PrimeRates provides access to personalized business loan offers through our simple and quick pre-qualification application. Once you’re pre-qualified, you can select the best offer for you and finalize the business loan application with the lender.
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Our simple application takes less than 5-7 minutes to complete.
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Choose the offer that best fits your needs by comparing loan amounts and terms.
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Finalize your loan offer with the lender you selected to receive your funds.
Do you need a construction business loan to help support the growth of your business? If so, the good news is that you have plenty of options. Below we have compared some of the top lending options to help you make an educated decision.
Construction projects can have a hefty price tag for the customer as well as the builder or construction company. A construction business loan can provide a more affordable option to finance the direct costs associated with building projects.
You’ll need to meet the requirements set forth by the lender, but if you do, then yes you can get a construction business loan. Construction businesses often face cash flow challenges as projects usually require expensive materials and equipment, not to mention, a lot of labor. As a construction business owner you’ll need to find a way to fund the project since you likely will not be paid in full until it’s complete. Most construction companies will require a deposit upfront and collect the rest of payment when the project is complete. While the deposit can help cover project expenses, it may not be enough.
Construction business loans are unique, and some are even designed for the specific use of financing commercial and residential building projects. For large projects, you should pursue a loan that’s designed specifically for construction businesses. These loans are typically dispersed in a series of draws as opposed to one lump-sum payment. Clients can also secure construction loans and pay the contractor as payments are disbursed, if they are comfortable with these arrangements.
Because contractors generally have an ongoing need for cash to finance projects, a line of credit helps. Taking out a business line of credit allows contractors access to a revolving line of credit on a regular basis. For example, if your line of credit is for $200,000, you can draw available funds at any time. You will only need to repay what you borrow. Most lines of credit are secured by an asset so interest rates can be low. The risk here is the asset securing the line of credit. Let’s say you use your home (a common choice for small business owners) and a client fails to pay in full for a completed project. You will still be responsible for repaying the money you borrowed. While there’s risk in essentially everything we do, when it comes to borrowing money it’s important to reduce risk as much as possible. In the construction world this can be done with clear contracts that protect the contractor. It can also be done with thorough bookkeeping and collection of payments. If a line of credit isn’t your first choice, there are other options which we will cover on this page.
Chances are if you’re reading this, you’re considering a business loan. It can be overwhelming to figure out where to start. Afterall, you’re an expert at construction, not financing. But, as a business owner, you’ll need a broad skill set or good help to succeed. Here are five steps to take if you’re considering a construction business loan.
In construction, there are many reasons you may need to borrow money. From buying new equipment to funding projects on a regular basis, nail down why you need financing. If you just know that you’re having cash flow issues, that’s not a good enough reason to get financing. Before securing financing of any kind your finances should be healthy and organized. Your intended use of funds will help determine what kind of financing is best. For example, if you need to buy equipment, an equipment loan or a business term loan are two good options. With an equipment loan you can use the equipment as collateral, thus making it easier to qualify. If you default on the loan the lender can seize the equipment. Another example is if you need funds to start a construction business. In this scenario, a microloan or business credit card can help. Once you’ve determined what you need financing for, you can explore types of financing at PrimeRates.
Business loan requirements can vary depending on the type of loan and the lender, but most lenders will consider the following:
Before applying for a loan you can check with the lender to find out what basic requirements are required.
While you may be excited to qualify for a loan, don’t jump at the first option, unless you have unusual circumstances and believe you will not qualify elsewhere. At PrimeRates, you can compare business loan offers from multiple lenders with no credit impact. Our secure platform allows business owners to find the best loan deal that’s personalized for their needs and qualifications. Online lenders have higher approval rates than traditional banks so searching online is a smart way to expand your options.
Once you qualify for a loan, you’ll probably need to submit some documentation. Most lenders will request some or all of the following:
Before applying you can contact the lender to learn more about requirements and or documentation.
Finally, you’re ready to seal the deal. Once you’ve qualified for a loan and decided to move forward, you’ll need to finish the application process. Upon completion of the application, the lender should have everything they need to generate a final loan approval. Once approved, you can receive a loan agreement to sign to initiate funding the loan.
An average minimum down payment of 20% – 25% can be expected with most construction loans. Depending on the type of loan you may be required to use collateral instead of a cash down payment. It’s important to do your research and select the loan that works best for your situation.
Loans can be used for business purposes. Some loans may have restrictions on how they are spent though so be sure to understand the terms. For example, an equipment loan should only be used for purchasing specified equipment. Other business loans will only specify that funds are used for business purposes. Generally, term loans and lines of credit only specify that funds are used for the business. Determining what you need financing for before applying will help you choose a loan that meets your needs.
Two of the most common options for construction business financing are business term loans and a line of credit. Some contractors may even use both simultaneously. If you need a lump sum of cash, pursue a business term loan. If you need ongoing access to cash on a regular basis, a line of credit may be better. Remember, there are other options too, and some may be best for you and your business. Educate yourself, understand your needs, and be confident about asking questions. The need for financing is something to be proud of. It means you’re growing. It means you are chasing a dream. It means you are committed to making your business succeed. Construction businesses often use financing so thankfully there are plenty of options and resources available.
Small businesses can get a construction loan. The reality is that small businesses may have a harder time getting a business loan, so they’ll need to know where to look. One of the best places for small construction businesses to get a loan is online. Online lenders have higher approval rates than traditional banks for small businesses. At PrimeRates, we have an entire network of top-rated lenders dedicated to helping small businesses get financing.
