Business loans for contractors — SBA, term loans, equipment financing

Business loans for contractors come in five main flavors in 2026: Small Business Administration (SBA) 7(a) (9.75%–14.75% max, slowest), bank or online term loans (7%–99% annual percentage rate (APR) depending on lender), business lines of credit (7.8%–60%+ APR), equipment financing (secured by the truck or machine), and invoice factoring (1%–5% per month for commercial receivables). What wins depends on your shop's age, your credit score, what the money is for, and how fast you need it.

I run a review site for service business software and talk to contractor owners weekly. The hardest question in this trade: how do you finance a fleet truck, a second crew, or a slow summer without handing 50% APR to a merchant cash advance (MCA) shop dressed up as a "term loan." Honest breakdown for 2026.

The five loan types contractors actually use

Type	Typical APR	Speed	Best for
SBA 7(a)	9.75%–14.75% max	30–90 days	Large purchases, acquisitions, working capital, commercial real estate
Bank/online term loan	7%–99%	1–14 days	Fixed lump-sum needs, growth capital
Business line of credit	7.8%–60%+	Same-day–3 days	Rainy-day cash, payroll gaps, seasonal dips
Equipment financing	5%–20% typical	1–5 days	Trucks, HVAC recovery machines, excavators, specialized tools
Invoice factoring	1%–5%/month	24 hours	Commercial shops with net-30 to net-90 receivables

Rates verified April 2026. See the deep dives below for per-lender sources.

1. SBA 7(a) loans

The SBA 7(a) is the cheapest money a contractor can realistically access and the hardest to get. The SBA does not lend directly; it guarantees loans issued by partner banks, which lowers the bank's risk and buys you a better rate.

Current rates (verified April 2026 via SBA 7(a) loans page and NerdWallet SBA Loan Rates):

• Variable rates: roughly 10%–13.5% (prime rate 6.75% plus allowable spread)
• Maximum allowable rates: 9.75% on loans over $350,000 up to 14.75% on loans under $50,000
• Loan amounts: up to $5 million
• Terms: up to 10 years for working capital, up to 25 years for real estate

Requirements:

• Minimum personal credit score: most SBA lenders want 680+, some will go to 650 with strong cash flow (verified April 2026 via Nav SBA Loan Rates)
• Operating for-profit business, U.S. based
• Proof you can't get the same credit on reasonable terms elsewhere
• Personal guarantee from any owner with 20%+ equity
• Collateral on loans over $50,000 (but absence of collateral alone won't kill the deal)

Documentation required:

• 3 years of business tax returns
• 3 years of personal tax returns for all 20%+ owners
• Year-to-date P&L and balance sheet
• Debt schedule for the business
• Business license, articles of incorporation, resume, personal financial statement (SBA Form 413)

Timeline: 45–90 days from application to funded. SBA Express closes in 2–4 weeks but caps at $500,000 and runs a higher rate. If someone promises standard 7(a) in 10 days, they are either quoting Express or a broker marking up a non-SBA product.

Best for: commercial real estate, acquisitions, refinancing expensive debt, or a $300k+ growth push. Not worth the paperwork for a $25k truck.

2. Bank and online term loans

A term loan is the boring version: fixed lump sum, fixed rate, fixed monthly payment, fixed term. Banks and your local community bank still do these; online lenders fill the gaps banks decline.

Funding Circle (online, SBA-style underwriting)

Funding Circle's US operations were sold to iBusiness Funding in June 2024 and now operate under that ownership; the product and underwriting model carried over. Loans $25,000 to $500,000, terms 6 months to 7 years (verified April 2026 via United Capital Source Funding Circle review and Finextra coverage of the sale).

• APR: starts at 15.22% for strong files, higher for weaker ones
• Origination fee: 4.49%–8.49% deducted from proceeds
• Requirements: 660+ personal credit, 2+ years in business, $100k+ annual per operator reports

When Funding Circle wins: established shops needing $100k–$500k for fixed growth who want a transparent fixed payment and can tolerate 45–60 days to close.

