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Here's a call I get all the time: a subcontractor just won the biggest job they've ever bid. It'll be a boon to the business, but they need money for materials, a crew, and equipment before the project starts.
I've spent my career helping small- to midsize business (SMB) owners secure financing, and this is a common squeeze for construction companies. Below, I'll get into the options contractors use most, how they fit different trades, and what to know before you borrow.
If you already know what you need, apply today.
| Option | Best construction use | Typical speed | How you repay |
|---|---|---|---|
| Short-term loan | Materials and mobilization costs for a new job | As quickly as same day | Fixed weekly, biweekly, or monthly payments over 6 to 36 months |
| Business line of credit | Payroll and gaps between progress payments | As quickly as same day | Weekly or monthly payments over 6 to 36 months, and you only pay interest on what you use |
| Equipment financing | Trucks, excavators, lifts, and specialty tools | 1 to 5 days | Fixed monthly payments over 12 to 72 months |
| SBA loan | Buying a shop or yard, refinancing, or long-term growth | As quickly as two weeks (typically 30 to 90 days) | Monthly payments over 10 to 25 years |
| Invoice factoring | Turning unpaid invoices from slow-paying general contractors into cash | 1 to 2 weeks | You get an advance, then the remainder minus fees once your client pays, typically in 30, 60, or 90 days |
| Merchant cash advance | Short-notice costs when a loan can't close in time | As quickly as same day | Daily, weekly, or monthly payments from a percentage of future sales, with no fixed term |
Why Construction Cash Flow Runs Behind the Work
Construction companies deal with cash flow challenges all the time. You submit an invoice for work completed that month; the general contractor reviews it, and payment follows. Each review adds time between invoicing and payments.
Here's what else can slow it down:
Mobilization costs
Materials deposits, equipment, permits, and crew wages that come due before you complete work.
Progress billing
You bill as you finish each phase of the job. Every invoice has to be reviewed before payment is released.
Retainage
Your client holds back part of every payment until the job wraps. A 10% holdback is common on private jobs.
Bonding costs
Federal construction contracts over $150,000 require performance and payment bonds. You pay this up front.
Types of Construction Business Loans
Clarify Capital's lender network offers 7+ business loans. Here are the most common ones I see construction business owners using.
Short-Term Loans for Materials and Mobilization
Short-term business loans give you a lump sum to cover the up-front spending to get materials, a crew, and equipment. Through Clarify Capital, short-term loans run from $10,000 to $5 million, with APRs starting at 6% and repayment terms of six to 36 months.
Business Line of Credit for Payroll Gaps
A business line of credit is a revolving credit line you can draw on as needed. It works like a credit card, where you draw, repay, and draw again. Clarify Capital's lending partners offer lines up to $5 million with APRs starting at 6%. You only pay interest on what you use. Lines of credit tend to fit working capital gaps, to cover things like payroll and inventory.
Equipment Financing for Trucks and Machinery
Use equipment financing to cover the cost of vehicles and machinery for your business. Through Clarify's lender network, you can finance up to 100% of the equipment's value. APRs start at 6%, and repayment terms run from 12 to 72 months. The equipment serves as collateral, and financing can take one to five days.
SBA 7(a) and SBA 504 Loans for Long-Term Growth
The U.S. Small Business Administration (SBA) guarantees small business loans from approved lenders. SBA loans offer longer repayment terms and competitive interest rates than short-term loans, but take longer to close. SBA 7(a) loans go up to $5 million and can cover working capital, equipment, and real estate. SBA 504 loans finance commercial property and long-life equipment through a certified development company (CDC) or a nonprofit partner that works with the SBA.
Invoice Factoring for Slow-Paying General Contractors
Invoice factoring lets you sell unpaid invoices for up-front cash. A factoring company advances up to 100% of the invoice's value, with fees ranging from 0.5% to 5% per invoice per month through Clarify Capital's network. Advance rates and fees depend on the factoring company and your client's credit, so it can be an option if you have bad credit.
Merchant Cash Advance for Short-Notice Costs
A merchant cash advance (MCA) gives you a lump sum in exchange for a share of your future sales.
Advance up to $5 million through Clarify's lender network with factor rates from 1.08 to 1.45. MCAs usually cost more than other options. I usually see contractors use them for short, specific needs when a loan takes too long to close.
