Our goal at Lending Valley is to provide all small business owners access to the best loans possible for their business. You can rest assured we will get you the best rates in the market!
It’s the scenario every contractor dreads. You just won a lucrative bid—maybe a renovation in Brooklyn or a commercial retrofit in Texas. The contract is signed. The crew is ready.
But then the reality hits: You need $50,000 for materials now.
You walk into your local bank, confident in your new contract. Two weeks later, you get the rejection letter. The reason? Your FICO score is 580.
In 2025, this story is becoming dangerously common. With the average payment cycle for subcontractors extending to 57 days and 77% of subs forced to cover material costs out of pocket, the gap between “winning the job” and “starting the job” is widening.
While traditional banks are denying 24% of all small business applications, the alternative lending market is booming. This guide will walk you through exactly how to bypass the banks, leverage your Business funding in Newyork or Florida options, and get the capital you need to break ground.
If you are trying to figure out how to get a business loan with bad credit for construction, you are in the right place. This guide cuts through the banking jargon and gives you the blueprint to get funded so you can keep the saws running and the crew paid.
First, let’s debunk the myth that bad credit is a death sentence for your business.
In the old days, lenders only looked at your personal credit history. Today, specialized construction lenders look at the “3 C’s”:
Recent data shows that 20% of businesses with credit scores below 600 were approved for funding in 2025, almost exclusively through alternative lenders. Why? Because alternative lenders know that a credit score doesn’t tell the whole story. It doesn’t show the $100,000 invoice you are waiting on from a slow-paying General Contractor (GC).
Expert Insight:
“In 2025, a credit score is a lagging indicator. It tells me what happened three years ago. As a lender, I care about your ‘Work in Progress’ (WIP) report. If you have a signed contract with a reputable GC, that paper is often worth more than a 700 FICO score.” — Senior Underwriter, Construction Lending Division.
Why Credit Scores Don’t Tell the Whole Story
“Banks look at the past; alternative lenders look at the future.”
That’s the mantra. Your credit score might be low because of a divorce, a medical emergency, or one bad job back in 2022. But if you have:
- Consistent monthly revenue (cash flow).
- Active job sites.
- Heavy equipment (collateral).
You are actually a strong candidate for a business loan with bad credit for construction.
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If the bank says no, where do you go? Here are the top three tools savvy contractors use to keep moving.
When you are searching for “Merchant Cash Advance near me” or seeking fast Business funding in Newyork, you aren’t looking for a long-term relationship; you are looking for speed. An MCA is designed exactly for this. It is fundamentally different from a loan because you aren’t borrowing money; you are selling a portion of your future revenue at a discount.
The lender advances you a lump sum today, and in exchange, they automatically deduct a percentage of your daily or weekly bank deposits until the advance is paid plus a fee. Because the approval is based almost entirely on the consistency of your cash flow rather than your credit history, this is the most accessible option for contractors with bad credit. It’s perfect for immediate crises—like when a supplier demands cash on delivery—but the high cost means it should only be used for short-term bursts, never for long-term financing.
Construction is notorious for the “paid-when-paid” cycle, where you might finish a job in June but not see the check until August. Invoice factoring solves this by letting you sell that unpaid invoice to a third party. If you are struggling to find a traditional Business loan in Florida or Small Business funding in Ohio because of your credit score, factoring is often your best lifeline. Here is why: The factoring company doesn’t care about your FICO score; they care about your client’s ability to pay.
If you are doing work for a reputable General Contractor or a government entity, you can get funded almost immediately, even if your personal credit is in the 500s. You get 80-90% of the invoice value upfront to cover payroll and materials, and the factor pays you the rest (minus a small fee) once they collect from the client.
Trying to buy “yellow iron”—like excavators, skid steers, or dump trucks—with cash is one of the quickest ways to kill your working capital. Equipment financing allows you to acquire these assets without draining your bank account. Unlike an unsecured loan, this type of funding is “asset-backed,” meaning the equipment itself serves as collateral.
This dramatically lowers the risk for the lender because if you default, they can simply repossess the machine. Because their risk is secured by the metal, lenders are much more willing to overlook a “bruised” credit history. This makes it an excellent strategy for contractors looking to expand their fleet and bid on bigger jobs without needing a perfect credit score or a massive down payment.
Let’s look at how real businesses are navigating this landscape in 2025.
Location: Business Loan in Brooklyn
The Scenario: Empire City Remodeling won a bid to renovate a brownstone.
The Problem: Copper pipe prices spiked over 40% in early 2025. The owner needed $25,000 immediately to lock in material prices before they rose further. His credit score was 580 due to a past divorce.
The Solution: He utilized a high-speed MCA in Newyork.
The Outcome: Funded in 24 hours. He bought the copper, started the job, and paid off the advance within 3 months using the first draw from the project. The speed saved him $4,000 in material price hikes.
Location: Business funding in Texas
The Scenario: Lone Star Civil was working on a highway sub-contract.
The Problem: Project awarding delays in 2025 meant their start date kept getting pushed. They had payroll to meet but no new checks coming in.
