Financing Options for a Construction Business — What You Need to Know
Introduction
Cash flow challenges are common in construction. From upfront material costs to delayed pay cycles, contractors and subcontractors regularly face capital gaps. Traditional lenders often overlook the unpredictable nature of construction operations—but there are tailored financing solutions available.
Why Construction Businesses Need Flexible Financing
Construction businesses face unique pressures:
Large upfront costs for materials and labor
Project-based payments, often delayed until milestones or completions
Seasonal fluctuations and variability in project volume
Garden Funding offers solutions designed to support construction companies where conventional lending falls short.
Financing Options Tailored for Construction Businesses
1. SBA‑Backed Loans (e.g. 7(a), Express, CDC/504)
Ideal for long-term funding—equipment, real estate, expansion.
Lower interest rates and predictable monthly payments.
Requires strong credit, collateral, and detailed underwriting; approval can take 30 days to several months.
2. Bank or Credit Union Term Loans & Lines of Credit
Offers flexibility (e.g. lines of credit for working capital).
Structured repayment schedules with competitive rates.
May require established relationship and solid credit profile.
3. Equipment Financing & Leasing
Funds purchases of heavy machinery or tools.
Reduces upfront investment and preserves cash flow.
Asset itself often serves as collateral.
4. Asset-Based Lending (ABL)
Loans secured by receivables, equipment, or real estate.
Useful for businesses with physical assets but limited credit history.
Structure focuses on collateral value rather than credit score.
5. Invoice Factoring
Sell outstanding invoices for immediate cash.
Particularly helpful when billing cycles are long or clients pay slowly.
Useful for steady receivables and stable margins.
6. Revenue-Based Funding / MCA‑Style Financing
Offers advance of cash in exchange for a portion of future revenue.
Fast approvals—often within days—and minimal paperwork.
Flexible repayment tied to actual sales, but can be expensive; factor rates may equate to triple-digit APRs.
Often only requires several months of bank statements and proof of sales—credit score is less important.
A Word of Caution on MCAs for Construction
While revenue-based funding provides speed and accessibility, construction companies should carefully weigh the downsides:
High effective cost compared to traditional loans.
Daily or weekly repayment structure can dramatically impact cash flow, especially when project payments are delayed or seasonally light.
Often unsuitable for businesses with variable or contractor-based revenue cycles.
Garden Funding emphasizes transparency in factor rates, holdback percentages, and flexible structures tailored to construction financial cycles.
Why Choose Garden Funding for Your Construction Financing
Industry Understanding: Funding solutions aligned with seasonality, project delays, and contract-based revenue.
Fast Turnaround: Funds typically disbursed in 1–2 days with expedited application (no credit score penalty).
Flexible Structures: Revenue-based terms adapt to busy and slow months.
Credit Flexibility: Businesses with lower credit profiles but strong bank statements or contract history are eligible.
Decision Guide: Which Funding Fits Your Business?
For buying tools, vehicles, or heavy equipment: look at equipment financing or term loans.
When cash flow is unpredictable or seasonal: consider lines of credit or revenue-based advances.
If your funds are tied in receivables or invoices: factoring may bridge gaps.
For long-term business growth and predictable repayment: SBA or bank loans offer structure and lower cost.
Final Thoughts
Construction businesses require financing that understands project cadence—not just credit ratings or generic models. Options like SBA loans and lines of credit Serve as strong foundations for long-term growth, while tools like invoice factoring and revenue-based financing provide short-term flexibility when speed and accessibility matter.
At Garden Funding, we tailor solutions for contractors and construction businesses—balancing speed, flexibility, and cost transparency to support steady growth. Need help exploring which option fits your latest project or pipeline? I’m happy to help map it out.