Construction Business Financing: 6 Tools for Contractors and Builders
Construction is the most working-capital-intensive SMB category. The right financing stack lets you bid bigger jobs, hold retainage without dying, and buy equipment without draining cash.
Mobilization financing
Upfront capital to start a job before the first draw. Priced as a percentage of contract value (2–5%) or as a short-term loan repaid from the first 1–2 draws. Most banks won't touch it; specialty construction lenders do.
Progress billing factoring
Sell certified pay applications at 1.5–3% discount. Faster than waiting net-45 from the GC. Schedule of values must be clean and approvals current.
Equipment financing
Excavators, lifts, trucks — all standard. $50K–$500K typical. Cat Financial and Komatsu Financial offer captive financing that's often cheaper than third-party.
Lines of credit for materials
Revolver against AR. Vendor invoices hit the LOC, customer payments pay it down. Cheaper than supplier net-30 with discount lost.
Bonding capacity financing
Working capital loan structured to boost surety's view of liquid net worth — unlocks larger bond capacity. Niche product; only certain lenders.
SBA 504 for shop / yard
Owning your yard and shop instead of renting builds equity and stabilizes overhead. 504 is the right structure for $500K–$5M acquisitions.
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