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Construction Business Financing
The capital needs contractors commonly face and the financing types often used to address them.
Not yet reviewed
This guide is a draft awaiting factual and compliance review. It's for general education only and is not financial, legal, or tax advice.
Common capital needs in construction
- Heavy equipment and work vehicles
- Materials purchased before a project is paid
- Payroll while waiting on progress payments
- Retainage held back until project completion
- Bonding and growth into larger contracts
Financing types contractors often consider
Equipment financing is commonly used for machinery and vehicles, with the equipment typically serving as collateral. Invoice factoring or receivables financing can help bridge slow-paying general contractors or public projects. A line of credit can cover materials and payroll between draws.
Documents to prepare
- Business bank statements
- Recent tax returns and financial statements
- Accounts receivable aging report
- Current contracts or backlog
- Equipment quotes, if financing equipment
- Licenses and insurance certificates
Considerations
Construction revenue can be lumpy, and funding sources may look closely at your backlog, customer concentration, and receivables. Retainage and pay-when-paid clauses can extend the time before you're paid, so factor them into how much you borrow and for how long.
Frequently asked questions
Can I factor invoices from a general contractor?
Sometimes. Factoring companies evaluate the creditworthiness of the party paying the invoice, and some have restrictions on construction receivables due to retainage and lien considerations.
Related financing
Want to talk through your situation? Speak with a specialist.