The short answer
Construction and trades businesses usually need finance for three things: working capital to bridge the gap between paying for labour and materials and being paid on a progress claim, equipment and vehicles such as excavators, utes and trucks, and clearing tax debts that built up during a cash crunch. Lenders treat construction carefully, because it's one of the industries with the most company insolvencies in Australia, and because payment depends on head contractors and progress claims. That shapes which products work. Equipment finance is widely available because the asset secures the loan. Unsecured cash flow loans are available to builders and trades with steady bank statements. Invoice finance is harder, because many invoice lenders exclude progress claims and retentions, though specialist lenders fund some. For larger amounts, or where there's ATO debt, loans secured against property are often the most reliable option. FundFox arranges business-purpose finance for builders, civil contractors, subcontractors and trades across Australia.
What do construction businesses usually need finance for?
| Need | Common solution |
|---|---|
| Wages and materials before a progress claim is paid | Unsecured business loan or line of credit |
| Excavators, loaders and site equipment | Earthmoving equipment finance |
| Utes, vans and tipper trucks | Ute and van finance or truck finance |
| A tax debt from a tough year | ATO debt funding |
| A larger contract needing upfront capital | Property-backed loan |
| Completed units that haven't sold | A residual stock loan through commercial property finance |
Why are lenders cautious with construction?
Construction regularly accounts for one of the largest shares of company insolvencies in ASIC's statistics. Margins are thin, jobs can run over, and a subcontractor's income depends on the head contractor paying on time. When a builder fails, the businesses below it often go unpaid. Lenders respond by looking closely at who you work for, how concentrated your income is and how your account has handled slow months.
Can construction businesses use invoice finance?
Sometimes, with limits. Many invoice finance lenders exclude progress claims and retentions, because the amount can be disputed, set off against defects or delayed under the contract. Trades businesses that invoice completed work to builders or commercial clients are easier to fund. A handful of specialist lenders fund progress claims against certified work, so ask your broker if most of your income comes from claims.
What do lenders look at for builders and trades?
- Your contracts and clients: who pays you, how quickly, and how much of your income comes from one builder.
- Licences and insurance appropriate to your trade and state.
- Bank statements across a few months, including slower periods.
- ATO position: lodgements up to date and any debt on a plan you're keeping.
- Work in progress and how a new contract will be funded until the first claim is paid.
Tax debts are common in construction
When cash is tight, GST and PAYG withholding are often the first things to slip, and both can make directors personally liable through a director penalty notice. Keep lodging on time even if you can't pay, and look at the options early. Our guides to GST debt and PAYG withholding debt explain the risks and the ways out.
Example scenario
A carpentry subcontractor with 14 staff wins a large apartment fit-out. The builder pays monthly claims 45 days after month end, but wages are weekly. The broker arranges a $120,000 line of credit secured over the director's home, giving a buffer the business draws on each month and repays when claims are paid. A new ute for the leading hand goes on a separate chattel mortgage.
Example only. It isn't a real client.
