Construction Line of Credit
Access capital on an as-needed basis and only pay interest on the amount drawn.
Qualify for a Construction Line of Credit
1+ Years in Business
$500,000 in Annual Revenue
A construction line of credit is designed to help businesses in the construction industry access flexible funding on an as-needed basis. It works similarly to a credit card, where businesses are approved for a predetermined credit limit and can withdraw funds as needed.
Also known as a contractor line of credit, this funding solution can be used to efficiently manage your cash flow, and ensure smooth operations and timely project completion. In this guide, we’re going over everything to know about a construction line of credit, as well as how to qualify for the best financing deal for your business.
How Construction Lines of Credit Work
With a line of credit for construction companies, lenders pre-approve a certain amount of funds, which your business will then be qualified to borrow. You’ll be able to draw from this credit line as needed, up until the approved credit limit.
Construction companies often have to grapple with multiple ongoing projects and expenses simultaneously. Managing your business’s cash flow can become challenging, especially when there are delays in project payments or sudden expenses. By acting as an additional reservoir of funds, a construction business line of credit can help alleviate some of the most pressing financial bottlenecks.
Businesses can use a construction line of credit to purchase materials, pay subcontractors, cover various project-related costs, and more. This type of financing can also be put towards growth opportunities, such as hiring new employees or investing in marketing.
Borrowers only need to pay interest on the funds they withdraw and there are no requirements to withdraw the entire credit line. Sometimes, a line of credit for a construction company can also be structured as a revolving line. This way, you can reaccess funds as you pay down your existing balance.
In short, having a readily available credit line can be a game-changer for construction businesses. You’ll be in a position to act fast in real-time, with the flexibility to borrow as much as you need when you need it.
Pros and Cons of a Construction Line of Credit
To get a thorough understanding of whether taking out a new construction business line of credit is the right decision for your business, you’ll want to weigh the pros and cons.
| Pros | Cons |
|
|
Construction Line of Credit Funding Amounts, Terms, and Rates
Generally, maintaining strong credit and a low debt to income ratio will work in your favor when it comes to securing the best terms and rates. It’s helpful to compare different contractor line of credit offers, as doing so may help you identify the best fit.
Line Amount
$100K to $10MM
Repayment
Revolving
Interest Rates
9% to 99%
How Can You Use a Construction Line of Credit?
As long as you plan on using your construction business line of credit for a legitimate business expense, there’s really no limit when it comes to purposes. Take a look at some of the most common ways construction companies and contractors will use a credit line.
- Cover Working Capital Needs: Cover day-to-day operating expenses – whether it’s payroll, material purchases, subcontractor payments, or other ongoing costs.
- Take on Growth Opportunities: A credit line can give your construction business the resources it needs to invest in marketing, expand operations, and even outpace competitors.
- Purchase Equipment: You can use a construction line of credit to purchase or repair necessary equipment and tools that ensure you have what you need to get the job done.
- Finance Project Expenses: Funding can help move along specific construction projects, allowing your business to take on larger jobs, secure materials, and add to its workforce.
- Manage Cash Flow: Even if clients fall behind on payments or jobs dry up because of seasonal disruptions, financing can help ensure your business has access to much-needed resources.
- Improve Your Credit History: Getting approved for a new construction line of credit and staying on top of your payments can be a great way to increase your credit score and prepare your business to access more financing opportunities in the future.
Construction Line of Credit v.s Construction Loan
Construction lines of credit are different from other business loans because of the way they are structured, specifically when it comes to terms and interest rates. Take a look at the most noticeable differences between the two.
| Construction Line of Credit | Construction Loan |
|
|
Why Choose National Business Capital for Construction Line of Credit Options?
National Business Capital works differently from other types of online lenders or even banks.
Instead of working with one lender and obtaining a limited view of your financing offers, our platform delivers a more complete approach by matching you automatically with offers from a network of different B2B lenders.
By reviewing numerous personalized solutions side by side, you’re in the best position to pick the credit line with the most favorable terms and rates. Plus, our Business Finance Advisors are at your side every step of the process. They work with you to answer questions and help you identify the best credit line opportunity for your business.
The entire funding process is also notably speedy. In some cases, businesses have been able to access funding in as little as 24 hours after completing the application. Ready to see what type of construction line of credit your business could qualify?
How to Apply for a Construction Line of Credit With National Business Capital
Applying for a construction business line of credit doesn’t have to be confusing. The process can be quite straightforward and speedy, especially if you apply with a B2B financing marketplace like National Business Capital.
-
1.Apply Securely Within Minutes
Move through our streamlined application within minutes and upload your business documents with zero risk.
Apply Now -
2.Review Your Offers
Compare your offers with expert advice from our team and select the best one for your specific circumstances.
-
3.Receive Your Money
Seize an immediate opportunity to grow your business or tackle a new challenge with confidence.
Frequently Asked Questions
How is the credit limit determined for a construction line of credit?
The credit limit you’ll qualify for will depend on factors like your business’s credit score, annual revenue, and whether or not you’re offering up collateral to back the credit line. Generally, the highest credit limits, especially those up to $1 million, require collateral.
How quickly can I access funds from the construction line of credit once approved?
Once your construction line of credit has been approved, you should have instant access to funding. Ease of access is one of the many benefits associated with this funding solution.
Are there any additional services or benefits provided along with the construction line of credit?
One of the benefits of obtaining a construction line of credit through National Business Capital is the type of relationship management and customer service our business offers. When you get funding, you’ll have a dedicated business financing expert at your side to guide your business through the application process and beyond. Plus, you can stay up to date on small business resources and helpful guides through our blog.
Complete Guide to Business Lines of Credit
Accelerate Your Success
Seize the opportunity to grow your business and gain access to the capital you need.