Heavy equipment loans for fleet (excavators, dozers, cranes) up to $5M+. Surety bonds (bid, performance, payment) for public works and large private contracts — not loans, but credit-backed guarantees. Lines of credit for progress-billing cash flow gaps. AR financing or factoring against signed contracts. SBA 7(a) for acquisitions and expansion up to $5M. SBA 504 for owner-occupied yards/shops. Construction has the deepest specialty lender market in U.S. SMB finance. Specialty contractor lenders (Stearns Bank, ENGS, Cat Financial) and specialty surety brokers (Marsh, Aon, NFP, Hub) outperform general lenders for this vertical.
Construction companies have one of the most specialized financing ecosystems in U.S. small business. The cash-flow cycle (bid, mobilize, perform, progress-bill, retainage, close-out) and the bonding requirements on public and large private contracts mean that general-purpose lenders almost never fit. This guide covers the products, the lenders that actually fit, and how to stack financing efficiently. For broader context see equipment financing and SBA loans.
Financing Products by Need
| Need | Product | Range |
|---|---|---|
| Heavy equipment fleet | Specialty equipment loan | $50K-$5M+ |
| Bid/performance/payment bonds | Surety program | $100K-$50M+ aggregate |
| Progress-billing cash flow | Line of credit | $100K-$5M |
| Contract receivables | AR financing or factoring | $100K-$10M |
| Company acquisition or expansion | SBA 7(a) | $200K-$5M |
| Owner-occupied yard/shop | SBA 504 or conventional CRE | $500K-$10M+ |
| Mobilization on big jobs | Mobilization loan / contract financing | $50K-$2M |
Surety Bonding
Surety bonds — bid bonds, performance bonds, and payment bonds — are required on most public works and large private contracts. They are not loans; they are guarantees by an insurance company (the surety) that the contractor will perform per the contract. The surety underwrites the contractor's:
- Financial strength (working capital, net worth, leverage)
- Work-in-progress (current backlog, percent-complete, billing/cost variance)
- Management depth and continuity
- Track record (completed projects without claims)
Sureties issue contractors a single-job limit (max bond on any one project) and an aggregate program limit (max total outstanding bonds). Growing both is a long-term effort built on audited financials, consistent profitability, and clean claims history.
Specialty surety brokers (Marsh, Aon, NFP, Hub International) place programs with specialty surety underwriters (Travelers, Liberty Mutual, Zurich, CNA Surety, Old Republic, Hudson). General insurance brokers without contractor specialty rarely access the best programs.
Heavy Equipment
Heavy construction equipment (excavators, dozers, loaders, cranes, lifts) is one of the most-financed asset classes in U.S. SMB. Specialty lenders include OEM captives (Caterpillar Financial, Komatsu Financial, John Deere Financial, Volvo Financial Services, Hitachi Capital) and independents (Stearns Bank, ENGS Commercial Finance, Wells Fargo Equipment Finance, BMO Equipment Finance).
Typical structure: $50K-$5M+ ticket, 5-7 year terms, 7-12% APR, 0-20% down, UCC-1 lien on the equipment. Used equipment routinely finances at 5-10 years on top-tier brands. See heavy equipment financing for the full deep-dive.
Progress Billing and Cash Flow
Construction has the worst working capital cycle in U.S. SMB: contractor pays material/labor up front, bills monthly progress, owner pays 30-60 days later, and 5-10% retainage hangs out until close-out (often 6-12 months). Working capital lines and AR financing exist specifically for this cycle.
Bank construction lines: 1-2x average monthly billings, secured by AR + retention + sometimes equipment. Pricing prime + 1.5-4% (currently 9-12%). Construction Financial Management Association (CFMA) member banks (Comerica, BMO Harris, Regions, BBVA) understand WIP schedules and progress-billing better than general banks.
Specialty contractor-AR lenders (Bibby Financial, Crestmark Vendor Finance, certain factoring companies) factor signed contracts and progress payments at 1-3% per month. Useful as a complement to a bank line but rarely as a permanent funding source.
Company Acquisition (SBA 7(a))
Buying a construction company uses SBA 7(a). Representative $2.5M general contractor acquisition:
- SBA 7(a): $2.0M (80% of purchase). 10-year amort, 10.75% APR. Monthly P&I ~$27,400.
- Seller note: $375K (15%) on full standby for 24 months, then 5-year amort at 6%.
- Buyer equity: $125K (5%) cash + standby seller note covers SBA equity requirement.
The lender will require WIP transfer review, surety-program transferability assessment, key-employee retention plan, and equipment appraisal. Surety transferability is the slowest gating item — budget 60-90 days for the surety to underwrite the new ownership.
Specialty Construction Lenders & Brokers
Equipment
- Caterpillar Financial Services, Komatsu Financial, John Deere Financial, Volvo Financial Services, Hitachi Capital (OEM captives)
- Stearns Bank, ENGS Commercial Finance, Wells Fargo Equipment Finance, BMO Equipment Finance (independents)
Surety brokers
- Marsh, Aon, NFP, Hub International (national contractor-surety specialty)
- USI, Brown & Brown (regional, with strong contractor practices)
Working capital and AR
- Comerica, BMO Harris, Regions, BBVA (CFMA-member contractor banks)
- Bibby Financial, Crestmark Vendor Finance, certain factoring shops
SBA
- Live Oak Bank (deep contractor SBA book), Newtek, Huntington National, Wells Fargo SBA
Next Step
Whatever your construction financing need — equipment, bonding, working capital, acquisition — specialty lenders and brokers in this space dramatically outperform general lenders. Get matched with a construction lender.