In This Guide
Table of Contents
Why We Built This
Why Contractors Need a Different Playbook
Contractors don't fit the generic small business mold. Your revenue is lumpy. Your receivables are stretched 30, 60, sometimes 90 days. Your equipment is expensive. Your payroll runs whether or not clients have paid. And your biggest growth opportunities — bigger jobs, bigger bonds, newer equipment — all require capital BEFORE the work starts, not after.
Most lenders don't understand this. They look at your tax return, see inconsistent quarterly revenue, and assume you are a risky borrower. The truth is you're a seasonal, project-based business whose cash flow looks completely normal to anyone who actually understands construction.
This guide covers the funding products, strategies, and tax moves that work specifically for contractors — written by people who have funded hundreds of construction businesses and know what underwriters actually weight for this industry.
“Contractors are among the most mis-funded businesses in the country. The right product for a restaurant is almost never the right product for a GC. If your funding advisor can't tell you the difference between a working capital loan and an equipment loan for your specific job pipeline, you're talking to the wrong person.”
— Bobby Friel, Basecamp Funding - Founder
Real Scenario
Case Study: The Colorado GC Who Scaled with Stacking
A Denver general contractor had been bidding residential jobs for 8 years. He wanted to move into commercial but couldn't bond jobs above $500K without more working capital and heavier equipment.
His bank offered a $200K working capital line. That alone wouldn't move the needle.
Instead of stopping there, he worked through a marketplace that structured a capital stack: $200K working capital line for payroll and materials gaps, $450K equipment financing for a used excavator and a skid steer, and an invoice factoring facility to accelerate cash from his existing commercial receivables.
Six months later he bonded his first $2.1M commercial tenant improvement. The stack let him grow into jobs that would have been impossible with any single product.
The lesson: Contractors don't grow on one loan. They grow on the right combination of products working together.
The contractor in Denver didn't grow because he got approved for more capital. He grew because he got approved for the RIGHT COMBINATION of capital. Most contractors who “need more funding” don't actually need more funding — they need their capital structured differently. Ask yourself: is your current funding structure helping you grow, or is it the reason you've been stuck at the same revenue for two years?
Core Products
The 6 Funding Products Built for Contractors
Contractors need products designed for project-based cash flow. These are the six that do the heaviest lifting.
🔧 Equipment Financing
Best for: Buying new or used heavy equipment, vehicles, or specialized tools. Can be combined with Section 179 for significant first-year tax deductions.
Key structure: Typical terms 2-7 years based on equipment useful life. Equipment age affects rate — newer equipment gets better structure.
📄 Invoice Factoring
Best for: GCs, subs, and specialty trades with commercial or government receivables. The customer's credit matters more than yours.
Key structure: Per-invoice fees with an advance on the invoice within 24-48 hours. Great for bridging the gap between job completion and client payment.
💵 Working Capital / Term Loan
Best for: Businesses with 1+ year of history and consistent bank deposits. Fastest product for general cash flow needs.
Key structure: Funded in days, paid back over 6-18 months. Not tied to specific equipment or invoices — cash in hand for whatever you need.
🔄 Business Line of Credit
Best for: Contractors with steady but uneven revenue who want a safety net always available.
Key structure: Approved credit limit, interest-only on draws, 12-24 month renewable draw periods.
🏛️ SBA 7(a) or SBA 504
Best for: Established contractors (2+ years) with strong credit who can wait 45-75 days to fund.
Key structure: Up to 25 years on real estate, 10 years on equipment, 7 years on working capital. 10% down is typical on real estate purchases.
📦 Purchase Order Financing
Best for: GCs or specialty subs with a signed contract from a creditworthy client and margins above 20%.
Key structure: Per-order advance using the PO itself as collateral. Fee is a percentage of the order value.
Working with Basecamp? Contractors rarely need just one product. Our funding advisors analyze your full job pipeline, current equipment list, receivables aging, and growth targets first — then build a stack using the combination of products that fits your business. The right answer is almost never the first product a bank offers you.
Ready to See What You Qualify For?
One application. 70+ lenders competing. 60 seconds. Soft-pull pre-qual.
See What You Pre-Qualify For →The Tax Strategy
Section 179 — The Tax Strategy Contractors Overlook
If you bought equipment last year and didn't take a Section 179 deduction — or worse, you paid cash for equipment when you could have financed it and kept the capital working — that's not a mistake you can undo. It's also not a mistake you have to keep making. Here's how contractors use this strategically going forward.
Section 179 of the IRS tax code lets you deduct the full purchase price of qualifying equipment in the year you buy it — instead of depreciating it over 5-7 years.
For contractors, this is massive. A $150K excavator financed at 10% down means you write a check for $15K, take delivery of the machine, and then deduct the FULL $150K against this year's taxable income.
Why Most Contractors Miss This
They think they need to pay cash to get the deduction. They don't. Section 179 applies whether you pay cash, finance, or lease-to-own. The full purchase price is deductible in year one as long as you put the equipment into service by December 31.
How Contractors Use It Strategically
December equipment purchases: Buy before year-end to offset a high-profit year with a full Section 179 deduction.
Finance instead of paying cash: Pair a large equipment buy with equipment financing to preserve cash while still taking the full deduction.
Coordinate timing with your CPA: Plan purchases for the year you're in a higher tax bracket — the deduction saves more when your rate is higher.
This strategy is not loophole territory — it's what the tax code was literally designed for. The deduction limits are high enough that most contractor equipment purchases qualify fully.
