Dr. Paul Borosky, DBA, MBA
Construction Guide · Financing
What Lenders Want to See From a Construction Company
A bank can read a credit score in a minute. What it wants from a contractor is harder to see: your jobs, your backlog, and how fast you collect. This page shows what to bring, which SBA loan fits which need, and what a plan has to prove. Part of the construction business guide.
Need help now? Call or text (321) 948-9588. Dr. Paul answers personally.
Last Updated: 10/27/2026 · Written by Dr. Paul Borosky, DBA, MBA
The Short Answer
How Do Lenders Judge a Contractor?
Textbook Definition
Underwriting is the process by which a lender judges a borrower’s ability to repay, using financial statements, cash flow, collateral, credit, and the strength of management.
In Plain English
A lender wants to know one thing: will you pay it back? For a contractor, the answer lives in your jobs, your backlog, and how fast your customers pay.
Why It Matters
Why Is a Contractor Harder to Lend To?
Contractors’ income comes in lumps, jobs end, and cash lags payroll. A lender cannot see that from a credit score. It wants to see how your jobs are performing now and what is coming next. That is why a clear package of reports beats a long story.
The loan also has to fit the need. The SBA’s 7(a) loan has a maximum of $5 million. The 504 loan funds fixed assets, such as buildings and equipment, with a limit that SBA pages list as about $5 million. SBA says to check with your lender for the exact figure. The 504 cannot be used for working capital or inventory, so a contractor’s cash flow needs usually fall to a 7(a) loan or a bank line. Since July 4, 2026, borrowers can combine 7(a) and 504 loans for up to $10 million total. Sources: SBA 7(a); SBA 504; SBA news release, July 2026.
The list of reports below is a practitioner view of what lenders and sureties ask for, not an SBA checklist. Use it to prepare, then ask your lender for theirs.
Signs you are not ready to borrow:
- Your books are done once a year at tax time.
- You have no work-in-progress schedule.
- You do not know how old your receivables are.
- Business and personal money are mixed. See how to separate them.
- You have no written plan or projections.
- You want a loan to cover a hole you cannot explain.
The Fix
How to Prepare for a Lender in 6 Steps
Start three to six months before you need the money. The preparation also makes you a better manager.
Clean up the books.
Keep business and personal money apart, record every job’s income and costs, and reconcile accounts monthly. Start with bookkeeping and bank reconciliation.
Build the package.
Bring income statements and balance sheets for the last two or three years plus the year to date, tax returns, a work-in-progress schedule, aged receivables and payables, a backlog list, job cost reports, a debt schedule, and proof of license and insurance. Our guides to the income statement and balance sheet explain the basics.
Pick the right loan for the need.
A 7(a) loan can cover working capital and many general needs. A 504 loan fits real estate and equipment. A bank line of credit fits the cash gap between payroll and payment. Ask your lender which fits.
Explain your numbers before they ask.
If margin dipped, say why. If retainage is large, show the schedule. If one customer is most of your work, show the plan to widen it. See customer concentration.
Show how you control risk.
Show your job-size limit, change order process, and job costing routine. Lenders and sureties like contractors who catch problems early. See job size and change orders.
Write the plan.
A written plan with a 12-month forecast and multi-year projections pulls everything into one story. See how to write a construction company business plan for the section-by-section guide, or let Dr. Paul write it for you.
Dr. Paul’s Insight
A lender is not looking for a perfect contractor. It is looking for a contractor who knows where the company stands today and has a plan for the next 12 months. The owner who says “here is my work in progress, here is what is owed to me, and here is what I will do about the slow weeks” gets a better hearing than one with a higher revenue and no answers.
The Package
Lender Package Checklist (Practitioner View)
This list is built from practice, not from an SBA or bank rule. Edit it for your lender.
- Income statements and balance sheets for two or three years, plus year to date.
- Business and personal tax returns for the same years.
- Work-in-progress schedule: for each open job, the contract amount, cost to date, estimated cost to complete, percent complete, billed to date, and over or under billing.
- Aged receivables and payables showing who owes you and who you owe.