The Solution: They used Invoice Factoring on a previous completed job.
The Outcome: They turned a pending $50,000 invoice into $45,000 cash the next day. This kept their skilled crew on payroll so they didn’t lose them to competitors during the delay.
Location: Small Business funding in Ohio
The Scenario: A family-owned roofing company had the chance to buy out a retiring competitor’s inventory.
The Problem: Traditional banks denied the loan request due to “insufficient credit history.”
The Solution: They applied for revenue-based Business funding in Ohio.
The Outcome: By showing 6 months of consistent bank deposits, they secured a $40,000 term loan. They bought the inventory at a discount, increasing their profit margins for the year.
Not all lenders are created equal. Here is what you need to know when shopping.
| Feature | Big Banks (Chase/Wells) | Direct Online Lenders | Lending Valley (Marketplace) |
| Credit Requirement | Strict (680+ usually) | Moderate (600+) | Flexible (500+ Accepted) |
| Speed | 30-90 Days | 2-5 Days | 24-48 Hours |
| Approval Odds | Low (<20% for small biz) | Medium | High (Network of 50+ lenders) |
| Paperwork | Extensive (Tax returns, P&L) | Moderate | Minimal (Bank Statements) |
| Best For | Established corps with perfect credit | Specific single products | Contractors needing options |
Myth: “I can’t get a business loan if I have a tax lien.”
Fact: Some alternative lenders will still fund you if you have a payment plan in place with the IRS. It’s harder, but not impossible.
Myth: “Alternative loans are just loan sharks.”
Fact: While rates are higher (14%-99% APR for online loans), they are legitimate financial tools. The key is ROI. If borrowing $10k costs you $2k in interest but allows you to make $20k profit on a job, it’s a smart business move.
Myth: “Applying to multiple lenders hurts my credit.”
Fact: Most modern marketplaces (like Lending Valley) use a “Soft Pull” to check your eligibility. This does not hurt your credit score.
“Stacking” occurs when you take out a second or third Merchant Cash Advance (MCA) while the first one is still active. Contractors often do this because the first advance wasn’t enough, or they need to pay off the first one. This is a dangerous trap. Each MCA takes a daily or weekly cut of your bank deposits. If you have three lenders each taking 10-15% of your daily revenue, you might be losing 45% of your cash before you even buy a gallon of fuel. This chokes your operating capital, making it impossible to fund new jobs, which leads to needing another loan—hence the “death spiral.”
In 2025, you cannot “fudge the numbers.” Lenders no longer just look at PDF bank statements (which can be edited); they require you to link your bank account via secure APIs like Plaid. This gives them a direct, read-only view of your real-time transaction history. If you claim to make $50,000 a month but your deposits show $30,000, or if you artificially inflate your balance by transferring personal savings into your business account, you will be instantly flagged for fraud. Being honest about a lower, consistent revenue stream is far better than presenting high, volatile, or fake numbers.
This is a classic financial error: using short-term debt to buy a long-term asset. Short-term loans (like MCAs) have very high daily or weekly payments because they are meant to be paid back in 3–12 months. If you use that money to buy a truck that will last 10 years, you are crushing your monthly cash flow to pay for an asset that pays you back slowly. You should always match the life of the loan to the life of the asset. Use short-term cash for materials (which you sell quickly) and long-term financing for equipment.
Finding Business funding in Texas or a Business loan in Florida when you have bad credit can feel like a full-time job. You apply, get rejected, and repeat.
Lending Valley changes the game. We are not a single bank; we are a marketplace.
If you are looking for a business loan with bad credit for construction, Lending Valley acts as your advocate, finding the specific loan product that fits your margin and your timeline.
A: Yes. You won’t qualify for a bank loan or SBA loan, but revenue-based financing (like MCAs) and invoice factoring are available. In 2025, 20% of approvals went to businesses with sub-600 scores.
A: For most bad credit loans, you only need:
-3-6 months of business bank statements.
-A Driver’s License.
-A voided check.
-(Sometimes) Accounts Receivable aging report.
A: No. An MCA is a commercial transaction where you sell a portion of your future revenue. It is not subject to the same APR laws as loans, which is why it’s faster but more expensive.
A: Absolutely. Once the funds are in your account, you can use them for payroll, materials, insurance, or fuel.
A: With Lending Valley, many clients receive funds within 24 to 48 hours of application.
A: Lending Valley uses a “soft pull” for the initial check, which has zero impact on your credit score. A hard inquiry only happens if you accept an offer.
A: Construction is considered “high risk” by banks due to payment delays and economic volatility. However, alternative lenders thrive in this space because they understand the industry better.
In 2025, cash is the fuel that keeps your projects moving. Whether you are dealing with a Business Loan in Brooklyn or Small Business funding in Ohio, your credit score is just one number in a much larger picture.
Don’t let a past mistake keep you from building your future. The capital is out there—you just need to know where to look.
Ready to see what you qualify for?
Check Your Eligibility with Lending Valley – No impact to your credit score.