Your CPA can model exactly what this saves you at your tax bracket. If your CPA doesn't bring up Section 179 before your next equipment purchase, get a new CPA.
Note: Tax strategies depend on your specific business structure, bracket, and annual profit. Section 179 rules and limits change. Always consult your CPA before making equipment purchases based on tax projections.
Use our equipment financing calculator to estimate payments and Section 179 savings on your next purchase.
Advanced Strategy
Capital Stacking for Construction Projects
Most contractors apply to one bank for one product and accept whatever number comes back. Capital stacking means building the right combination of products — each from the lender best at that piece — into a coordinated package.
A Typical Contractor Capital Stack
SBA 504 / Commercial Mortgage
The shop, yard, or office. Longest term, lowest cost of capital in the stack.
Equipment Financing
Trucks, trailers, skid steers, excavators. The equipment itself serves as collateral.
Working Capital Line
Payroll, materials, mobilization costs. Revolving — only pay interest on what you draw.
Invoice Factoring
Fast cash from outstanding receivables. Bridges the gap between job completion and client payment.
Each piece comes from a different lender who specializes in that product. You get better structure on every layer than any single bank would offer on a general-purpose loan.
Why Most Contractors Don't Stack
Because they apply to one bank, that bank offers what they offer, and the contractor doesn't realize a coordinated stack across multiple lenders is possible with a single application through a marketplace.
Working with Basecamp? Capital stacking is one of our core specialties for contractors doing $1M+ per year. One application, 70+ lenders, your funding advisor builds the stack and manages every lender through closing. You don't fill out five applications — we do the coordination for you.
Combined Strategy
Invoice Factoring + Working Capital Combined
This combination is the single most powerful funding strategy for contractors with slow-paying commercial or government clients.
How It Works
Invoice Factoring
Turns your outstanding receivables into same-week cash
Working Capital
Handles mobilization, payroll, and materials gaps BEFORE the invoice is generated
Together, you never wait for a client to pay before you can take on the next job
Real Example
A concrete subcontractor with $400K in outstanding receivables and a new $200K job starting next week.
Without the combination: Wait 45 days for the receivables to come in. Turn down the new job or take on personal debt to fund it.
With the combination: Factor the $400K receivables for immediate cash to fund operations. Use a working capital line to fund mobilization and materials for the new $200K job. Never pause operations. Never miss a job window.
The tradeoff: Factoring and working capital both have costs. But the cost of MISSING a $200K job far exceeds the fees on the funding that lets you take it.
Ready to Structure the Right Stack for Your Business?
One application. 70+ lenders. Your dedicated funding advisor builds the combination that actually fits your job pipeline.
See What You Pre-Qualify For →Avoid These Pitfalls
The 6 Funding Mistakes Contractors Make
These are the most common funding mistakes in the construction industry. Every one of them is preventable.
⚠️ Applying for Working Capital to Buy Equipment
Fix: Equipment purchase = equipment financing. Working capital is for payroll and materials.
⚠️ Skipping Equipment Financing for "Bad" Credit
Fix: Equipment financing is one of the most revenue-focused products. Don't assume you can't qualify.
⚠️ Taking the First Offer from Your Bank
Fix: Compare at least 3 offers through a marketplace. Competition gets you better terms.
⚠️ Ignoring Factoring Because It "Seems Expensive"
Fix: Factor receivables strategically. Use it to fund growth, not to stay afloat.
⚠️ Not Talking to Your CPA Before Equipment Buys
Fix: Before any purchase above $25K, call your CPA. The tax savings often cover the down payment.
⚠️ Waiting for the Perfect Terms
Fix: Take the best available offer today. Most lenders offer term reviews at 6-12 months — your rate can improve as your business grows.
Ready to See What You Qualify For?
One application. 70+ lenders competing. 60 seconds. Soft-pull pre-qual.
See What You Pre-Qualify For →Put It Into Practice
Your Contractor Funding Game Plan
Map your job pipeline.
What size jobs are you bidding in the next 6 months? What equipment, materials, and working capital do those jobs require?
Inventory your current assets.
What equipment do you own outright? What receivables are outstanding? What credit lines do you already have in place?
Identify the gap.
Where does your pipeline exceed your current capacity? Equipment? Working capital? Bonding?
Match products to the gap.
Equipment gap = equipment financing. Materials/payroll gap = working capital or line of credit. Receivables gap = invoice factoring. Shop/yard = SBA 504.
Structure the stack.
Apply through a single marketplace that can coordinate multiple lenders. Don't chase one product at a time through multiple banks.
Coordinate with your CPA.
Time equipment purchases around your tax bracket. Plan Section 179 deductions before year-end.
Execute.
Pre-qualify today. Your funding advisor structures the stack. Most pieces fund in days to weeks — the full stack typically comes together within 30 days.
Keep Going
Continue Learning
Keep going — these three guides pair together to give you the full funding playbook.
Common Questions
Frequently Asked Questions
About the Author
About Bobby Friel
Bobby Friel is the founder of Basecamp Funding, a business loan marketplace connecting business owners with 70+ lending partners across all 50 states. With over 20 years of experience in banking and mortgage lending, Bobby has structured capital stacks for construction companies ranging from single-truck operations to multi-state contractors doing $50M+ in annual revenue. Based in Colorado's Vail Valley, Bobby understands contractor cash flow cycles firsthand.
See What You Pre-Qualify For →If your capital stack was restructured this quarter — right equipment, right working capital, right factoring facility, all coordinated — how much bigger would the jobs on your pipeline be 12 months from now?
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