Cliffbank Lenders, a small-business funding service in Merced, California, explains contractor business loans for Merced County home builders, remodelers and commercial builders: construction lines of credit for materials and payroll between draws, working capital for a new contract, and equipment financing. It uses Census counts of local builders and permits. Funding partners decide.
| Residential builders, county (2023) | 108 |
|---|---|
| Nonresidential builders, county (2023) | 14 |
| Home builders with under five on payroll | 72.2% |
| New homes authorized, county (2025) | 780 |
| Uses to compare | Credit lines, equipment, payroll |
| Who decides | The funding partner |
The construction cash cycle
A builder or remodeler signs a contract, orders materials, schedules crews and subcontractors, and bills the owner or lender in draws tied to completed stages. Each draw may take days or weeks to inspect and release, and retainage can hold back part of every payment until the job is done. Between draws, lumber, concrete, wages and equipment payments are all due.
A job can be profitable and still run short of cash in the middle. The post on how contractors pay for materials walks through the timing on a single job.
Construction lines of credit for contractors
A construction business line of credit is one tool for that gap: draw for materials or payroll, repay when the draw is released, and draw again on the next stage. Lines of credit suit contractors because the need repeats on every job but the amount varies. A home builder line of credit works the same way, though builders financing the house itself use construction loans from specialized partners, which is a different product from business funding.
Partners reviewing a contractor's line may ask for a list of jobs in progress, the contract values, what has been billed and what remains, along with bank statements.
Working capital for a construction company taking on a bigger contract
Working capital for a construction company taking on a bigger contract fits one-time needs: mobilizing a larger contract than usual, covering payroll through a slow-paying job, or a deposit on materials with long lead times. A working capital loan with a fixed schedule should be sized to the gap and repaid from the job it funds.
Construction equipment financing
Skid steers, mini excavators, trailers, lifts, compressors and work trucks suit equipment financing, secured by the equipment and paid over its working life. Used equipment can be financed; partners will want the age, hours and a dealer quote. Renting may suit equipment used only a few weeks a year; financing may suit a machine that is on a job most weeks. Compare total dollars either way.
Builders and permits in Merced County, CA
County Business Patterns counted 108 residential building contractors and 14 nonresidential building contractors with employees in Merced County, CA in 2023. 72.2% of the residential builders had fewer than five employees. The construction sector as a whole had 415 employer establishments, 62.2% of them that small. Nonemployer Statistics counted 421 residential building businesses without employees in 2024, a separate count not added to the employer figure.
The Building Permits Survey shows new residential units authorized county-wide rising from 406 in 2023 to 520 in 2024 and 780 in 2025. Those counts cover new homes only, not remodels or commercial work.
Finishing and mechanical trades, covered separately
Painting, drywall and flooring contractors and plumbing and HVAC contractors have their own pages, because their cash cycles differ: finishing trades carry materials and labor late in a project, while plumbing and HVAC shops carry parts stock and service vans. Contractors can check their license record with the contractor license lookup guide.
What partners usually read for a contractor
- Business bank statements showing draw and invoice deposits
- A schedule of jobs in progress: contract value, billed, paid and remaining
- The contractor license record and entity status
- For equipment: the dealer quote with hours or age
- Current loans, lines and advances
Illustration only: a remodeler with $212,000 in signed work expects a $38,000 draw in three weeks and owes $14,600 for cabinets and $9,200 in payroll before then. A $24,000 draw on a line, repaid from the draw, matches the gap.
Questions contractors should ask before signing
- Can the line be drawn job by job, and how fast does a draw reach my account?
- Does the partner count retainage as a receivable?
- Will a lien on equipment block financing the next machine?
- Is the line reviewed every year, and on what records?
Contractors who keep a current jobs-in-progress schedule can answer many of a partner's questions before they are asked.
By Cliffbank Lenders · Updated
