6 Must-Know Tips for Contractors Evaluating Short-Term Funding Options

By: Fora Financial | August 18, 2025

When you own a construction business, it's all too common to find yourself short on working capital. Reasons might include slow payments, rapid expenses, equipment rental and replacement needs, and winning more work than you can comfortably fund using current cash on hand.

Why Contractors Face Working Capital Challenges

A recent report from Procore^[1] summed up the working capital challenges that construction businesses face:

"Construction is a capital-hungry, high-risk industry. And that makes traditional lenders nervous. Even strong construction businesses often struggle to secure the financing they need—or face long wait times, heavy restrictions, and approval processes that don't match the speed of the work."

Often, the gap in cash flow is a temporary situation—requiring funds for just a few months. But you might find banks and other traditional lenders slow to extend capital, forcing you to explore alternative financing.

[1] Procore. "Contractor Financing." Procore, accessed April 30, 2025. https://www.procore.com/library/contractor-financing.

Short-Term Financing Options

Short-term financing can bridge your temporary gap in cash flow, and there are several different options to choose from:

• Revenue advances: Cash upfront based on expected income.
• Short-term business loans: Lump-sum loans repaid within months, not years.
• Business lines of credit: Access what you need, when you need, up to a set limit.
• Invoice factoring: Sell your unpaid invoices for quick cash.
• Business credit cards: Revolving credit with variable terms.

For contractors, the optimal short-term financing option depends on the kinds of projects you work on, the size of your business, and how quickly you need the funds.

6 Tips for Evaluating Short-Term Funding

It's important to consider each of these when weighing your options for short-term financing:

1. Match financing to your timeline: Make sure that your financing strategy aligns with your business pace. If you get stuck in a slow approval process, by the time you get funding, you can have already missed payments or lost project opportunities.
2. Think in terms of total cost: Compare the total payback amount, not just interest rates. A low APR or factor rate can cost more in the long run if repayments extend over several years, rather than weeks or months.
3. Make sure your repayment schedule fits your cash flow: Align loan payment timing with your business operations and accounts receivable schedule to better manage your business's liquidity.
4. Look for early payoff benefits: Seek financing agreements with early payment discounts to retain more profit should you get paid sooner or your project wraps up faster than expected. This strategy can make a big difference on tight-margin jobs.
5. Know how financing impacts credit: Be aware of the potential impact that hard credit pulls can have on future terms from traditional lenders. Always inquire about the funding partner's credit bureau inquiry policy to keep short-term borrowing off your credit report.
6. Weigh the cost of paperwork: Save time and get funding faster by choosing a short-term lender that has minimal paperwork requirements. Traditional lenders typically want extensive documentation—tax returns, balance sheets, AR/AP breakdowns, etc.

Get Fast, Flexible Funds—Built for Contractors

With terms from several weeks to 18 months, your bridge financier should prioritize what contractors prioritize: speed and flexibility. But not every short-term lender works the same. It's important to know who you're partnering with so you can make an informed decision that fits your contracting business.

At Fora Financial, we are committed to:

• Fast and simple financing
• No limits on how you use funds
• Easy repayment
• Real support

Want to understand the full story about short-term financing options? Download our free ebook, Bridging the Cash Flow Gap: Making Short-Term Capital Work for Your Construction Business.

Since 2008, Fora Financial has distributed $4 billion to 55,000 businesses. Click here or call (877) 419-3568 for more information on how Fora Financial's working capital solutions can help your business thrive.