As the saying goes, it takes money to make money. When a contractor is looking to expand, looking into contractor business loans and financing is a great place to start.

A bank is the best place to look if eligible, as rates will be the lowest. However, most businesses desire quicker access to funding, with less documentation and fewer hassles. There are a few solid options to grow your construction firm.

Short Term Business Loan

This is the quickest and easiest way for a contractor to obtain working capital in a short time frame. Out of all contractor business loans, this is typically the easiest to obtain. With repayment terms from 6–18 months, you will not be entangled in long-term debt. Repayment terms are generally easier to handle, typically with smaller weekly payments to ease the larger monthly payment commitment. For more details on short term funding, check out the benefits here.

Term Loan

For bigger moves, such as taking on a project that can exceed 18 months, a quick repayment structure is not always the answer. For contractors with 2 years in business, positive financials, and at least a 680 FICO score, a term loan may be the best option. Terms typically span 2–5 years, with a monthly payment and lower rates, usually around 9–15% APR, with no prepayment penalty. You can learn more about term loans here.

Contractor Line of Credit

A revolving line of credit is a great asset for contractors who have funding needs arise from time to time. Without the requirement of taking a lump sum, a contractor line of credit provides access to revolving credit without relying on personal credit cards and lowering your FICO score. The main advantage of this type of funding is the cost: it is cheaper than other programs, and you only pay interest for the time you use the funds. You can learn more specifically about lines of credit here.

Invoice Factoring

Invoice factoring is a very cost-effective way to unlock your accounts receivable. In this type of financing, the lender purchases your invoice at a small discount, giving you immediate access to cash without creating debt. This is best suited for B2B contractors with larger invoices, such as those from government contracts.

As you can see, there are plenty of options for contractor business loans outside of a bank or asking friends and family. Always ensure you are working with a company that guides you to the best option and does not push you toward a specific one.