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Loans for General Contractors and Construction Companies

Written by Allison Martin

Allison Martin is a personal finance enthusiast and a passionate entrepreneur. With over a decade of experience, Allison has made a name for herself as a syndicated financial writer. Her articles are published in leading publications, like, Bankrate, The Wall Street Journal, MSN Money, and Investopedia. When she’s not busy creating content, Allison travels nationwide, sharing her knowledge and expertise in financial literacy and entrepreneurship through interactive workshops and programs. She also works as a Certified Financial Education Instructor (CFEI) dedicated to helping people from all walks of life achieve financial freedom and success.

Updated December 18, 2023​

6 min. read​

loans for contractors

Do you currently have or plan to open a commercial construction business? Or are you looking for contractor loans specific to general managers, contractors or companies in the construction industry? It can be challenging to scale your company if you don’t have suitable financing options at your disposal. Even worse, you could be forced to turn away business if you don’t have the cash on hand to cover material and equipment costs.

Fortunately, there are options to provide the capital you need, along with an alternative payment solution to help cover supply costs.

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General Contractor Loans

Both commercial and residential general contractors face a variety of expenses related to day-to-day business. From equipment and materials to salaries and training, they have numerous financial responsibilities. Meanwhile, the workflow instability makes it tough to cover all the expenses.

General contractor loans help contractors land profitable new projects while managing the existing work without worrying about daily expenses and payment delays. These loans are designed explicitly with contractors’ needs and business specifics in mind.

Circumstances That Warrant Loans for Contractors

Financial planning in the construction industry can be complicated. Contractors often rely on the previous client’s promise to make timely payments to take on a new project. When the payment for completed work is delayed, they face a gap in financing.

When the working capital fails to cover ongoing needs, contractors need to turn somewhere else for funding. The circumstances that warrant loans for contractors include:

  • Equipment — you’ve taken on a large project that requires expensive equipment or heavy machinery. While renting may seem like a good option, it’s a short-term solution. You need to buy the necessary equipment to save money in the long run. A loan can help you do it.
  • Materials and labor — when working on a large project, you may have to wait for weeks for the funds to come in. However, you need to pay for materials and labor upfront. Loans can bridge this funding gap to prevent delays.
  • Slow seasons — the construction industry is highly volatile. The “feast or famine” setup makes it hard for contractors to survive slow seasons. Meanwhile, the cold and wet weather in many states makes completing various projects for several months a year impossible. The right loan can help contractors survive the dry spell.
  • Marketing — to attract more customers, contractors of all sizes need to invest in marketing. A volatile cash flow can make it hard to cover advertising expenses. A loan can support your marketing campaign, attracting more clients and driving your business forward.

Contractors often face a disrupted cash flow. To bridge the gap without losing clients or hindering your reputation, your business may need a loan or materials financing solution to help you keep growing your business.

If you need a loan to cover staff costs or materials ahead of your project, contact the online lender ROK Financial. Instead of requiring a minimum credit score, they will look into the years in business and gross revenue. You will get a business lending advisor to review loan options, help you complete the applications, and navigate the whole process. To talk to one business advisor from the ROK’s team, fill out this simple contact form, and someone will contact you to discuss your case.

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Business Loans for Contractors and Construction Companies

Below is an overview of loan options available to contractors and construction companies.

Unsecured Business Loan

An unsecured business loan is a small business loan from a lender that doesn’t require you to provide collateral. The decision of whether to approve such a loan is based on the creditworthiness of the applicant. Without collateral, the lender is taking a more significant risk in giving you a loan. This results in higher rates and complex approval requirements. However, this loan can be an excellent solution for small contractors who seek quick funding.


  • Shorter loan application approval time
  • No collateral required
  • No risk of losing the collateral


  • High-interest rates
  • Hard to qualify for
  • Inability to secure a considerable loan amount

Short-Term Loans for Construction Companies

You could get a short-term business loan from an online lender. These loan products generally offer short repayment terms, ranging from a few months to three years. Consequently, you’ll get lower interest rates than you would with other loan products, like credit cards. However, the monthly payments could be steep.


  • Lower borrowing costs
  • More competitive interest rates
  • Faster loan payoff


  • Shorter loan terms
  • Steep monthly payments

Business Lines of Credit for Construction Companies

A business line of credit gives you access to a pull of funds you can make withdrawals against, up to the limit, during a set period. You’ll only make interest payments on the amount you borrow during the draw period, and you can borrow and repay as many times as needed.

When the draw period ends, your company will be responsible for equal monthly installment payments (principal and interest) on the remaining balance over the repayment term. This loan option can be a good solution for small contractors who prefer financing flexibility and know-how to maintain complete control of their funds.