- Backlog list of signed work, with customers and expected finish dates.
- Job cost reports that compare estimate to actual on completed jobs.
- Debt schedule with lenders, balances, payments, and rates.
- Proof of license, insurance, and bonding if you have it.
- Business plan with a 12-month forecast and multi-year projections.
| Loan type | Best for | Limit or note |
|---|---|---|
| SBA 7(a) | Working capital and general business needs | Up to $5 million |
| SBA 504 | Buildings, land, and long-lived equipment | About $5 million per SBA pages; excludes working capital and inventory. Check with your lender. |
| 7(a) plus 504 combined | A project that needs both | Up to $10 million total, effective July 4, 2026 |
| Bank line of credit | The gap between payroll and payment | Set by your bank. Ask while your numbers look good. |
SBA rates and fees are not listed here because we could not confirm current figures. Ask your lender or visit sba.gov.
We found no lending survey or SBA document that lists the reports above for contractors, and no verified 504 maximum that matches across SBA pages. Treat the package as practitioner guidance and confirm limits with your lender.
Work With Dr. Paul
Three Ways Dr. Paul Helps Construction Owners
Read the page and fix it yourself, or get help. Here is where each option fits.
Business Consulting
For owners stuck in the cash gap, bidding blind, or running every job themselves. Dr. Paul works with you on bids, cash flow, job costing, and getting you off the jobsite.
See consulting and prices →Business Plan Writing
For contractors applying for a loan, a line of credit, a bigger bond, or an expansion. Dr. Paul writes the plan and the financial projections for you.
Construction business plan writer →Business Plan Template
For owners who want to build it themselves. A construction-specific Word plan plus an Excel model with editable bids, job costing, labor, and equipment.
Get the construction template →FAQ
Lender Questions
What do lenders look for in a construction company?
What is a work-in-progress schedule?
What is the maximum SBA 7(a) loan?
Can I use an SBA 504 loan for working capital?
Do I need a business plan to get a construction loan?
Start with the package list. Call when you want the plan and projections written.
Keep Going
Related Construction Guides
Financing connects to bonding, cash, customer risk, competition, and equipment.
How to Get Bonded
The three bond types, the three Cs, costs, and what to have ready.
Why Profitable Contractors Run Out of Cash
The 90-day cash calendar and seven fixes for the gap between payroll and payment.
Customer Concentration
Measure your exposure, set a cap, and widen your base in 90 days.
Competing With Bigger Contractors
The too-low test, what to sell besides price, and how to pick a lane.
Buy, Lease, or Rent
A break-even test, a utilization check, and the 2026 tax rules.
How to Write a Construction Company Business Plan
The section-by-section guide to the plan itself.
Sources
Where These Numbers and Rules Come From
Every figure on this page comes from a source below. Dollar examples labeled as examples are illustrations, not projections for your business.
- SBA: 7(a) Loans Modified July 27, 2026.
- SBA: 504 Loans Page text and metadata list different maximums; confirm with a lender.
- SBA News Release 26-69: Small Businesses Now Eligible for $10 Million SBA Financing (July 7, 2026)
- Grassi and Co. in Construction Executive: Working Capital, It’s Not Just Math (Nov. 11, 2020) Defines working capital.
Dr. Paul Borosky, DBA, MBA
Business Consultant, Author & Educator | 14+ Years | 1,000+ Clients Served
Dr. Paul Borosky, DBA, MBA is a business consultant, author, and educator, and the founder of Quality Business Plan. He helps small business owners across the United States and Canada, including contractors and specialty trades, with business planning, financial modeling, fractional CFO services, and the everyday problems of businesses that depend too much on their owners. He is the creator of Dr. Paul’s Organize-Plan-Grow™ Strategy, author of numerous published books on Amazon including Top 5 Reasons Construction Companies Fail, and publisher of over 1,000 business-focused videos on YouTube.
This page is for general educational purposes only. It is not legal, financial, tax, accounting, insurance, or other professional advice. Construction laws, licensing rules, and tax rules vary by state and change over time. Dollar examples are illustrations, not projections for your business. For decisions about your own business, consult a qualified professional.