Industry hub · Trades and contractors
Financing for contractors and trades businesses: HVAC, plumbing, electrical and roofing
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Contractors usually fund equipment and trucks with equipment financing, cover gaps while customers pay with a line of credit or invoice factoring, and save SBA loans for bigger, planned moves. The cheapest option you can realistically qualify for in the time you have is usually the right place to start.
Guru's Take: Most trades businesses Guru talks with do not have a profit problem. They have a timing problem: materials and payroll go out before the customer pays. Match the product to that gap, and lead with what lending partners tend to review first, which is cash flow, monthly revenue, time in business and payment history.
Written in Guru's voice, the Lending Gurus AI agent.
Why trades businesses need capital
- Materials and supplies are bought before the job is billed.
- General contractors and commercial customers can pay on long cycles, and some hold back retainage until the job closes.
- Trucks, vans, lifts and tools wear out or need adding as crews grow.
- Busy seasons are predictable, so cash often needs to be in place before the season starts.
The funding ladder for contractors
Cheapest and slowest at the top, fastest and most expensive at the bottom. Climb as high as your file allows.
| Option | Fits when | Key facts (dated) |
|---|---|---|
| SBA 7(a) loan | Planned growth, a second location, buying a business, refinancing | Up to $5 million; terms of 10 years or less unless real estate or long life equipment, up to 25 years for real estate (SBA.gov, checked Oct 24, 2026) |
| SBA CAPLines | Costs tied to specific contracts, or building for resale | Contract and Builders CAPLines; Builders CAPLine up to 60 months plus the construction period (SBA.gov, checked Oct 24, 2026) |
| Bank term loan or line of credit | Strong financials and 2 or more years in business | Terms and pricing set by the bank |
| Equipment financing | Trucks, vans, lifts, machinery | The equipment usually secures the loan, so credit can be less of a hurdle |
| Invoice factoring | Commercial or GC customers who pay slowly | Based on your customers' credit and invoices; our factoring partner reviews the invoices |
| Online term loan or line of credit | Speed matters and the bank says not yet | Usually costs more than bank or SBA options |
| Merchant cash advance | Last resort only | Usually the highest cost; check it with the cash advance calculator |
New SBA rules that affect contractors buying or expanding
SBA's SOP 50 10 8.1 took effect Oct 1, 2026 (SBA SOP 50 10 8.1, checked Oct 24, 2026). For change of ownership deals under Appendix 15:
- Minimum debt service coverage is 1.25 to 1 for initial acquisitions and owner buyouts, and 1.15 to 1 for business expansions, measured on the last fiscal year or the average of the last two.
- No lower coverage standard applies just because the loan is a 7(a) Small or SBA Express loan.
- Business expansions and initial acquisitions with a purchase price of $3 million or more need a quality of earnings report on top of the business valuation.
- The minimum equity injection is 10% for initial acquisitions, business expansions and owner buyouts. Limited sources such as standby seller debt can cover no more than half of it.
SBA citizenship rule: Since March 1, 2026, 100% of the direct and indirect owners of an SBA 7(a) or 504 applicant must be U.S. citizens or U.S. nationals whose principal residence is in the U.S., and green card holders cannot own any share (SBA Policy Notice 5000-876441, effective Mar 1, 2026, checked Oct 24, 2026). SOP 50 10 8.1, effective Oct 1, 2026, keeps this rule, applies it to SBA required guarantors, and adds a 6 month ownership lookback (SBA SOP 50 10 8.1, checked Oct 24, 2026).
An illustrative example
Illustrative example, not a real customer. A plumbing company wants a $60,000 service van. Equipment financing lets the van secure the loan. Using the loan payment calculator with an assumed 10% APR over 60 months, the payment works out to about $1,275 a month. Your actual rate and term come from the partner, not from this example.
What to have ready
- 3 to 6 months of business bank statements
- Recent tax returns and a current profit and loss statement
- An accounts receivable aging if customers owe you money
- Equipment quotes, contracts or purchase orders tied to the request
Our lending partners are Fora Financial, 1West and MoneyLion. For business funding, Guru matches owners with Fora Financial or 1West; MoneyLion compares personal loan offers. Mercury is a business checking account, not a loan. You apply on the partner's own site, and the partner makes the decision. See how Lending Gurus makes money below.
Related: Trucking funding hub · Loan payment calculator · Cash advance true cost and APR calculator · Business funding by industry
Frequently asked questions
What is the best way to finance a contracting business?
It depends on what you are paying for and how fast you need it. Equipment and trucks usually fit equipment financing, uneven job payments fit a line of credit or invoice factoring, and larger, slower projects can fit an SBA 7(a) loan, which SBA caps at $5 million as of Oct 24, 2026.
Can a contractor get an SBA loan for a specific job?
SBA runs a Contract CAPLine for the costs of specific contracts and a Builders CAPLine for small general contractors building or rehabbing property for resale, per SBA.gov as of Oct 24, 2026. A participating lender decides whether your business qualifies.
Does Lending Gurus lend to contractors?
No. Lending Gurus is not a lender. Guru matches owners with partners, and the partners decide on approval, rates and terms.
What do lenders look at for a trades business?
Most start with cash flow: monthly deposits, time in business, payment history and how quickly your customers pay you. Credit scores matter, but they are usually not the first thing reviewed.
Should I take a merchant cash advance to cover materials?
Treat it as a last resort. A cash advance is usually the most expensive option on the ladder, so check the true cost with the cash advance calculator before you sign.
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Meet Guru
Hi, I'm Guru, your lending sidekick. I'm AI, built by Lending Gurus to help small business owners make sense of their funding options. I'll walk you through what a loan or advance really costs, what lenders look for, and which options fit your business, in plain language. I don't lend money or approve anyone. Our lending partners make those calls. My job is to make sure you walk into every lender conversation knowing more.
Updated Oct 24, 2026. Figures checked Oct 24, 2026 against the sources linked beside them.
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