OnDeck (fast, expensive)

OnDeck is the go-to when you need cash this week and your file is too thin for a bank. The price tag reflects that.

Rates and requirements (verified April 2026 via NerdWallet OnDeck review and OnDeck qualifications page):

• Term loan APR: 35%–99%, average around 49%
• Line of credit APR: average around 35%
• Term loan amount: up to $500,000
• Line of credit: up to $100,000
• Term: 3–24 months on term loans
• Origination fee: 2.5%–4% for first-time borrowers
• Requirements: 625+ FICO, $100,000+ annual revenue, 1+ year in business

OnDeck repayment is typically daily or weekly automated clearing house (ACH), not monthly. Model that against your receivables cycle before signing.

When OnDeck wins: emergency truck replacement or a 48-hour opportunity when you have no line of credit. Expensive insurance, not cheap growth capital.

3. Business lines of credit

A line of credit is a revolver: get approved for a ceiling (say $75,000), draw only what you need, pay interest only on the drawn balance, and the room reopens as you pay it back. For seasonal shops (HVAC summer crunch, roofing hail season, plumbing freeze spikes), this is the single most useful product on this list.

Bluevine (online, fair credit OK)

The most widely-used online line of credit for small service businesses in 2026.

Rates and requirements (verified April 2026 via Bluevine line of credit and NerdWallet Bluevine review):

• Rates: as low as 7.8% for top-tier applicants, higher for average credit
• Credit limit: up to $250,000
• Requirements: $10,000+ monthly revenue, 625+ credit score, 12+ months in business
• Funding speed: same day to 24 hours post-approval
• Not available in Nevada, North Dakota, South Dakota, or U.S. territories
• No maintenance fees; pay only on drawn balance

When Bluevine wins: established 1-to-10-truck shops that want a cash buffer between receivables. Fast, no fee if idle.

Fundbox (fair credit, short terms)

Fundbox takes thinner files than Bluevine. The price reflects it.

Rates and requirements (verified April 2026 via PrimeRates Fundbox review and business.org Fundbox review):

• Credit limit: up to $150,000
• Weekly fees: starting 4.66% on 12-week terms, 8.99% on 24-week terms; effective APR can exceed 35%
• Requirements: 600+ credit score, 3+ months in business (6 recommended), $100k+ annual revenue
• No origination fee, no prepayment penalty

When Fundbox wins: brand-new contractors (under 12 months) with 600-range scores who can't get into Bluevine. Use as bridge financing, not permanent working capital.

Kabbage (now American Express Business Line of Credit)

Kabbage was bought by American Express in 2020 and relaunched as the Amex Business Line of Credit. Limits up to $250,000, 6/12/18/24-month terms, monthly fees that translate to APRs in the 20s for most files. Useful if you already have an Amex Business relationship.

Local bank lines of credit

Don't skip this. A local community bank or credit union holding your checking will often extend $25k–$100k at prime plus 2% to 4% (roughly 8.75%–10.75% in April 2026), no origination fee, one annual renewal review. You sacrifice speed (2–6 weeks) for price. Walk in before defaulting to online lenders.

4. Equipment financing

Equipment financing uses the equipment itself as collateral. If you default, they repo the truck or excavator. Because the lender has tangible collateral, rates beat unsecured term loans and approval is easier for weaker files.

What contractors finance this way: service trucks and vans, HVAC recovery machines and A2L tools, plumbing jet trucks and cameras, electrical bucket trucks and generators, roofing dump trailers and conveyors.

Balboa Capital (now Ameris Bank)

Balboa Capital is a division of Ameris Bank and one of the larger contractor-facing equipment lenders in 2026.