  • Access to cash at any time
  • Straightforward interest-only payment terms
  • No early payment penalties
  • Building of business credit history


  • Numerous fees
  • Hard to qualify for (even once approved, you may need to undergo annual reviews)
  • Low limits
  • Long approval process
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Equipment Financing for Construction Companies

Don’t have the funds on hand to pay for the equipment you need to complete jobs? Equipment financing is an option to cover costs and can be used for large and small equipment purchases instead of paying rental fees.

Are you worried you won’t get approved due to your credit rating? The good news is many lenders will offer customers financing with competitive interest rates as the equipment secures the loan.


  • No collateral
  • Flexible payment scheme
  • Fast approval


  • Lack of flexibility (can only be used for equipment)
  • Higher rates than for traditional loans

SBA (Small Business Administration) 7(a) and Microloans for Construction Companies

If you’re having trouble qualifying for a business construction loan, you could secure financing through the SBA Loan Guarantee Program. You’ll need a personal credit score of at least 680 to be eligible for funding, and the SBA could match you with banks and credit unions in their lending network.

The 7(a) loan program from the SBA is one of the more popular options. Loans can be used for short or loan-term working capital, equipment and real estate purchases, new construction or renovation projects, or to start or purchase a business.

You will likely get a competitive interest rate if you qualify for funding with this construction business loan. However, getting approved could take several weeks or months, and the application process is rather tedious. Consequently, it could be more sensible to search for funding elsewhere.



  • Time-consuming approval process
  • High requirements to qualify
  • Good credit and personal guarantees are often required

Invoice Financing / Factoring for Construction Companies

Tired of sitting around waiting for invoices to be paid? Enter invoice factoring – a solution that can alleviate the stress of customers not paying on time, especially for small business owners. You could receive up to 70 – 80 percent of the invoice amount through a lender who offers invoice financing without having to wait for weeks or months to get paid.

It’s important to note that invoice factoring isn’t an extremely cheap funding option. Still, it can help avoid cash flow disruptions that could affect operations. Furthermore, you can maintain good relationships with employees, sub-contractors and other parties.

Some lenders won’t require a personal guarantee with invoice financing. However, they will evaluate your credit health before deciding if your company qualifies for the service. Also, note that invoices owed by consumers won’t qualify for factoring.


  • Immediate cash flow
  • High chances of approval
  • No collateral


  • High fees
  • Risks (if the client doesn’t pay)
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Enhancing Your Chances of Getting a Contractor Loan

Here are a few things you can do to improve your chances of being approved for one of the above loan options:

  • Maintain an excellent personal and business credit score. Lenders will assess your credit history to gauge your creditworthiness and ability to repay the amount you borrow. If your credit score is low, it could be challenging to get approved for a loan. Therefore, it’s vital to make timely bill payments, keep your credit utilization low and refrain from opening too many new credit accounts.
  • Choose a lender with your best interests in mind. Look for a lender that specializes in providing contractor financing and funding to construction companies or construction business owners. These lenders will have a better understanding of your business and its unique needs, making it easier for you to get approved.
  • Create a solid business plan for why you need a loan. Your business plan should outline why you need the loan, how you plan to use the funds and how you plan to repay the loan. A well-crafted business plan helps demonstrate to lenders that you are a responsible borrower and that you have a clear strategy for growing your business.
  • Work on your balance sheet (reduce negative balance days, review your monthly revenue). Your balance sheet should show that your business is financially stable and the cash flow is positive. You can achieve this by reducing negative balance days, reviewing your monthly revenue and ensuring that your expenses are under control.
  • Make sure to have a clear understanding of why you qualify for a contractor loan. This can help you narrow down the list of lenders and increase your chances of approval. For example, if you need a loan to purchase new equipment, you should look for lenders that specialize in equipment financing.
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Alternative Financing for the Commercial Construction Industry

It can be challenging to take on commercial construction projects and expand your business with limited funds if you can’t find loans for contractors and construction businesses. And if your credit rating isn’t quite up to par, securing a business loan may seem impossible. Or the lender could require you to jump through a series of hoops that force you to miss out on lucrative opportunities while sitting around waiting to get approved.

Fortunately, there are financing alternatives available for contractors and construction businesses. As mentioned above, you can explore invoice factoring, where a financing company purchases your outstanding invoices at a discount and provides you with immediate cash flow. This can be especially helpful if you have outstanding invoices from clients who take a long time to pay.

Another alternative financing option is equipment financing, where you can obtain financing to purchase or lease equipment needed for your construction project. This can be an excellent option if you need to purchase expensive equipment but don’t have the cash on hand to do so.

Crowdfunding is another option that has risen in popularity in recent years. It involves raising funds through an online platform for larger projects or to get your business off the ground.

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