Construction businesses have unique funding needs due to project-based revenue. Here's your guide:
Top Funding Options for Construction:
1. Invoice Financing / Factoring Best for: Bridging the payment gap
- ●Get paid immediately on completed work
- ●Don't wait 60-90 days for customer payment
- ●Based on customer credit, not yours
- ●Scales with project volume
2. Equipment Financing Best for: Heavy equipment purchases
- ●Excavators, trucks, tools
- ●Equipment as collateral
- ●Match loan to equipment life
- ●Tax advantages
3. Business Line of Credit Best for: Project-to-project gaps
- ●Draw for materials and payroll
- ●Repay when project pays
- ●Revolving access
- ●Only pay for what you use
4. Working Capital Loans Best for: Seasonal gaps, growth capital
- ●Cover winter slowdowns
- ●Fund bid deposits
- ●Handle payroll during slow periods
5. SBA Loans Best for: Major equipment, expansion
- ●Lowest rates
- ●Longer terms
- ●Government backing
- ●Requires strong financials
Construction-Specific Challenges:
- ●Long payment cycles (60-90+ days)
- ●Large material purchases upfront
- ●Seasonal work patterns
- ●Bonding requirements
- ●Progress billing complexity