Whether your construction business is brand new or already established, cash flow will always be on your mind. Construction loans for small businesses can be used to cover hefty construction expenses, such as on-site facilities, materials, temporary machine parts, and employee wages. Construction business owners can also benefit from having funds readily available on-demand, in case of any unforeseen expenses.
In this article, we are going to cover everything you need to know to find the best construction loan for your business.
Best Construction Business Loans
As a construction company owner, you might be faced with the challenges of competition, seasonality, and spontaneous opportunities for growth. As such, applying for a small business loan is often a normal stage of an expanding construction business.
Written by:Tetiana Sitiugina-Babiuk
Our Top Picks for Best Construction Business Loans
- Multiple loan types available
- Funding in 48h
- Soft credit pull
- Ideal for plenty of industries
- Approval not solely credit based
- Early payoff discounts
- No monthly fees or prepayment penalties
- Same-day or next-day funding
- Best for business lines of credit
How to Choose the Best Construction Business Loan?
While there are various types of financing available to finance construction business needs, choosing the right one to apply for comes down to several main factors. In fact, our financial experts have used these specific factors to rank the lenders below.
- Loan Features. What are the loan amounts, terms, and repayment optionality offered by the lender? Will the loan amount cover the cost of your construction project?
- Application process. How invasive are the application information requirements? Does the approval process include a hard or soft credit check? How long does it take to complete the application and receive the funds?
- Interest rates and fees. What interest rates are associated with the loan? Are there any additional charges, such as origination or borrowing fees?
- Qualification process. What are the qualification requirements, such as annual revenue, minimum credit score, and minimum time in operation?
- Customer support. Is there an in-person customer support team? Are supplemental tools and information readily available?
- Online user reviews. What do previous customers say on independent review sites like Trustpilot?
- Perks and bonuses. Does the lender offer a flexible repayment schedule or employ advanced technology? How transparent are they in their advertising?
Best Construction Business Loans - Full Overview
When it comes to construction business loans, there is no one size fits all. Instead, the ideal financial product for you will depend largely on the specifics of your business and what you need the money for.
1.Biz2Credit - Best for Working Capital Loans
Working capital loans are typically used to fund day-to-day business operations and cover short-term expenses, such as buying materials or paying crew wages. Biz2Credit offers an incredibly fast 24-hour turnaround for its working capital loans, - as long as you have all of your documentation ready right away.
Pros
Cons
With a working capital loan from Biz2Credit, you can borrow up to $2 million with a daily, weekly, or bi-monthly repayment schedule. The term length and interest rate can vary and will be discussed during the application process.
To qualify for the loan, you must have a minimum credit score of 575. In addition, your construction company must be in business for at least 6 months, with an annual revenue of no less than $250,000.
Features
Loan Value $25,000 - $2 million Term Length Variable Repayment Period Daily, weekly, or bi-monthly Origination Fee 1% - 6% APR Range Variable Minimum Credit Score 575 Minimum Annual Revenue $250,000 Minimum Time in Business 6 months
The Bottom Line
Without a doubt, your construction company may benefit from Biz2Credit’s incredibly fast working capital loans, known for their flexible repayment periods and varying term lengths. To speed up the process, make sure that you have all the documents ready upfront, and you will see the money in your bank account as soon as within 1 business day.
Try Biz2CreditRead the full Biz2Credit review for more details.
2. Fora Financial - Best for Short-Term Business Loans
With Fora Financial, you can apply for a short-term business loan, which can be used to cover immediate expenses like payroll needs or unexpected cash flow shortages.
Pros
Cons
Through Fora Financial, you can borrow between $5,000 and $500,000 at factor interest rates varying between 1.1 and 1.3. These loans are short-term, so they would need to be repaid within the next 4 to 15 months.
To qualify for the loan, your construction business must be in operation for no less than six months, with an annual revenue of $12,000 or more. Furthermore, your personal credit score should be no less than 500.