Terms (verified April 2026 via Balboa Capital equipment financing and Balboa equipment FAQ):

• Up to $500,000 on hard collateral (trucks, heavy equipment), $350,000 on soft collateral
• Terms: 24, 36, 48, or 60 months
• Funding speed: same day possible
• Rate ranges aren't published; operator reports suggest 6%–12% prime credit, 12%–20% mid-tier

CIT (now First Citizens Bank Equipment Finance)

CIT Group was acquired by First Citizens Bank in 2022. Minimums are $250k+ and it targets larger fleets, so most one-truck contractors won't be the target customer.

Dealer captive financing

Ford Commercial Vehicle Financing, Ram Commercial Capital, and Chevy Business Choice offer at-the-dealership financing, often with manufacturer-subsidized promo rates (0% for 36 months has appeared in 2026 on slow inventory). Always get an independent equipment lender quote first; the "promo rate" sometimes requires buying at higher MSRP that wipes out the savings.

5. Invoice factoring

If you do commercial work (property management, general contractors paying subs, municipal contracts, commercial HVAC service contracts), you know the problem: the invoice is net-30 and it turns into net-75. Factoring is the fix.

How it works: you invoice a commercial customer $20,000 on net-30, a factoring company advances 80%–90% within 24 hours, your customer pays the factor directly, and the factor remits the reserve (minus fees) when the invoice clears.

2026 pricing (verified April 2026 via Resolve Pay construction factoring guide and Crestmont Capital factoring rates):

• Advance rate: 70%–85% typical, up to 97% for top accounts
• Factoring fee: 1%–5% per month of face value
• Construction-specific rates: 3%–5% per month (higher due to retainage and dispute risk)
• Extras: Uniform Commercial Code (UCC) filing $50–$500, ACH $10–$25, wire $25–$75, credit checks $20–$100 per new customer

When invoice factoring wins: $50k+/month in commercial invoices, creditworthy customers (the factor underwrites your customer, not you), and margin fat enough to absorb 3%–5% per month. Residential-only shops should skip it.

Contractor-specialized factors: TBS Factoring Service, Triumph Business Capital, 1st Commercial Credit, and Bankers Factoring.

Requirements by loan type, at a glance

Loan type	Min. credit score	Min. time in business	Min. annual revenue	Collateral
SBA 7(a)	680 typical	2 years	$100k+	Required on loans > $50k
Bank term loan	680 typical	2 years	$250k+	Often required
Funding Circle	660	2 years	Ops report $100k+	Blanket UCC
OnDeck	625	1 year	$100k	Blanket UCC + personal guarantee
Bluevine LOC	625	1 year	$120k	Personal guarantee
Fundbox LOC	600	3 months	$100k	Personal guarantee
Equipment financing	600–620	6 months	$75k+	The equipment
Invoice factoring	550	3 months	Commercial receivables	The invoices

Named winners by scenario

Best for startup contractors under 1 year in business: Fundbox line of credit or equipment financing with a captive dealer. Bluevine wants a full year; Funding Circle and SBA want 2 years. Fundbox accepts 3 months and 600 credit, so it's often the only real non-MCA option.

Best for established shops needing working capital: Bluevine line of credit for the $25k–$100k range, SBA 7(a) for $100k+ and you can wait 60 days. The Bluevine-for-speed, SBA-for-price split is the right mental model.

Best for truck and equipment purchases: Balboa Capital for standalone equipment, or dealer captive financing if the manufacturer is running a subsidized promo. Do not finance a truck on a Bluevine line of credit; you're paying 20%+ for collateralizable capital.

Best SBA lender for contractors: Live Oak Bank and Huntington Bank are the two most active SBA 7(a) lenders for service-business owners in 2026 and both have experience with contractor financials. Your local Chase or Wells Fargo branch is fine too if you already bank with them.

Best invoice factoring for commercial plumbing and HVAC: Triumph Business Capital and 1st Commercial Credit both have dedicated construction divisions that understand retainage, pay apps, and subcontractor payment schedules. Generic factors often mis-underwrite construction receivables and you end up with advance rates below 70%.

