Business Loans & Financing For Construction Companies
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 education decision.
What is a construction business loan?
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.
How do you finance a construction project?
Financing a construction project can be simplified using primerates.com. Simply visit primerates.com and fill out your application. Within minutes you will be connected to multiple lenders that can potentially provide the money you need!
Do you need a downpayment for a construction 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.
What are the requirements for a construction business loan?
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.
Is a construction business loan a good idea?
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
- Allows you to buy your own equipment
- Complete more projects, earn more revenues
- Affordable payment plans
- Expand your company faster
Cons
- Taking on debt
- Interest and fees
Options for Financing Your Construction Business
SBA Loans
Small Business Administration (SBA) is a government resource than can provide construction business loans.
Pros
- Very accessible for securing capital
- Helps business without collateral
- Works with startups
- Lower monthly payments
- Longer loan maturities
- Typically structured without balloon payments
- Lower down payments
Cons
- Higher interest rates
- More paperwork
- More time required for documentation and approval process
- Longer funding time
- Loans often secured with any property owned by business owner
SmartBiz
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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 | |
» MORE: SmartBiz SBA Loan Review
Revenue-Based Financing
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
- No company equity required
- Significant investor funding
- Payments based on percentage of monthly revenue
- Receive money upfront
- Faster approval time
Cons
- Must have business portfolio prepared
- Minimum requirements may be difficult to meet
- Lack of regulation
- Some lenders can impose high interest rate
FundBox
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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 | |
» MORE: FundBox Business Loan Review
Line of Credit
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
- More permanent funding solution
- Money can be drawn at anytime up to agreed upon limit
- Ideal for balancing cash flow
- Only pay interest on the amount you use
- Improves business adaptability
- Builds business credit
Cons
- Pay-as-you-go format means fees can add up quickly
- Difficult to qualify for
- Low borrowing limits compared to other options
- Risk for misuse of loan
StreetShares
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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 | |
» MORE: StreetShares Business Loan Review
Commercial Loans
New business endeavors are commonly funded by commercial loans. They can be a good option for small construction business that need funding.
Pros
- Lower interest rates
- Flexible options
- Long-term loans often between 3 – 10 years
- Extended payment plans
- Large sums of money
- Unsecured, no collateral required in most cases
- You retain ownership of company
Cons
- Challenging to qualify for funding
- Excellent business credit typically required
- Personal financial history required
- Less autonomy than other options
Funding Circle
Funding Circle is another peer-to-peer lending option that highlights credible investors and over $7 billion dollars invested.
Pros
- Quick online application
- Secured loans
- Transparent terms
- Backed by more credible investors
- Use loan proceeds for almost any business purpose
Cons
- Lien on business assets required
- Personal guarantee from owners required
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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 | |
» MORE: Funding Circle Business Loan Review
SmartBiz
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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 | |
» MORE: SmartBiz SBA Loan Review
Peer-to-Peer Lending
Person-to-person or peer-to-peer lending is an online lending option that connects borrowers and lenders.
Pros
- Generous loan amounts
- Easy and quick online application process
- Fixed interest rates and payments
- No prepayment penalty
- Unsecured loans, no collateral required
Cons
- More ideal for good credit borrowers
- Bad credit borrowers can receive high interest rates
- No government insurance or protection
- Some jurisdictions don’t allow p2p lending
LendingClub
LendingClub is a peer-to-peer lending giant that offers fast-approved loans with reasonable interest rates.
Pros
- Clear terms outlined prior to signing up for a loan
- Well established pattern of service
- 36- or 60-month terms
- Information easily accessible on their website
- Receive pre-approved offer in minutes
- Easily apply online
- Loans usually funded in less than 10 days
- Competitive interest rates between 6 to 30 percent
- Nationwide availability for most types of credit
Cons
- Application process may require copies of tax documentation
- Passes accounts into collection quickly after missed payment
- Unsecured loans only
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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 | |
» MORE: LendingClub Business Loans Review
Upstart
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
- Good chance of approval
- Quick funding
- Competitive interest rates between 9.57% – 29.99%
- Generous loan amounts between $1,000 – $50,000
Cons
- Some states have minimum loan amount
- Fees can be costly
- Prepayment penalty can apply
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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 | |
Prosper
Founded in 2005, Prosper was one of the very first peer-to-peer lending marketplaces within the United States.
Pros
- Fixed terms (2-year and 5-year option)
- No early payment penalties
- No minimum income requirement
- No hidden fees
- Easy application process
Cons
- Minimum credit score of 640
- Payment schedule cannot be adjusted
- Maximum loan amount $35,000
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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 | |
Conclusion
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.