Features
Loan Value $5,000 - $500,000 Term Length 4-15 months Repayment Period Monthly Origination Fee Up to 2.5% plus borrowing fee of 10% - 30% of the loan total Interest Rate Factor 1.1 - 1.3 Minimum Credit Score 500 Minimum Annual Revenue $12,000 Minimum Time in Business 6 months
The Bottom Line
All things considered, construction business loans from Fora Financial present an excellent solution to funding the short-term needs of your business. As with other alternative lenders, the interest rates might be on the higher side, - but this is compensated with a streamlined application process, lenient eligibility criteria, and quick funds disbursement.
Try Fora FinancialRead the full Fora Financial review for more details.
3. Fundbox - Best for Business Term Loans
Fundbox offers convenient business term loans that can be used for immediate construction business expenses, - for example, to purchase an expensive piece of equipment or machinery. The loan application process is fairly straightforward, and you can expect to hear about the approval decision within minutes. Should you get approved, you will receive the funds as soon as the next business day. One great thing about business term loans from Fundbox is that there are no monthly minimum requirements. Instead, the repayment will be debited directly from your bank account on a weekly basis.
Pros
Cons
With Fundbox, you can apply for a relatively typical small business construction loan ranging from $1,000 to $150,000 in value. The repayment term can be either 24 or 52 weeks, with a weekly repayment schedule.
The online application process is fast and easy, and the credit score requirements are fairly lenient at only 600. While you may be offered a relatively high interest rate the first time you apply, you can expect to receive a better deal with your future loan applications, - given that you quickly repay the first loan, of course.
Features
Loan Value $1,000 to $150,000 Term Length 24 or 52 weeks Repayment Period Weekly Origination Fee None Interest Rate 8.33% for 24 week terms 18% for 52 week terms Minimum Credit Score 600 Minimum Annual Revenue $100,000 Minimum Time in Business 6 months
The Bottom Line
Fundbox term business loans are known for their easy application process and quick turnaround. Don’t let the relatively high interest rates discourage you from considering Fundbox: if you manage to pay off the loan quickly, you will be offered more funds at lower rates the next time around.
Try FundboxRead the full Fundbox review for more details.
4. BlueVine - Best for Business Lines of Credit
As a construction company owner, you may benefit from having access to a business line of credit at all times. Luckly, BlueVine online lender offers just the right product. With lines of credit from BlueVine, you don’t need to worry about a lengthy application process or long funding decisions. You will be able to complete the application in a few minutes, - and don’t be surprised to see the funds in your bank account in a matter of hours. It is worth noting that BlueVine doesn’t serve all the states. Therefore, you need to make sure to review the list on their website prior to applying.
Pros
Cons
Through BlueVine, you can apply for a business line of credit with a limit between $5,000 and $250,000 and a repayment period of either 6 or 12 months. If you carry the loan to full term, you might find that the interest rate gets expensive, - so you might want to consider paying off the loan sooner.
Because the line of credit is an unsecured construction business loan, it comes with little stricter qualification requirements. As such, you must have a credit score of at least 600, make at least $120,000 in annual revenue, and be in operation for at least 6 months.
Features
Loan Value $5,000 to $250,000 Term Length 6 or 12 months Repayment Period Weekly or monthly Origination Fee 1.60% - 2.50% per draw Interest Rate 0.30% - 1.50% per week (Flex6) 1.50 - 6.50% per month (Flex12) Minimum Credit Score 600 Minimum Annual Revenue $120,000 Minimum Time in Business 6 months
The Bottom Line
To sum up, a business line of credit from BlueVine can help you significantly with the daily expenses of your construction company, at a reasonable cost - as long as you pay off the loan early.
Try BlueVineRead the full BlueVine review for more details.
5. Credibly - Best for Long-Term Business Expansion Loans
If you are looking to grow your construction business, a long-term business expansion loan from Credibly might offer an excellent funding opportunity at a reasonable cost. With long-term business expansion loans from Credibly, the application process should take no longer than 10 minutes, and you can expect to hear back in four to six hours. If approved, you can sign the contract on the same day and receive the funds in one to two business days.
Pros
Cons
Long-term business expansion loans are offered for a period ranging between 3 and 10 years and come with lower interest rates as compared to other types of small business construction loans. The loan value can range up to $5 million, and the funds should be used specifically to help you grow your construction company. As such, a detailed business plan is required as a part of your application.