Common traps contractors fall into

1. Merchant cash advance disguised as a term loan. If a "lender" quotes "factor rate 1.35" instead of APR, pulls daily or weekly ACH, requires no collateral, and funds in under 48 hours without a credit pull, it's an MCA. Real APR on a 1.35 factor over 6 months is 70%–110%. Demand an APR quote in writing.

2. Confession of judgment (COJ) clauses. Sign one and you waive your right to a court defense if the lender declares default. New York banned them for out-of-state borrowers in 2019 after widespread abuse, but they still appear. If you see "confession of judgment" anywhere, cross it out or walk away.

3. Broker markup. Many online "lenders" are brokers marking up rates 3–10 points. Ask directly: "Are you the lender on this loan or a broker?" If broker, ask to see the original lender quote and the commission.

4. Stacking. Taking a second loan without telling the first lender usually violates covenants and accelerates default. Online lenders cross-check Experian Small Business Financial Exchange (SBFE); they find out. Always disclose.

5. Daily ACH repayment. A "12-month term loan" with daily ACH turns your receivables into the lender's receivables. One bad week bounces the ACH, non-sufficient-funds (NSF) fees stack, default clock starts. Monthly-pay term loans are worth 2–5 APR points of premium.

6. Prepayment penalties and fixed-fee structures. True term loans let you save interest by paying early. Factor-rate structures lock in the full fee regardless of payoff date. Read the prepayment section before signing.

How I would choose in 2026

A 3-year-old, 5-truck HVAC shop needing $75k for a second service truck and A2L-rated equipment for the refrigerant transition:

1. Walk into the local community bank first, ask for a $100k business line of credit
2. Apply to Balboa Capital for the truck so the truck is the collateral and term matches useful life
3. Keep Bluevine as backup if the community bank declines
4. Skip OnDeck and Fundbox unless everything else fails

A commercial plumbing shop doing $80k/month in net-45 invoices to property managers would add a factoring relationship with Triumph or 1st Commercial Credit on top of the credit line. Price that cost into bids rather than eat it.

FAQ

What credit score do I need for an SBA loan? Most SBA 7(a) lenders look for 680+, though some will consider 650 for strong files with good cash flow and collateral (verified April 2026 via Nav SBA Loan Rates). Under 650, SBA Express and Microloans have slightly more flexible underwriting but still generally want 620+. Below that, rebuild credit first.

How long does an SBA 7(a) take to close? 45–90 days from a complete application. SBA Express closes in 2–4 weeks but caps at $500,000 and charges higher rates. Budget 60 days for standard 7(a).

Can I get a business loan as a solo contractor? Yes, but options narrow. SBA 7(a) works if 2-year revenue supports the request. OnDeck, Bluevine, and Fundbox accept solo-operator files (business revenue plus personal credit). Equipment financing on a truck is often the easiest solo loan because the collateral de-risks the deal. Factoring also works if you're doing commercial invoicing.

Is equipment financing better than a term loan for a truck? Almost always yes. The truck is collateral, which gets you 6%–12% versus 15%+ unsecured, and matches the loan term to useful life (5 years typical). Interest is deductible and Section 179 can accelerate depreciation. Only take a term loan on a truck if the equipment lender declines you.

Is invoice factoring worth it for contractors? For commercial shops with $50k+/month in net-30 or net-45 invoicing to creditworthy customers, yes. You trade 3%–5% per month for 24-hour cash instead of 30–75 days. For residential-only shops that collect on the job, no.

Can I get multiple loans at the same time? Yes, if the first loan's covenants allow it. Most SBA and bank term loans require notification or approval on new debt. Lines of credit, equipment financing, and factoring generally coexist because they serve different purposes and secure different collateral. Stacking (hidden second loan) is a trap; always disclose.

Related guides

• Contractor business credit cards covers when a $25k card beats a loan
• Consumer financing for contractors in 2026 covers offering monthly-payment plans to your customers on quotes
• Contractor insurance basics covers the coverage most lenders require before funding
• Hiring your first service technician covers how to afford the payroll jump a loan should be funding
• HVAC business plan template covers the document your SBA lender will ask for on day one