2026 Complete Guide
5 ways to finance a construction company: SBA 7(a), equipment financing, invoice factoring, credit lines and term loans. Amounts, rates and timing for each.
Construction financing
Each serves different construction business needs
Best for: Buying equipment yards, expanding operations, working capital $100K+
Best for: Excavators, bulldozers, cranes, trucks, emergency equipment replacement
Best for: Bridging payment gaps when waiting on GC or government invoices 30–90 days out
Best for: Bid bonds, material deposits, payroll gaps between project draws
Best for: Expansion, fleet additions, office/yard build-out, any general business use
Side by side
| Loan type | Amount | Rate | Term | Approval |
|---|---|---|---|---|
| SBA 7(a) Loan | $50K–$5M | 8.5–11.5% APR | 10–25 years | 30–60 days |
| Equipment Financing | $25K–$2M | 6.5–20% APR | 2–7 years | 1–5 days |
| Invoice Factoring | $10K–$2M | 1–5% per 30 days | Per invoice (30–90 days) | 3–7 days |
| Business Line of Credit | $10K–$500K | 8.75–45% APR | Revolving | 3–14 days |
| Business Term Loan | $25K–$500K | 7.5–45% APR | 1–5 years | 3–14 days |
Typical ranges, updated September 2026. Your terms depend on your revenue, credit, time in business and the lender.
Worked example
Contractors run out of cash on profitable jobs because costs go out before payments come in. Example: a six-month, $1,200,000 subcontract billed at $200,000 a month, with 10% retainage held until closeout and payment about 45 days after each bill. Job costs run 85% of billings ($170,000 a month), paid as incurred. Assumptions for illustration only — your contract sets the retainage and payment terms.
| Amount | |
|---|---|
| Monthly costs you pay | $170,000 |
| Monthly billing / collected after 10% retainage | $200,000 / $180,000 |
| Costs out while you wait about 45 days for payment | about $255,000 |
| Retainage held by the end of the job (10% × $1,200,000) | $120,000 |
| Peak cash you must carry, near the end | about $375,000 |
That peak is what a line of credit should cover — and why lenders ask for your work-in-progress schedule and accounts-receivable aging, not just tax returns. The retainage comes back only at closeout, sometimes months later, so count it as tied up. Factoring an invoice can bridge one slow payer, but it is priced per 30 days and costs far more than a line used the same way.
FAQ
Common questions about contractor financing
Equipment financing and invoice factoring are the most-used by contractors.
Size it to the peak cash a job ties up: costs paid while you wait for payment, plus retainage held until closeout. On a six-month, $1,200,000 job billed monthly with 45-day payment and 10% retainage, that peak is roughly $375,000 near the end of the job. Lenders will ask for your work-in-progress schedule and receivables aging.
Factoring lets you sell unpaid invoices to a factoring company for 85–95% of face value upfront. The factor collects from your client (GC or government agency) and remits the balance minus a 1–5% fee. No debt is added to your balance sheet. Approval is based on your client's credit, not yours.
Yes. Equipment financing is one of the fastest options for contractors. Approval in 1–5 days, 600+ credit accepted, and the equipment serves as collateral. Most lenders finance 80–100% of equipment cost at 6.5–20% APR for 2–7 years.
Equipment financing and invoice factoring are accessible at 600+ and 500+ respectively. SBA loans require 680+. Lines of credit need 650+. If your personal credit is below 620, prioritize invoice factoring or equipment financing while rebuilding your score.
A business line of credit (8.75–45% APR) or invoice factoring are the best options. Set up a line of credit before you need it — lenders prefer approving credit lines to businesses not in crisis mode.
Bridge loans provide short-term capital (6–36 months) to cover gaps between project phases or pre-construction expenses before permanent financing. Rates run 6.25–13% APR. They require a clear exit strategy such as a construction-to-permanent refinance.
Guides
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