While the required time in operation is not disclosed, it is unlikely that a brand-new business will qualify.
Features
Loan Value $150,000 - $5 million Term Length 3 to 10 years Repayment Period Monthly Origination Fee 2.5% Interest Rate 8% to 25% APR range Minimum Credit Score Not disclosed Minimum Annual Revenue Not disclosed Minimum Time in Business Not disclosed
The Bottom Line
When it comes to business expansion loans, Credibly is a trusted loan provider that offers high borrowing limits, reasonable rates, and flexible options.
Try Credibly Read the full Credibly review for more details.
6. Kabbage - Best for Business Lines of Credit
Kabbage is another great option for business lines of credit, which you can use to cover daily operational expenses, such as employee wages. Keep in mind, however, that the Kabbage startup was acquired by American Express. Therefore, the lender only offers lines of credit to its previous customers or customers already associated with American Express.
Pros
Cons
With lines of credit from Kabbage, the loan limit can range from $1,000 to $150,000, with a repayment period of either 6, 12, or 18 months. The annual interest rates are high, varying between 24% and 99%, - however, you can minimize the costs if you pay back the balance quickly.
Great thing about Kabbage is that it doesn’t have a specific credit score requirement. However, it does conduct a hard credit score check prior to approving your application.
Features
Loan Value $1,000 to $150,000 Term Length 6, 12, or 18 months Repayment Period Monthly Origination Fee None Interest Rate 24% to 99% APR range Minimum Credit Score None Minimum Annual Revenue $50,000 annual revenue or $4,200 monthly revenue over the past three months Minimum Time in Business 12 months
The Bottom Line
If you have previously received a loan from Kabbage or are a current American Express customer, you are welcome to apply for a Kabbage business line of credit, - even if you have subpar credit.
Try KabbageRead the full Kabbage review for more details.
7. National Funding - Best for Equipment Financing and Leasing
The equipment financing and leasing loan from National Funding is intended to be used specifically for the purchase of a piece of construction machinery or equipment.
Pros
Cons
With an equipment financing and leasing loan from National Funding, you can expect to have more attractive rates and terms than with some other forms of financing. This is due to the fact that the purchased equipment itself will serve as a collateral for the loan. However, you will be required to provide proof that you have actually purchased the machinery or equipment.
With this type of construction business loan, the loan amount can range up to $150,000, with a 2- to 5-year repayment term.
Features
Loan Value | Up to $150,000 |
Term Length | 2 to 5 years |
Repayment Period | Monthly |
Origination Fee | Not disclosed |
Interest Rate | Not disclosed |
Minimum Credit Score | 500 |
Minimum Annual Revenue | $100,000 |
Minimum Time in Business | 12 months |
The Bottom Line
If you are looking to buy an expensive piece of construction machinery or equipment, National Funding is a great resource to consider. You can receive up to $150,000 for the purchase, with reasonable terms and conditions.
Try National FundingRead the full National Funding review for more details.
Best Construction Business Loans - Main Features
|
Company |
Min. Credit Score |
Min. Time in Business |
Min. Annual Revenue |
Loan Amount |
Interest Rate |
|
Biz2Credit |
575 |
6 months |
$250,000 |
$25,000 - $2 million |
Variable |
|
Fora Financial |
500 |
6 months |
$12,000 |
$5,000 - $500,000 |
Factor 1.1 - 1.3 |
|
Fundbox |
600 |
6 months |
$100,000 |
$1,000 - $150,000 |
8.33% for 24 week terms 18% for 52 week terms |
|
BlueVine |
600 |
12 months |
$120,000 |
$5,000 - $250,000 |
0.30% - 1.50% per week (Flex6) 1.50 - 6.50% per month (Flex12) |
|
Credibly |
Not disclosed |
Not disclosed |
Not disclosed |
$150,000 - $5 million |
8% to 25% APR |
|
Kabbage |
None |
12 months |
$50,000 |
$1,000 - $150,000 |
24% - 99% APR |
|
National Funding |
500 |
12 months |
$100,000 |
Up to $150,000 |
Not disclose |
How Can You Use a Construction Business Loan?
