What is Commercial Construction Contract Financing?

Construction site with heavy equipment

Commercial construction contract financing is a way for contractors and subcontractors to borrow dollars they need for the early stages of a particular job by using the value of their contract as collateral for the loan.

Mobilization Funding, sometimes referred to as Mobilization Financing, is a commercial construction contract financing option for subcontractors who are otherwise unable to secure an SBA or traditional bank loan, but who need additional funds for the first few months of a project. It is a short-term option that allows you to borrow up to a certain percentage of the total value of the contract, then repay the loan with the dollars received from contract payments.

Here are a few things to keep in mind when looking for commercial construction contract financing:

This type of financing depends on the borrower having a signed agreement with general contractor, property owner, or the party is paying for the work. The contract will lay out a payment schedule, job requirements, the scope of the work that needs to be done, and the total value of the contract. While a lender can often offer a type of pre-approval for a job that the applicant is bidding on or considering, in almost all cases a loan cannot be issued until the contract is awarded.

Learn more about commercial construction financing.

In order to secure commercial construction contract financing, the lender typically requires that the borrower sign a document guaranteeing that all payments on that contract will flow through a controlled account until the loan is paid off. Unlike some other construction loans, the borrowed dollars are restricted to expenses for that particular job(s).

Commercial construction contract lenders typically require that the borrower has been in business for at least two years and be able to provide bank statements and some financial documents.

Is your company seeking a commercial construction contract loan? Click here to get in touch with a Mobilization Funding team member.

One Comment

empty image Deb Pearl

Thank you for all the information about commercial loans. My husband has been interested in getting a commercial loan, but he doesn’t know much about them. I’m glad you mentioned that all payments on the contract will flow through a controlled account until the loan is paid off. I will have to make sure I let my husband know.

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