Funding for Construction Company

HomeFunding for Construction Company


Valued at approximately 1.6 trillion U.S. dollars in 2021, the construction industry witnessed an annual average growth rate of 3.1% in 2022 and is forecasted to expand at a rate of 3.2% from 2023 to 2026. However, the sector is expected to grow exponentially irrespective of the supply chain issues, like the shortage and rise in the price of building materials, a lack of skilled labor, and increasing land cost of land, which is eventually leading to project delays. In the U.S., the residential construction sector has been witnessing colossal growth since the third quarter of 2020 and immensely aided the country’s economy and the overall construction industry to recover from the COVID-19 crisis. According to the data from the US Census Bureau, the residential sector observed a Q-o-Q increase of 5.5% in Q1 2021.



      Primary Growth-Influencing Factors

      When it comes to the residential construction sector, the considerable growth momentum is the result of limited mortgage rates, steady demand for larger living areas, skimpy housing inventory, and increasing opportunities for home renovations. Multiple survey reports say that the yearly value of residential constructions in the U.S. is expected to exceed USD 205 billion by 2023. Among the primary growth-influencing factors of the construction industry are inflation, changing interest rates of business loans and material costs, and the availability of qualified workers. Besides, the constant advancement of technology is considered to be restructuring the industry by introducing concepts like building information modeling (BIM) collaboration, cloud computing, mobile data, etc., and helping construction companies manage operations more efficiently. Also, technology is used to better on-field operations and make real-time job site information available. Visual job inspections and oversight are made possible by drones. These help contractors conduct site surveys, site inspections, and general site management. As a result, they can manage complex sites more easily and effectively.

      Trends Affecting The Construction Industry

      Technological boom

      1. After the pandemic hit the world, people have become extremely conscious about health, safety, and cleanliness. This has affected the construction site guidelines, which are now more focused on cleanliness and adhering to multiple safety protocols. Today, there is an increasing number of machines, capable of identifying common safety issues. 

      2. Technology-backed wearables like Wi-Fi-connected work boots, that alert others if one has met an accident, and headsets, that can actively reduce noise and keep workers in sync with their surroundings are being widely used in construction sites, these days. 

      3. Today, robots are replacing human workers in certain areas. These are capable of deciphering and translating data findings into actionable insights. Construction robotics and automation not only enhance productivity but also reduce waste, improve safety and often fill the workforce gap. 

      4. 3D printing, these days, has gained considerable popularity. Mostly, the frame and walls of a building are made with 3D printing using materials like concrete, geopolymers, fiber, sand, mud, soil, and straw. However, considering the rapid advancement of technology, plumbing, and electrical fixtures are also expected to soon get integrated into the building through 3D printing.

      5. Today, smart contracts allow better tracking of projects with set rules and deadlines. Also, this system offers enhanced security. 

      6. Construction drones are widely used, these days, for mapping large areas over long distances and producing aerial heat maps and thermal images. The cutting-edge drone software supply real-time data needed to make decisions more aptly. Drones are also used for scaling tall building structures. 

      7. Augmented Reality(AR) primarily enables 3D visualization of upcoming projects and automated measuring of buildings. This makes under-construction properties tangible for the buyers and hence helps the builders sell them more easily.

      8. Building information modeling (BIM) technology enables users to generate computer renderings of buildings using BIM software solutions like Autodesk BIM 360, Trimble Connect, Revit, etc. 

      9. Construction Management Software helps to prepare RFIs, compile data, share files with mobile teams, draw up budgets, store crucial documents, manage payroll and HR, and efficiently monitor inventory.

      Use of innovative living materials

      Though innovative living materials like self-healing concrete, 3D graphene, transparent aluminum, light-generating concrete, invisible solar cells, etc. might increase the costs of the builders, these are expected to turn out to be financially beneficial for users in the long run.

      Rising demand for green buildings

      Though demands are steadily increasing for green constructions that offer sustainable and eco-friendly features, this category is still considered to be niche. Green construction aims to lower a building’s carbon footprint and reduce the use of non-renewable resources. The practice of outfitting rooftops with plants, known as Greenscaping, is gaining immense popularity.

      Why Does A Construction Business Need Financing?

