Funded Contractor Capital Apply Now →
Compare · 2026

Term Loan vs Line of Credit for Contractors

One lump sum or reusable credit? Here's which fits your contracting cash flow.

Short answer: Choose a term loan for a single, planned expense — equipment, an expansion — where fixed payments help you bid and budget. Choose a line of credit for recurring, unpredictable needs like covering the gap between draws, because you draw only what you need and reuse it as you repay. Many contractors keep a line for cash flow and use term loans for big purchases.

Reviewed by the Funded Contractor Capital Funding Team · Updated July 2026

How funding works, step by step

From application to funding in four steps — most contractors complete it within a day.

1

Apply in 5 minutes

Complete a short online application. It uses a soft credit pull that does not affect your score.

2

We review your deposits

Approval is based on your last 3 months of business bank statements — not tax returns or the contract.

3

Get your offer

Review your amount and terms up front, with any fees disclosed before you accept. No obligation.

4

Get funded

Sign and receive funds by ACH, often within 24 hours of approval.

Term loan vs line of credit

How the two compare for a contracting business.

CriteriaTerm LoanLine of Credit
StructureLump sum, onceRevolving, reusable
You pay forThe full balanceOnly what you draw
Best forOne big planned purchaseRecurring gaps between jobs
PaymentsFixed monthlyOn the drawn balance
ReusableNoYes — draw again
Typical range$25K – $5M$10K – $500K

Why contractors fund with us

  • One application shows you every option you qualify for
  • FICO 500+ accepted; approval on revenue
  • Funds in as little as 24 hours
  • We recommend the lowest-cost fit, not the priciest
  • Fixed payments or revenue-share — your choice
  • No tax returns — 3 months of bank statements

What you need to apply

  • US-based contracting business
  • 6+ months in business
  • ~$30,000+ in monthly revenue
  • Last 3 months of bank statements
  • Valid EIN and business bank account

Frequently asked questions

Is a term loan or line of credit better for a contractor?
A line of credit usually fits uneven, draw-based cash flow because it's reusable; a term loan is better for a single large purchase with predictable payments.
Can I have both?
Yes — many contractors keep a line of credit for day-to-day cash flow and take a term loan for major equipment or expansion.
Which option can I get fastest?
Most of these fund within 24 hours of approval. The application takes about 5 minutes with a soft credit pull that doesn't affect your score.
Can I qualify with bad credit?
Yes — FICO 500+ can qualify, because approval is weighted toward revenue and bank-deposit consistency rather than credit score.
Is this a business loan or a cash advance?
Both are available. The right structure depends on your revenue, credit, and how you prefer to repay — fixed payments or a share of your deposits. We show you the options you qualify for before you commit.
What can I use the funds for?
Any legitimate business purpose — payroll, materials, equipment, mobilization, covering the gap between draws, or growth. There are no restrictions on how you deploy working capital.
Are there any upfront fees to apply?
No. Applying and getting a decision is free, and any fees are disclosed in your offer before you accept — so there are no surprises.

Sources & further reading

Figures on this page are typical 2026 industry ranges provided for general information; your actual terms are set at application.

See which you qualify for

Apply in 5 minutes with a soft credit pull.

Apply Now →

Comparisons reflect typical 2026 industry structures for general information and vary by lender and underwriting; your actual terms are set at application. Product and company names referenced are the property of their respective owners.