Financing for construction and trades
Contractors carry equipment costs and wait on progress payments. Financing that matches project timing keeps crews working.
Key points
- Most construction financing is about timing: you pay for crews, materials and equipment before progress payments arrive.
- Holdbacks tie up part of every invoice, often 10%, until a project is complete.
- Equipment with strong resale value is one of the easiest things to finance.
- Lenders want to see your backlog of signed work, not just past revenue.
How financing works in construction and trades
Construction businesses are often profitable on paper and short on cash in practice. You buy materials, pay your crews every two weeks and rent or buy equipment, while clients pay on progress draws that can take 30 to 60 days. Holdbacks keep part of each payment back until the job is done, sometimes for months.
The right financing smooths that gap. It lets you take on bigger jobs, bid with confidence and keep equipment working instead of waiting for cash to come in.
Common financing needs
Here’s how businesses in this industry typically match their needs to the right kind of financing.
| What you need | Usually the best fit | Why |
|---|---|---|
| Cover payroll and materials between progress draws | Lines of credit | Draw only what you need while a job is running, then repay when the draw lands |
| Buy or replace heavy equipment | Equipment financing | The machine secures the loan, so approvals are easier and rates are lower |
| Get paid faster on completed work | Invoice factoring | Turns approved invoices into cash without waiting on the general contractor |
| Buy a yard or shop | Commercial real estate | Stop paying rent on the space your trucks and equipment live in |
How NorthMerit can help
Apply once and we’ll connect you with one financing partner who works with businesses like yours. It’s free, and there’s no obligation.
What lenders look at
Lenders look at your backlog of signed contracts, your history of finishing jobs on budget, and how reliably your clients pay. Bonding capacity, if you have it, is a strong signal. They’ll also look at your work-in-progress schedule, which shows how much of each job is billed and how much is left.
Seasonality matters too. Many contractors earn most of their revenue in eight months, so lenders want to see that your financing can carry you through the slower months.
Other things partners commonly ask about: holdbacks and progress billing; heavy equipment with strong resale value; seasonal swings in cash flow.
Covering a big job
A framing contractor wins a $600,000 contract with monthly progress draws and a 10% holdback. A line of credit carries payroll and materials until each draw arrives.
How to prepare
Have your work-in-progress schedule, your two most recent year-end statements and a list of signed contracts ready. If you’re financing equipment, a quote from the dealer is usually all a lender needs to start. Keep your holdback receivables listed separately, so a lender can see what’s coming.
Common questions
Is NorthMerit a lender?
Does it cost anything to apply?
Who will contact me?
Other industries
The right financing, from the right partner.
Apply once. One financing partner who knows businesses like yours. Free, with no obligation.
