Competitive Rate Financing for Construction Companies, Contractors, and Skilled Specialists.
1+ Year in Business
Assets or Collateral
A contractor business loan is a specialized type of financing tailored specifically for the construction sector. Unlike traditional loans, these loans come with terms and conditions designed to accommodate the cyclical, seasonal, and unpredictable nature of the industry.
Funds can be disbursed either as a lump sum or as a line of credit, allowing the borrower to draw as needed from their total credit limit. Contractors can use this financing for various purposes, including:
Whether you need to cover immediate expenses or finance long-term projects, specialized contractor financing provides the capital and structure necessary to meet the unique needs of contractors.
The contractor loan market offers significant variation, with each loan type having its own set of advantages and disadvantages. Here are the main types of loans contractors can utilize:
Ideal for contractors needing a quick cash boost, short-term loans offer a convenient solution for immediate financial requirements. Despite higher interest rates, these loans are appealing due to their ease of access and minimal paperwork requirements.
For contractors looking to make significant expansions or large-scale purchases, long-term loans provide the opportunity to secure larger amounts of funding at more favorable interest rates. These loans offer a longer repayment period but typically involve collateral and a more thorough approval process.
Business lines of credit offer maximum flexibility, allowing contractors to draw funds as needed and pay interest only on the amount used. This option is ideal for managing fluctuating cash flow needs, though it may come with fees and requires a solid credit history for approval.
Catering to businesses with steady revenue streams, this option allows contractors to access capital based on their monthly or annual revenue. Repayment is usually calculated as a percentage of the business’s revenue, providing flexibility as it aligns with the company’s income levels. This can be especially beneficial for contractors with fluctuating project timelines and payment schedules.
Specifically intended for buying equipment, this type of loan offers lower interest rates and directly increases the business’s operational capacity by using the purchased equipment as collateral.
Invoice financing allows contractors facing payment delays to receive an advance on their unpaid invoices, improving cash flow without waiting for client payments. Although fees can impact total revenue, this option is crucial for effectively handling short-term liquidity needs.
National Business Capital’s longstanding lender relationships work in contractors’ favor. Our Business Finance Advisors negotiate on behalf of your business to achieve specialized structures and contract exceptions that allow you to grow your business to greatness with minimal friction.
The process of securing a contractor loan begins with the application, where contractors must provide comprehensive details about their business. This information allows lenders to assess the borrower’s creditworthiness, the business’s financial stability, and the feasibility of the business plan.
Contractors may need to provide the following documents:
Once the application is submitted, lenders review the provided documents to determine eligibility. If approved, businesses enter the contract negotiation phase, where they work with their lender to refine the offered terms. Over-qualified businesses typically have stronger negotiating power compared to those that barely meet minimum requirements.
Both parties must agree on a contract for the transaction to proceed. It’s important not to feel pressured into accepting an offer that doesn’t meet your business needs. Once an agreement is reached, the contract is finalized, funds are disbursed, and the repayment process begins.
Repayment terms vary significantly depending on the type of loan. For example:
The repayment schedule could be daily, weekly, or monthly, typically determined by the business’s cash flow and the specific loan product. Some lenders offer unique repayment cycles, granted on an as-needed basis to qualified borrowers.
By understanding the application process, necessary documentation, and repayment terms, contractors can better prepare for securing and managing their business loans effectively.
The term “traditional financing” refers to more generic loan options such as home mortgages, personal loans, and general business loans, while contractor business loans are specifically tailored to meet the unique needs of contractor businesses. These specialized options are designed to address challenges like handling delayed payments from clients, financing specific equipment purchases, or covering operational costs during off-seasons. The loan structures, terms, and eligibility requirements are crafted to accommodate the cyclical nature of construction work.
By understanding these differences, contractors can better choose financing options that align with their business needs and operational cycles, ensuring they have the necessary funds to support their projects and growth effectively.
Up to $100MM
Up to 25 years
1 to 7 days
Short-Term Loans
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Short-term loans have expedited repayment periods between 6 and 18 months. These are best for situations where you’ll see a near-immediate ROI from your financing, like purchasing the upfront costs needed for a project or picking up bulk inventory for a holiday season.
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Intermediate-Term Loans
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Intermediate repayment falls between 1 to 3 years. It’s essentially a middle ground for entrepreneurs who don’t need short or long-term financing.
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Long-Term Loans
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Entrepreneurs select longer repayment periods to lower their monthly payments and spread out the borrowed amount for as long as possible. Although you’ll pay more in interest payments, opting for longer repayment periods is a way to preserve your cash flow.
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A term loan is a specific amount of money lent to a borrower by a lender, with repayment scheduled over a predetermined period. The loan begins with a start date when the funds are deposited into the borrower’s business bank account, and it concludes on an end date once all principal and interest have been paid off.
Borrowers may have the option to repay the loan before the term ends, potentially lowering their overall cost of capital, depending on the lender’s terms. Term loans are commonly used for various business purposes such as inventory purchases, business expansions, renovations, working capital, and more.
There’s essentially no difference: Term loans are a type of financing where the borrower makes regular payments toward the principal and interest over a specified period.
Other types of financing, like revenue-based financing, offer a lump sum of capital similar to term loans. However, they typically feature shorter repayment periods and approval criteria based on profitability rather than traditional credit metrics.
All term loans have the following characteristics in common:
If you’re looking for a straightforward financing method, you should explore term lending and the options available to you.