Different lenders and loan types can have varying requirements for a construction business loan. Prior to applying you should gather your income and tax records. In addition, you should prepare documentation showing the legitimacy of your business. Taking these steps can help speed up the approval process and increase your chances of approval.
A construction business loan can be a good idea as long as it’s managed properly. It can allow your business to grow and revenues to increase quickly.
Pros
Cons
Small Business Administration (SBA) is a government resource that can provide construction business loans.
Pros
Cons
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| Loan Amount: | $30,000 – $350,000 |
| APR Range: | 9.7% – 11.04% |
| Time To Fund: | Typically take several weeks to fund, but can fund as quickly as within seven days. |
| Loan Term: | Maximum loan term is 10 years. |
| Origination Fee: | 4.00% |
| How To Qualify: | 675+ Personal credit score $50,000+ Annual revenue |
| Great Option For: | Borrowers with good credit SBA loans Funding real estate purchases Refinancing debt |
| Credit Check? | Soft credit check and hard pull |
| Co-Applicants Accepted? | No cosigners |
| Direct Pay-Off To Creditors? | No |
| Click “Check Rates” to apply to SmartBiz Apply Now | |
» MORE: SmartBiz SBA Loan Review
Revenue-based financing can be helpful to startups or unproven business models that need funding. Revenue-based financing can allow companies to promise an agreed-upon percentage of future revenue.
Pros
Cons
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| Loan Amounts | $1,000 to $100,000 |
| APR Range | 10.1% to 79.8% |
| Repayment Terms | 3 to 6 months |
| Time to Funding | A few minutes to several days |
| Annual Revenue | $50,000+ |
| Click “Check Rates” to apply to FundBox Apply Now | |
» MORE: FundBox Business Loan Review
Construction companies can take advantage of credit lines offered by financial institutions. A line of credit can be used for various purposes by the borrower.
Pros
Cons
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| Loan Amounts | $2,000 to $250,000 |
| APR Range | 24.00% to 99.00%% |
| Repayment Terms | Up to 3 years |
| Time to Funding | Typically 1 – 5 days |
| Click “Check Rates” to apply to StreetShares Check Rates | |
» MORE: StreetShares Business Loan Review
New business endeavors are commonly funded by commercial loans. They can be a good option for small construction businesses that need funding.
Pros
Cons
Funding Circle is another peer-to-peer lending option that highlights credible investors and over $7 billion dollars invested.
Pros
Cons
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| Loan Amount: | $25,000 – $500,000 |
| APR Range: | 4.99% – 26.99%% |
| Time To Fund: | 10 days on average |
| Loan Terms: | Up to 5 years |
| How To Qualify: | 620+ Personal Credit Score No Minimum Annual Revenue |
| Great Option For: | Established Businesses – 2+ years in business, Not Sole Proprietors |
| Click “Check Rates” to apply to Funding Circle Apply Now | |
» MORE: Funding Circle Business Loan Review
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| Loan Amount: | Up To $5 Million |
| APR Range: | Up to 11.04% |
| Time To Fund: | Within 45 days |
| Loan Term: | 25 Yrs |
| How To Qualify: | 675+ Personal Credit Score $250,000+ Annual Revenue |
| Great Option For: | Borrowers With Good Credit SBA Loans |
| Click “Check Rates” to apply to SmartBiz Apply Now | |
» MORE: SmartBiz SBA Loan Review
Person-to-person or peer-to-peer lending is an online lending option that connects borrowers and lenders.
Pros
Cons
LendingClub is a peer-to-peer lending giant that offers fast-approved loans with reasonable interest rates.
Pros
Cons
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| Loan Amount: | $5,000 – $300,000 |
| APR Range: | 9.8% – 35.7% |
| Time To Fund: | As quick as 2 days |
| Loan Term: | One to five years |
| How To Qualify: | 600+ Personal Credit Score $75,000 Annual Revenue |
| Great Option For: | Good Personal Credit Works With All Entities Including Sole Proprietors |
| Click “Check Rates” to apply to LendingClub Apply Now | |
» MORE: LendingClub Business Loans Review
Upstart is a peer-to-peer lending option that can offer funding for construction business loans. Upstart can be differentiated by its unique approval process that considers factors other than just your credit score.
Pros
Cons
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| APR range | 5.99% – 35.89% |
| Available loan terms | 36 – 60 months |
| Loan amounts | $1,000 – $50,000 |
| Time to fund | One business day |
| Origination fee | 0% – 8% |
| Credit needed | 620+ |
| Income needed | N/A |
| Soft Credit Check? | Yes |
| Best for | New Borrowers, Borrowers With Thin Credit, Fair Credit |
| Click “Check Rates” to apply to Upstart Visit Site | |
Founded in 2005, Prosper was one of the very first peer-to-peer lending marketplaces within the United States.
Pros
Cons
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| APR range: | 6.95%-35.97% |
| Available loan terms: | 36-60 months |
| Loan amounts: | $2,000-$40,000 |
| Time to fund: | One day |
| Origination fee: | 2.41%-5% |
| Credit needed: | 620+ |
| Income needed: | Varies |
| Soft Credit Check? | Yes |
| Best for: | Those with a steady income |
| Click “Check Rates” to apply to Prosper Check Rates | |
Ready to take your business to the next level using a construction business loan? Submit one loan application at primerates.com and get connected to multiple lenders within minutes. Primerates.com allows you to receive more competitive offers, easily compare lenders, and save hours of time. Ready, set, save, and apply today at primerates.com.
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