Why do banks turn down construction businesses for loans?

A bank underwrites twelve months of deposits looking for a smooth line. Construction never produces one: you invoice at mobilisation, at milestones, and at completion, so three good months can sit either side of a month with almost nothing in it.

Retainage makes it worse on paper. Five to ten per cent of every contract is held back, sometimes for a year after the work is finished, so the balance sheet shows revenue earned that the bank cannot see arriving.

Then there is the classic mismatch: you need the money for payroll and materials *before* the draw is released, which is precisely the moment your account balance looks weakest to an underwriter.

A revenue-based funder is reading for a different thing — whether money reliably arrives, not whether it arrives on a schedule. Lumpy deposits across six months still demonstrate collection.

Repayment moves with your deposits rather than against a fixed calendar, which matches the way a contractor actually gets paid. A slow month costs a smaller payment, not a missed one.

Equipment is treated separately and more cheaply. An excavator or a skid steer secures its own financing, because the funder can value and recover the asset — so it should not be funded out of working capital at working capital prices.

Working capital sized to your deposit history covers payroll and materials while a draw is outstanding, and weekly repayment suits money that arrives with draws rather than every day.

Equipment financing is the cheaper route for an excavator, a skid steer or a truck, because the machine secures its own financing and should not be bought at working capital prices.

If the same gap opens on every job and the rest of your file is strong, a line of credit drawn at mobilisation and repaid when the draw lands is the lowest-cost shape of all.

Six months of business bank statements, as PDFs from the bank rather than screenshots.

Your current contract schedule — what is signed, what is in progress, what is invoiced but unpaid. It is the single strongest thing a contractor can put in front of an underwriter.

Any outstanding advances. Stacking is visible in your statements and is the fastest route to a decline.