Best Construction Business Loan Options in 2019

Best Construction Business Loan Options in 2019
Ronis Gracie
on March 23, 2020
Read in 1 min

Even the most successful construction businesses encounter financial difficulties. They may need to pay for damaged supplies, cover damages to a construction site or pay to replace stolen equipment. When large expenses are too much to pay out of pocket, it may be time to consider a business loan.

Types of Loans for Construction Companies

For all construction companies, the owner’s business credit history and income are both major components of choosing a type of funding. Since construction companies and their income sources are typically considered risky, it is hard to obtain a working capital loan or invoice factoring financing. These are some of the most common loans used by construction companies.

Equipment Financing

Construction companies can use equipment financing to purchase new equipment. This is a short-term loan that comes with a moderate interest rate. It is best to plan on repaying an equipment financing loan within a month or two.

Small Business Loan

For construction companies needing a considerable sum of money and a longer repayment term with a reasonable interest rate, this is a good option. It is a secured loan provided by private lenders and backed by the government.

Merchant Cash Advance

A merchant cash advance provides money immediately for financial emergencies. These loans are meant to be short-term solutions and do not come with long-term payment arrangements. Since income is used for approval instead of credit, business owners with marginal credit can gain approval.

Line of Credit

With adjustable interest rates typically staying below 10 percent, this is a good option for larger purchases and longer repayment terms. A line of credit can be secured or unsecured. Business owners need decent credit and proof of income or collateral to be approved for a line of credit.

Construction Business Loan Obstacles

The biggest obstacle construction businesses face when seeking financing is that the nature of the business is considered a risk. Construction businesses often wind up paying for injuries of subcontractors, faulty work and damaged sites. Having good insurance for finished and unfinished work sites, subcontractors and equipment helps overcome this obstacle. A short business history and unreliable income are both problematic obstacles as well.

Qualifying for A Construction Business Loan

Having proper insurance greatly improves approval chances. To qualify for the best possible financing, construction business owners must have been in business for more than 6 months. It is also important to have an income greater than $8,000 per month. If these criteria are met, getting a business loan is more feasible.

Funding OptionsAPRDo you qualify?Time in BusinessAnnual Revenue
Funding Option
Lendio Get Started
APR
Starting at 5%
Estimated Apr
Do you qualify?
500
MIN CREDIT SCORE
Time in Business
At least 6 months
Annual Revenue
At least $100K
Funding Option
Kabbage. Learn More
APR
1.5% - 10%
Monthly Fee Rate
Do you qualify?
N/A
MIN CREDIT SCORE
Time in Business
At least 1 year
Annual Revenue
At least $50,000
Ronis Gracie Finance Journalist

A serial entrepreneur experienced with building several small companies from the ground up and consulting for many others, Ronis understands the finer points of small business financing. He’s passionate about small business & is committed to simplifying small business lending for others.

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Important Disclosures. Please Read Carefully.

Persons facing serious financial difficulties should consider other alternatives or should seek out professional financial advice. This website is not an offer to lend. Lendgenius.com is not a lender or lending partner and does not make loan or credit decisions. Lendgenius.com connects interested persons with a lender or lending partner from its network of approved lenders and lending partners. Lendgenius.com does not control and is not responsible for the actions or inactions of any lender or lending partner, is not an agent, representative or broker of any lender or lending partner, and does not endorse any lender or lending partner. Lendgenius.com receives compensation from its lenders and lending partners, often based on a ping-tree model similar to Google AdWords where the highest available bidder is connected to the consumer. Regardless, Lendgenius.com’s service is always free to you. This service is not available in all states. If you request to connect with a lender or lending partner in a particular state where such loans are prohibited, or in a location where Lendgenius.com does not have an available lender or lending partner, you will not be connected to a lender or lending partner. You are urged to read and understand the terms of any loan offered by any lender or lending partner, and to reject any particular loan offer that you cannot afford to repay or that includes terms that are not acceptable to you. By submitting your information via this website, you are authorizing Lendgenius.com and/or lenders and lending partners in its network or other intermediaries to do a credit check, which may include verifying your social security number, driver license number or other identification, and a review of your creditworthiness. Credit checks are usually performed by one of the major credit bureaus such as Experian, Equifax and Trans Union, but also may include alternative credit bureaus such as Teletrack, DP Bureau or others. You also authorize Lendgenius.com to share your information and credit history with its network of approved lenders and lending partners. For qualified consumers, our lenders offer loans with an Annual Percentage Rate (APR) of 35.99% and below. For qualified consumers, the maximum APR (including the interest rates plus fees and other costs) is 35.99%. All loans are subject to the lender’s approval based on its own unique underwriting criteria. Example: Loan Amount: $4,300.00, Annual Percentage Rate: 35.99%. Number of Monthly Payments: 30. Monthly Payment Amount: $219.36. Total Amount Payable: $6,581.78 Loans include a minimum repayment plan of 12 months and a maximum repayment plan of 30 months. In some cases, you may be given the option of obtaining a loan from a tribal lender. Tribal lenders are subject to tribal and certain federal laws while being immune from state law including usury caps. If you are connected to a tribal lender, please understand that the tribal lender’s rates and fees may be higher than state-licensed lenders. Additionally, tribal lenders may require you to agree to resolve any disputes in a tribal jurisdiction. You are urged to read and understand the terms of any loan offered by any lender, whether tribal or state-licensed, and to reject any particular loan offer that you cannot afford to repay or that includes terms that are not acceptable to you.

Lender’s or Lending Partner’s Disclosure of Terms.

The lenders and lending partners you are connected to will provide documents that contain all fees and rate information pertaining to the loan being offered, including any potential fees for late-payments and the rules under which you may be allowed (if permitted by applicable law) to refinance, renew or rollover your loan. Loan fees and interest rates are determined solely by the lender or lending partner based on the lender’s or lending partner’s internal policies, underwriting criteria and applicable law. Lendgenius.com has no knowledge of or control over the loan terms offered by a lender and lending partner. You are urged to read and understand the terms of any loan offered by any lenders and lending partners and to reject any particular loan offer that you cannot afford to repay or that includes terms that are not acceptable to you.

Late Payments Hurt Your Credit Score

Please be aware that missing a payment or making a late payment can negatively impact your credit score. To protect yourself and your credit history, make sure you only accept loan terms that you can afford to repay. If you cannot make a payment on time, you should contact your lenders and lending partners immediately and discuss how to handle late payments.