      • To purchase equipment and materials to start a project or continue with the incomplete one. 
      • To expand its facility.
      • To hire, train and maintain employees. 
      • Pay for damage expenses.
      • To bid for a new project and pitch clients. 
      • To fill cash flow gaps caused by weather or any other natural disaster. 
      • To ensure smooth workflow even during long billing cycles. 
      • To carry out impactful marketing and PR(Public Relation) campaigns.
      • To manage payroll.

      Merchant Cash Advances(MCAs) for Construction Businesses


      Merchant Cash Advances are advances on future receivables with a flexible and non-stringent repayment structure and a short term of 4 to 12 months. MCA providers give approvals in hours and disburse funds within 24-48 hours of the approval.


      Application Requirements

      Primarily, the borrower’s personal and company ID proof, business plan, profit-loss, and business account statements of the last 6 months to 1 year. The amount a company can borrow often depends on the state’s medical marijuana and recreational marijuana legalization. However, businesses trading in states where cannabis is illegal might find it hard to get financing.

      Repayment Structure

      An MCA is priced based on a factor rate, which is generally between 1.1 and 1.5, depending on the industry type, average monthly credit card sales, the amount required and the trade history of the company applied for MCA. As repayment of the advance is based on future credit/debit card sales, the repayment amount can go up or down depending on the daily sales. The factor rate, which generally ranges between 1.09 and 1.5, is multiplied by the principal to determine the total payable amount.

      Funding for Construction Company

      As we mentioned before, the application process is simple.
      We will break it down for you step-by-step.

      Step 1
      Funding for Construction Company

      The borrower needs to provide the lenders with social security numbers as well as signatures to get the credit pull authorized.

      Step 2
      Funding for Construction Company

      MCA lenders ask for sales volume by card type, return frequency, processing fees, chargeback history, monthly costs, batch frequency, average transaction size, and processor-imposed reserves. The borrower needs to submit all pages of each bank statement, besides the above-mentioned documents.

      Step 3
      Funding for Construction Company

      After submitting the primary documents, the borrower needs to provide certain additional documents like Articles of Incorporation, K-1 of recent business tax return, business property lease, driver’s license or any other photo ID, voided cheques, recent business tax return, and financial statements.

      Step 4
      Funding for Construction Company

      The underwriters then get in touch with the borrower’s vendors, business property landlord, if any, or the bank holding the mortgage on the business property, to understand if the business has the permission of continuing operating in the same location at least throughout the loan repayment time frame.

      Step 5
      Funding for Construction Company

      The lenders contact the borrowers over calls to review the business information, discuss the use of the advance and assess the borrowers’ willingness to follow through with the contract terms.
      Some MCA providers hire inspection firms to perform a site inspection by visiting the borrowers’ location to verify the address, examine inventory and take note of the number of credit card machines available on site.

      Step 6
      Funding for Construction Company

      Finally, the repayment method is decided on.
      After getting approval on the application, the borrower gets the funds transferred to his/her business account, within 24 to 48 hours.

      Primary Benefits Of MCA


      MCAs come with simple application processes and offer quick approvals and fund disbursement.


      MCAs come with flexible repayment terms.


      MCAs Do Not restrict the usage of the funds.

      do not ask for collatral

      MCAs do not ask for collateral.


      MCA application requires minimal paperwork.

      credit score

      MCA providers are quite lenient in terms of credit
      score requirements.


      In the case of MCAs, the chances of rejection are
      comparatively low.

      Other Popular Financing Options for Construction Business

      Invoice Factoring

      Technically, it is not a loan, but a financing option, in the case of which, construction company owners can sell unpaid invoices at a discounted rate to invoice factoring companies. They get a percentage of the invoice paid upfront. The invoice factoring companies then collect payments directly from the customers and pay the business owners the remaining invoice amount, after deducting a fee. Invoice factoring companies primarily consider the invoices’ value and the customers’ payment history of the businesses to buy their unpaid invoices. As the invoice often acts as collateral, application requirements of invoice factoring are generally less stringent compared to other alternative financing options. This is quite a popular financing option for construction businesses as these often face cash flow issues due to long billing cycles.

      More info on Merchant Cash Advances (MCA) & Construction Company Funding.