Lines of Credit for Contractors
Construction companies use a business line of credit for daily business operations. With this type of loan, you don’t have to pay for the entire line of credit. You only need to repay the money you’ve withdrawn, plus the interest. Contractors commonly use a business line of credit for the following:
Asset-Based Loans for Contractors
Does your business own high-value assets? You can free up working capital and use those assets to your advantage. An asset-based loan allows you to secure financing by putting up company assets (equipment, accounts receivable, inventory, etc.) as collateral. Here’s why your construction business should use asset-based loans:
Reduce monthly debt payments
Purchase new equipment
Hire new employees
Term Loans for Contractors
Term loans are business loans that charge low monthly payments and have repayment terms that range from one to five years. It’s better for businesses to apply for term loans rather than use their available cash. Contractors can use the funds from a term loan in many different ways, such as:
Hire new employees
Working capital injection
Construction Factoring for Contractors
Construction factoring is used by contractors to get paid early on invoices. This enables contractors to have cashflow available for day to day operating expenses. By collecting payment on invoice sooner, construction factoring also provides liquidity for:
Hiring new employees
Mobilization Funding for Contractors
Contractors that bid on large commercial jobs are often in need of financing to pay for upfront expenses associated with the new project. Mobilization funding provides capital for expenses incurred before you can invoice your customer. Once you invoice your customer and get paid you can pay back the mobilization financing. Frequently mobilization funding is paired with factoring to help accelerate cashflow throughout the life of the project. Some of the ways you can use mobilization financing are
Hire new employees
How to Use Construction Business Loans
From financing ongoing and future projects to covering unforeseen expenses, there are different ways you can use construction business loans.
Here are some of the most popular ways to use construction financing:
Hire and/or Train Employees
Construction projects are a lot of work and you can’t possibly do everything on your own. Hiring and training new members will help your construction company grow and succeed. You can take on more projects; provide better service, and more. With a construction business loan, you can cover the cost of hiring and training your employees.
Pay for Unforeseen Expenses
Lawsuits, unpaid invoices, natural disasters, accidents – these are just some of the unforeseen expenses that can catch you off guard. Don’t wait until disaster strikes; be prepared and use construction business loans to pay for these unexpected expenses.
Outsource Other Services
Marketing, web development, and accounting are some of the tasks you may want to outsource. Contractors have their hands full all the time, so outsourcing these jobs can help you save time and effort. However, these services come at a price. Construction loans provide you with the funds needed to outsource tasks and hire reputable companies.
Purchase Materials and Equipment
Construction projects rely heavily on equipment and machinery. If you want to buy new/used equipment, construction equipment financing gives you the funds to do just that. It also helps to know the difference between equipment loans and leasing before applying. If you want to know more, our financial experts will be more than happy to explain it to you.
Growth and Expansion
While it’s great to have an established online presence, it will also be beneficial for construction companies to have a physical location. If you want to renovate and expand your current space or you want to branch out, taking out a construction business loan is a wise move.
Fund Construction Projects
Scaling business operations is the goal of every business owner. However, taking on bigger projects means bigger expenses, sometimes even beyond your budget. Rather than turning down growth opportunities, you can use a construction business loan to fund new and existing projects.
How to Know If You Need Construction Financing
While construction business loans can help your business, not everyone needs them. If your construction company is young and you need capital to get you started, applying for a construction business loan may get your business up and running.
However, startup companies aren’t the only ones with cash flow issues. Established companies come across financial problems every now and then. But this doesn’t mean that you should take out a loan. After all, a loan is a loan and you need to pay it back. You need to ensure that your business is profitable enough to repay the loan.
SMB Compass cares about your business and we want you to make the most out of your finances. Our financial experts can help assess your construction company and determine whether you’re in a good place to apply for a loan. If so, we will help your business reach its full potential by pairing you with the right loan product.
What You Need to Apply for a Construction Business Loan
Keep in mind that the requirements vary from lender to lender, as well as the type of loan you’re looking to get. Here are the things they will likely ask of you:
Strong Personal Credit
Some loans don’t require you to have strong credit. But if you want to qualify for favorable terms, you need to demonstrate a good personal credit rating. When you apply for a loan, expect lenders to review your credit history.
Down Payment and Collateral
To qualify for a construction loan, some lenders will ask you to make a down payment of at least 20% (10% for SBA 7(a) loans) of the total cost of the project. If you own valuable assets, lenders may also ask that you use that to secure the loan.
The total percentage of the down payment largely depends on the cost of your project and the intended use of the loan funds. Lenders ask a personal guarantee to ensure that you’re invested in your company and that you won’t default on the loan when things go south. Make sure to talk to your lender regarding down payments and collateral.
Vendors, subcontractor reviews, previous work experience, online reviews – lenders want to know about it. Lending companies will closely inspect the reputation of your company and the people you’re working with.
If you’re working with a builder, make sure to ask for evidence of a good reputation, cost estimates, and comprehensive project plans. To ensure that you’re working with a reputable builder, you can check the National Association of Home Builders in your area.
It will be easier for you to qualify for a construction loan if lenders see that you’re working with trusted people with proven track records.
Lenders want to know that your business is healthy enough to repay the loan. Generally, they will check your current and past debt, payment history, other loans or liens that you may have on your assets. You also need to provide financial statements, income tax returns, and proof of assets.
Detailed Business and Construction Plan
Lenders won’t hand easily hand you the money just because you asked for it. You need to show them that you have a plan in mind. You need to provide a comprehensive business plan, along with plans for specific projects, construction contracts, detailed building plans, and cost estimates.
Types of Contractors we Finance
General Contractor Loans
Plumbing Contractor Loans
Roofing Contractor Loans
Sub Contractor Loans
Foundation Contractor Loans
Flooring Contractor Loans
Electrical Contractor Loans
Framing Contractor Loans
Landscaping Contractor Loans