Why builders run short even when the books look good
Most building businesses that call us are profitable on paper. The squeeze comes from timing. You pay for materials, plant hire and subcontractors as each stage is built, but you only invoice when the stage is complete, and then the principal, the developer or the head contractor takes its time paying. A claim submitted at the end of the month might not clear for another 30 to 60 days, and a disputed variation can sit unpaid for far longer.
On top of that, retention money is held back on many commercial contracts until practical completion and again through the defects period. Wet weather pushes stages out. A client's bank delays a drawdown. Supplier accounts go on stop. Meanwhile the ATO still wants the BAS paid and the crew still needs paying every week. One slow payer can stall three jobs.
The pressure points we see most
- Progress claims approved but not yet paid by the principal or developer
- Retention held through practical completion and the defects liability period
- Materials price rises between quoting and buying
- Subcontractors who need paying weekly while claims are monthly
- Deposits and security bonds required to win the next tender
- ATO debt that built up during a slow year or a bad job
Builder scenarios we can fund
| Scenario | What the loan does | Typical exit |
|---|---|---|
| Head contractor is 60 days late on a large progress claim | Pays subbies and suppliers so the next stage starts on time | The overdue claim is paid |
| Retention held on two finished commercial jobs | Releases working capital tied up in retention | Retention released at end of defects period |
| Supplier account on stop with materials needed this week | Clears the supplier balance and restores trade credit | Business cash flow from current jobs |
| Won a bigger contract that needs upfront mobilisation | Funds plant, materials and the first month of labour | First and second progress claims |
| ATO debt affecting licence renewal or tender eligibility | Pays out or substantially reduces the ATO debt | Refinance once tax lodgements are current |
| Builder owns a completed spec home that hasn't sold | Releases equity to fund the next project | Sale of the spec home |
| Partner leaving the building company | Funds the buy-out of the departing partner | Refinance to a longer-term lender |
These are examples of the kinds of situations we see, not promises of any outcome. Every loan is assessed on its own scenario.
Why banks and cash flow lenders struggle with construction
Banks see construction as higher risk and want two or three years of financials, tax returns, aged debtor reports and a clean credit file. A bank refinance commonly takes up to three months or more, and you may not be approved for the amount you need. That is no use when a subbie needs paying on Friday.
Cash flow lenders look at your bank statements. A builder's statements are lumpy by nature: big claims in, big payments out, then a quiet fortnight. That pattern often reads as risk to an automated assessment, so the amount offered is small or the answer is no. If that has already happened to you, see declined by a cash flow lender.
How an Equity Tap loan fits a building business
We secure the loan against property you or a related party own, whether that's your home, an investment property, a commercial site or a completed spec build. We can take a first mortgage, a second mortgage behind your existing lender, or a caveat. We don't order a valuation before approval, and we don't need your financials or bank statements.
Builders like the repayment structure. Interest for up to the first six months can be prepaid or added to the loan, so there are no scheduled payments while you wait for the claim to land. When the principal pays, you repay. If the payment slips, the loan can stay in place for the time you need it within the agreed term. Interest is not waived, and you see the full cost before you proceed.
Note that this is a business loan to keep your building company trading, not a construction loan with progress draws on a development. If you are buying a site to develop, our property developers page covers that.
Common exits for builders
- Payment of the overdue progress claim or final claim
- Release of retention money
- Sale of a completed spec home or townhouse
- Refinance to a bank once the business is back on track (see refinance bridging loans)
- Sale of surplus plant or equipment
What we need from you
ID, the address of the security property and details of any existing mortgage, a short explanation of what the money is for, and evidence of the exit, such as the outstanding claim, the contract or a sale agreement. That's it. Read more on business loan documents.
Broker note
Construction clients are often the ones banks decline or drag out. If you have a builder client with an unpaid claim, an ATO problem or a supplier on stop, send the scenario through our broker page. You deal with the decision maker, get a quick indicative answer and keep the client while the longer-term finance is sorted.
Also see loans for tradies and ATO tax debt business loans. Ready to go? Apply online or call 1300 123 024.
Business-purpose lending only. Approval, timing and terms depend on the scenario.
Frequently asked questions
Can I borrow against an unpaid progress claim?
The head contractor keeps paying late. Can you help this week?
Do you need my building company's financials?
I have ATO debt. Will that stop the loan?
Can I use my house as security without refinancing my home loan?
Do I have to make repayments while I wait for the claim?
Is this a construction loan?
Brokers: send the scenario through the Equity Tap broker channel and you will deal with the same lending team.