What documents does a construction company need for a line of credit?

Non-bank lines: 3–6 months of business bank statements, owner ID, voided business check, basic business info (EIN, time in business). For larger lines or bank-tier approval: last 2 years of business tax returns, YTD profit & loss, balance sheet, aging receivables schedule by customer, and current debt schedule. Contractor license and proof of insurance are often requested. A project backlog summary (signed contracts vs. bid/spec work) can strengthen a bank-tier application significantly.

Can a construction company get a line of credit in the first year of business?

It's difficult. Most non-bank lines require 12+ months in business; bank-tier lines require 24+ months and profitable financials. With under 12 months TIB, the most accessible working capital options are revenue-based financing (MCA) for fast bridge capital and equipment financing for specific asset purchases. If the business has 6–12 months of strong deposit history, some non-bank lenders will consider a small line ($10K–$50K) — the deposit consistency and absence of NSFs carry a lot of weight.

How is a construction line of credit different from a project loan?

A construction line of credit is a revolving business facility that's not tied to a specific project — you draw from it for any business purpose, repay, and redraw. A project-based construction loan (common in real estate development) is a fixed-term facility tied to a specific construction project, with disbursements tied to construction milestones and a conversion to permanent financing at project completion. For most general contractors and trades, the revolving business line of credit is the right product — the project-based construction loan is for developers and builders, not trade contractors.

Does retainage affect a contractor's ability to get a line of credit?

Retainage outstanding doesn't disqualify a contractor — lenders that specialize in construction understand it. In fact, a clean aging receivables schedule showing retainage owed by creditworthy GCs or project owners can be a positive underwriting signal (it demonstrates completed billable work). What lenders flag is retainage that's overdue past 90–120 days, especially from a single concentrated customer, which signals a slow-pay or dispute situation.

What's a typical interest rate on a line of credit for a construction company?

Non-bank / broker-network lines typically run 15–45% APR depending on credit, time in business, and deposit strength. Bank-tier lines run 7–18% APR (variable, typically Prime + spread). The critical difference: you only pay interest on what you actually draw. A $100K line at 30% APR with $30K drawn for 45 days costs roughly $1,110 — not $30,000 annually. Run the math on your expected draw pattern, not the full line limit.

Business Line of Credit for Construction Companies — 2026

Construction businesses face a specific cash-flow problem that a line of credit is structurally designed to solve: the gap between when costs hit (mobilization deposits, early-phase subcontractor payments, materials orders) and when revenue arrives (draw invoices that pay 30–90 days after submission). A general contractor landing a $600,000 commercial build-out may need $40,000–$80,000 in working capital before the first draw is approved — and that capital need repeats on every new project. A term loan is wrong for this: you'd be paying interest on a fixed lump sum between projects when you don't need it. A line of credit is right: draw at project start, repay when the GC's customer pays, and the credit resets for the next job.