These days, you can find a construction business loan for virtually any situation. For example, if you are new to the construction industry and are looking to start or grow your business, the loan capital can help you market your business, purchase materials, hire workers, and bid on projects. Your construction business will also need everything from tools to heavy-duty machinery to specialized software. Finally, you will also need to manage everyday expenses of your construction company, including office supplies, insurance premiums, taxes, legal fees, and salaries. A specialized construction business loan will cover these expenses and help you to keep your business running smoothly.
Finally, you will also need to manage everyday expenses of your construction company, including office supplies, insurance premiums, taxes, legal fees, and salaries. A specialized construction business loan will cover these expenses and help you to keep your business running smoothly.
How to Get a Construction Business Loan?
The specific application requirements and procedures will vary from lender to lender and from product to product. In general, to get the application process started, you will need to:
- Estimate the costs of your construction project.
- Review the qualifications of your business, such as its credit score, annual revenue, and time in business.
- Compare the different types of construction loans and determine which one works better for your needs.
- Find a lender that offers the type of loan you are looking for and has acceptable qualification requirements.
- Collect the required documentation and complete the loan application.
- Submit your application, sign the loan agreement, and complete the closing process.
Most of the time, to qualify for a construction business loan, you would need to have a credit score of 600 or more, a strong annual business revenue, be in business for one year or more, and be able to offer a down payment between 10% and 30%.
How Do Construction Business Loans Work?
A construction business loan is any type of loan that is used to help fund a construction business. These loans can include equipment financing, lines of credit, term loans, and even business credit cards, - each of them working in a different way.
- Equipment financing. With equipment financing, the lender issues you a lump sum amount needed to purchase equipment for your business, and the equipment itself functions as collateral in case of default.
- Business lines of credit. Here, the lender gives you access to a predetermined amount of funding, which you can draw from as you need. The line of credit can be secured or unsecured, and you would only need to pay interest on the funds you use.
- Term loans. A term loan provides borrowers with a lump sum of money upfront in agreement to specific borrowing terms. As such, you would agree to a certain interest rate, repayment schedule, and other terms.
- Business credit cards. Business credit cards can act as short-term, interest-free funding with flexible repayment options. This form of loan can help you track your spending and establish a good credit history for future business loan applications.
Alternatives to Construction Loans
While commercial construction loans might work well to finance the needs of your construction business, they aren’t your only option. For example, having a simple business credit card on hand can be an excellent alternative for smaller daily expenses, when you need the money fast. With business credit cards, the approval time is typically short, but the rates are high, and limits are low.
You might also consider applying for a Merchant Cash Advance. With this type of financing, you receive a quick access to a lump sum of funds in exchange for a portion of your future profits. In this case, the lender will automatically deduct a percentage of your sales through credit or debit card until the borrowed amount is repaid in full.
Conclusion
We have reviewed the best construction business loans on the market today, but the ultimate decision should be based on the specifics of your business and what you need the money for. For example, if you are planning to buy a certain equipment for your business, the equipment financing and leasing loan from National Funding will be your best choice. On the other hand, if you have a business growth plan you wish to turn into life, consider applying for a long-term business building loan from Credibly.
Whatever financial product you end up choosing, make sure to carefully review the terms and conditions offered by each lender. With thorough research, you will be able to find just the right financial product for your construction business.
Frequently Asked Questions (FAQ)
What are the requirements for a commercial construction loan?
- Credit score of at least 600
- Strong annual revenue
- At least one year in business
- Ability to offer 10% to 30% down payment
How much do you have to put down on a construction loan?
Generally, you can expect to be asked to put down between 10% and 30% of the total cost of the construction project you wish to finance. While the exact down payment amount will, of course, vary from lender to lender, 20% down is a good average estimate.
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About the Author
Tetiana Sitiugina-Babiuk
Tetiana Sitiugina-Babiuk is an independent writer and SEO strategist helping a broad range of international clients to convey their stories for over five years.
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