Contractor financing: options, costs and how to qualify
Contractors usually cover materials and payroll between draws with a line of credit or invoice factoring, finance machines with equipment financing, and grow with term or SBA loans.
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Contractors pay for labor and materials before the customer pays for the work. Progress payments, retainage and slow-paying general contractors stretch that gap. The best funding bridges it without locking you into a daily debit you cannot meet between draws.
A worked example for contractors
Materials before the first draw: $40,000 over 6 months
Merchant cash advance at a 1.35 factor rate$14,000 in cost
Bank loan at 10.98% APR, for owners who qualify$1,291 in cost
Example numbers, not an offer. The loan assumes equal monthly payments. Rates you are offered depend on your business. Price your own offers
What you need the money for, and what fits
- Materials before the next drawDraw for the job, repay when the progress payment lands.Best fit: Line of credit
- Slow-paying invoicesGet cash for invoices your customers owe, before they pay.Best fit: Invoice factoring
- Excavator, truck or toolsThe equipment secures the financing.Best fit: Equipment financing
- Taking on bigger jobsMore working capital on a set schedule. SBA 7(a) loans go up to $5 million.Best fit: SBA loan
- A one-time project costA lump sum with a fixed payment you can price into the bid.Best fit: Term loan
- Starting smallSBA microloans go up to $50,000 through nonprofit lenders.Best fit: SBA microloan
Your card processing costs, too
Large invoices paid by card carry large fees. On a $20,000 job, every 0.5% of fees is $100. Know your effective rate before you quote, and see our statement guide.
Passing the fee to customers is regulated. Visa allows surcharges on credit cards only. Connecticut, Massachusetts and Maine ban them, and New Jersey caps them at your actual cost to process the card. See the surcharge law table.
What to watch for
Daily debits against lumpy income. Draw-based income and a fixed daily debit do not mix well. If you take a cash advance, check how reconciliation works when a draw is late.
Stacking between jobs. A second advance to cover the first one's debit adds cost and a second debit. Read MCA stacking.
Four steps to funding
- 1
Answer a few questions
What you need, how much and how soon. Your industry is already filled in. No contact details to see options.
- 2
See your best-fit options
Two to four products that match, with typical cost ranges in dollars.
- 3
Get offers, if you want
Your request goes only to our own funding service, never to a call list.
- 4
Read the agreement, then decide
The funder is named in your agreement. Sign only if the numbers work.
Frequently asked questions
Sources
- SBA, 7(a) loans (maximum $5 million), accessed Oct 20, 2026
- SBA, 504 loans (maximum $5.5 million), accessed Oct 20, 2026
- SBA, Microloans (up to $50,000), accessed Oct 20, 2026
- 12 CFR 235.3, Regulation II debit interchange cap (eCFR), accessed Oct 20, 2026
- Visa, Surcharging credit cards: Q&A for merchants, accessed Oct 20, 2026
- Connecticut General Statutes 42-133ff (Chapter 739), accessed Oct 20, 2026
- Massachusetts General Laws c.140D, s.28A, accessed Oct 20, 2026
- Maine Revised Statutes, Title 9-A, 8-509, accessed Oct 20, 2026
- New Jersey P.L.2023, c.146, credit card surcharges, accessed Oct 20, 2026