Term Loans for Construction
Some investments need predictable financing. Fleet expansion, major equipment packages, or shop improvements deserve fixed monthly payments you can plan around. When you need to budget precisely within construction margins, term loans provide the certainty variable payments cannot.
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When Term Loans Work for Construction
Term loans are not the most flexible option, but they excel for substantial investments where payment predictability matters more than revenue alignment.
Fixed Payment Budgeting
A $200,000 term loan at 16% for 60 months means $4,870 monthly, every month, for five years. This predictability lets you build financing into project bids with complete confidence.
Bid Planning
Fixed equipment costs can be incorporated into project bids. Know exactly what financing costs per project.
Cost Comparison
A 5-year term loan often costs less in total than shorter-term MCA or revenue-based products. Lower monthly payment also preserves cash for projects.
Equity Building
Each term loan payment reduces principal. You build equity in equipment while making manageable payments.
When Predictable Payments Matter
Variable-payment products work for some situations, but major investments often demand fixed monthly obligations.
Variable Payment Uncertainty
Revenue-based payments vary with project timing. When you cannot predict monthly financing costs, bid planning becomes difficult.
Major Investment Scale
Fleet expansion, major equipment, or shop improvements require substantial capital that short-term products do not efficiently provide.
Bid Integration
Fixed financing costs can be incorporated into project bids. Variable costs complicate pricing.
Construction Margin Reality
5-10% construction margins require precise cost management. Predictable financing helps maintain margins.
Long-Term Equipment Match
A $150,000 excavator performing for 15 years should not be financed over 12 months.
Refinancing Path
Term loan track record supports future refinancing to SBA or better rates.
Term Loan Process for Construction
Term loans require more documentation but provide structured, predictable financing.
Application
Complete application with business information, revenue data, and funding purpose.
15 minutes
Documentation
Provide bank statements, tax returns if requested, and project/equipment details.
Gather documents
Underwriting
Detailed review of financials, project history, credit, and business performance.
7-21 days
Funding
Receive your loan with clear terms: amount, rate, monthly payment, term length.
1-3 days after approval
Structured Financing for Major Investments
Term loans provide predictable monthly payments over extended periods. When your construction business needs substantial capital for planned investments, term loans offer budgeting certainty within construction economics.
Fixed Monthly Payments
Same payment every month for the entire loan term. Build financing into bids with complete confidence.
Extended Terms
Terms from 1-5 years spread payments to manageable levels. Match loan term to equipment useful life.
Clear Total Cost
Interest rate and amortization schedule show exact total repayment. No surprises.
Construction Awareness
We understand construction economics and project-based revenue. Financing structured sustainably.
Larger Amounts
Term loan structures support larger funding amounts appropriate for fleet expansion and major equipment.
Build Business Credit
Regular term loan payments build your business credit profile for future needs.
Construction Term Loan Applications
Situations where fixed-payment term loans provide the right structure.
Fleet Expansion
Multiple equipment pieces bundled. Structured financing over equipment life.
Typical funding: $100K-$400K
Major Equipment
Significant equipment purchase: large excavator, crane, paver.
Typical funding: $75K-$250K
Shop/Yard Improvements
Facility improvements, storage, or operational upgrades.
Typical funding: $50K-$200K
Vehicle Fleet
Multiple trucks, service vehicles, or fleet replacement.
Typical funding: $75K-$300K
Debt Consolidation
Replace multiple MCA products with single term loan. Simplify and reduce cost.
Typical funding: $75K-$300K
Working Capital
Substantial working capital with predictable repayment schedule.
Typical funding: $50K-$200K
Term Loans vs. Alternative Construction Financing
Understanding when term loans make more sense than flexible alternatives.
| Feature | Term Loan | MCA | Revenue-Based |
|---|---|---|---|
| Payment Structure | Fixed monthly | Daily/weekly | % of deposits |
| Repayment Term | 1-5 years | 6-18 months | 6-18 months |
| Payment Predictability | Complete | Variable | Variable |
| Bid Planning | Calculable | Difficult | Difficult |
| Effective Cost | Lower | Higher | Higher |
| Approval Speed | 1-3 weeks | 24-72 hours | 24-72 hours |
| Best For | Planned major investments | Speed/flexibility | Revenue flex |
| Documentation | More required | Minimal | Minimal |
Term Loan Requirements for Construction
Term loans have higher qualification requirements but provide better terms.
Business History
Established construction business with substantial operating history.
2+ years preferred
Business Revenue
Sufficient revenue to demonstrate capacity for fixed monthly payments.
$400,000+ annual
Owner Credit
Term loans typically require good personal credit from owners.
640+ preferred
Profitability
Demonstrated profitability with positive cash flow.
Profitable operations
Tax Returns
Business and personal tax returns often required.
2 years returns
Clear Purpose
Defined use of funds. Term loans work best for specific investments.
Documented purpose
Strong project revenue and demonstrated profitability support term loan qualification.
Real Results
Valley Excavation
Excavation Contractor, Washington
The Challenge
Valley wanted to add an excavator ($125,000) and two dump trucks ($95,000). MCA quotes created unpredictable monthly costs that complicated project bidding.
The Solution
We structured a 60-month term loan for $220,000 at 15.5% with fixed monthly payments of $5,300. Predictable payments allowed precise bid planning.
The Result
Equipment acquired on schedule. Fixed payments easily incorporated into project bids. Valley has since expanded fleet twice using term loan financing.
“Variable payments made bidding impossible. I needed to know exactly what equipment cost monthly. Fixed payments let me bid with confidence.”
Construction Term Loan Data
Industry benchmarks for term loan financing in construction.
Term Loan Advantages for Construction
Strategic benefits of fixed-payment financing for contractors.
Budget Certainty
Build fixed financing costs into project bids. Know exactly what you owe monthly.
Bid Planning
Fixed equipment costs enable precise project pricing and margin management.
Lower Total Cost
Extended terms and competitive rates often mean less total cost than MCA.
Fleet Planning
Predictable payments enable strategic fleet expansion planning.
Professional Structure
Traditional financing structure expected by bonding companies and banks.
Refinancing Path
Establish term loan track record for future SBA or better-rate refinancing.