Business Financing for Construction & Contracting

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Guide to Small Business Financing for Construction & Contractors

Jack P.

Funding Advisor

For small business owners, construction projects can often take unexpected turns. Unforeseen costs, such as buying equipment or materials, can emerge. A variety of factors, from new investors and local regulations to adverse weather, can push back the commencement date. Adding to the financial strain, contractors in the building sector frequently receive payment only upon reaching specific milestones in the project.

Pay Contractors Upfront

Purchase Materials in Bulk

Take on More Projects

free up cash flow

Why Does the Construction Industry Need Loans?

Maintaining consistent service quality throughout the year can be a financial challenge for construction companies. They rely on heavy-duty machinery, a committed workforce, and a substantial inventory of construction materials. The financial strain amplifies when machinery breaks down or when they embark on large-scale projects that require a significant outlay in resources. Such circumstances can rapidly drain their operational funds.

Similarly, contractors wrestle with financial constraints when their capital is tied up in ongoing projects and raw materials. Despite the project-based nature of their business, they must manage licensing fees, implement marketing tactics, and offer competitive bids throughout the year.

Sterling Street Financial’s Approach

Sterling Street Financial offers a range of business loans tailored to the distinct financial patterns and recurrent costs of construction companies and contractors. Beyond covering immediate and hefty expenses, these loans act as a financial safety net, bridging revenue gaps as both sectors anticipate completion payments and new contracts.

Business loans designed for construction companies and contractors can be categorized as:

Understanding Loan Options for Construction Businesses

At Sterling Street Financial, we recognize the unique financial needs of construction and contractor businesses. So, how do our tailored business loans work?

The various loan products mentioned cater to diverse financial needs and situations. For instance, suppose a business owner requires additional funds to buy more materials, acquire new machinery, or manage payroll until the subsequent project phase is finalized. Suitable remedies for such challenges in construction businesses encompass short-term working capital loans and business credit lines.

Your choice generally hinges on the repayment duration of the loan and the possibility of requiring another construction loan in the near future. Construction businesses often encounter unexpected costs and cash flow interruptions. Therefore, having a business construction credit line helps avoid repeated loan applications for every short-term financial hiccup.

Imagine you’ve just wrapped up a project and are gearing up for the next. But, the payment won’t be arriving for several weeks. In such situations, accounts receivable factoring could be beneficial. Here, the loan provider buys the account at a discounted rate, taking on the task of collection from your client. Once they’ve secured the payment, you get the balance of the initial amount, minus any charges.

It’s crucial to recognize that construction loans are versatile and can address a variety of issues. Whether you’re looking to expand your team, settle with suppliers in advance, or secure specific permits for a particular job, we can customize your loan’s size and conditions to suit every expense in your construction enterprise, even if they arise at separate times.

Construction & Contractor Business Loans FAQs

Business loans for construction contractors are specialized financial solutions tailored to the unique needs of the construction industry. They provide essential funds for equipment, supplies, and other operational costs, ensuring projects are completed on schedule.

Construction projects often face unforeseen expenses, delays due to weather or regulatory issues, and extended payment terms. A business loan can help bridge the gap between project milestones, ensuring contractors can cover costs and continue operations smoothly.

These loans offer flexibility, allowing contractors to manage unexpected costs, invest in new equipment, hire additional labor, and take on larger projects without straining their cash flow.

There are various loan products tailored for the construction industry, including Working Capital Loans, Equipment Financing, Business Lines of Credit, and Accounts Receivable Factoring, among others.

The structure and terms of the loan depend on its type. For instance, Equipment Financing is ideal for purchasing new machinery, while a Business Line of Credit offers flexibility to draw funds as needed. Accounts Receivable Factoring involves selling outstanding invoices to a lender for immediate cash.

These loans provide immediate access to funds, allowing contractors to take on more significant projects, manage cash flow challenges, and grow their business. They also come with competitive interest rates tailored to the construction industry.

While these loans offer financial flexibility, it’s essential to choose the right product and amount. Overborrowing or opting for a loan with unfavorable terms can strain the company’s finances.

Eligibility varies based on the loan product and the lender. Common factors include business revenue, credit score, operational history, and cash flow.

Yes, several loan products cater to businesses with less-than-perfect credit. Lenders might focus more on the company’s revenue, operational history, and the nature of the project than just the credit score.

If declined, it’s crucial to understand the reasons. Contractors can consider alternative financing options or take steps to improve their financial standing before reapplying.

Contractors can use the funds for various purposes, such as purchasing equipment, hiring additional labor, covering operational expenses, or even expanding their business.

Steps to Secure Business Funding with Sterling Street Financial

1. Submit Your Online Application

Use our user-friendly platform to quickly request funding. Assistance is just a call, chat, or email away.

2. Talk to Our Experts

Our seasoned experts are ready to guide you through every step, ensuring you are armed with all the necessary information.

3. Get Funded!

After approval, funds are swiftly deposited into your account to boost your business growth.

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