How big a line of credit does a contractor need?

Enough to cover materials, payroll, and subcontractors for your open jobs between payments. Many contractors size it to one to two months of job costs.

What is a Contract CAPLine?

An SBA revolving line that finances costs of specific contracts. It is repaid as the contract pays and is priced at SBA-capped rates.

What does carrying a $100,000 draw cost?

At the middle of the representative band, about $1,583 a month in interest while it is outstanding.

WithFunded › Best-of guides › By product

Best lines of credit for contractors in 2026

The best line of credit for most contractors is an unsecured online or bank line sized to the costs they carry between progress payments. Larger contractors do better with a line secured by receivables, and the SBA's Contract and Builders CAPLines finance costs tied to specific jobs at SBA-capped rates. Open the line before the big job, not during it.

By the WithFunded team · Published November 11, 2026 · Rates as of November 2026

The short list

Best for most contractors: Business line of credit
Best for larger contractors: Asset-based line of credit
Best for financing a specific contract: SBA CAPLines (revolving line)
Best for small supply purchases: Business credit card

The 4 best options, ranked

1. Business line of credit Best for most contractors

A general-purpose line covers materials and payroll on any job and is repaid as draws arrive. No job-by-job paperwork is involved.

Watch for: Some lenders add draw or maintenance fees, and a limit can be cut at renewal. Business line of credit guide →
2. Asset-based line of credit Best for larger contractors

With substantial receivables, a secured line offers a higher limit at a lower rate, though lenders discount retainage.

Watch for: Expect regular reporting on receivables and inventory, and a limit that moves with them. Business line of credit guide →
3. SBA CAPLines (revolving line) Best for financing a specific contract

A Contract CAPLine funds the direct labor and material costs of one contract and is repaid from that contract's payments.

Watch for: Draws are tied to the season, contract, or receivables the line was approved for. SBA loan guide →
4. Business credit card Best for small supply purchases

Supplier runs on a business card, paid monthly, keep small costs off the line and interest-free.

Watch for: Low limits, and one of the most expensive ways to carry a balance for months.

Side-by-side comparison

Option	Verdict	Cost basis	Funding speed	Qualifies on
Business line of credit	Best for most contractors	Representative 8%–30% APR, charged only on what you draw	Often days	Revenue, time in business, and credit
Asset-based line of credit	Best for larger contractors	Interest on what you draw; the limit follows a borrowing base of receivables and inventory	Weeks to set up	The quality of your receivables and inventory
SBA CAPLines (revolving line)	Best for financing a specific contract	SBA-capped rates on a revolving line of up to $5 million	Weeks to months	A documented seasonal cycle or specific contracts to borrow against
Business credit card	Best for small supply purchases	No interest if paid in full each cycle; high rates on a carried balance	Days	Mostly your personal credit

What it costs

A line of credit charges interest only on the balance you have drawn. This is the monthly interest on a carried draw, before any principal is repaid:

Carried draw	At 8% APR	At 19% APR	At 30% APR
$25,000	$167	$396	$625
$100,000	$667	$1,583	$2,500
$250,000	$1,667	$3,958	$6,250

Interest-only illustration across the representative band. Draw fees and repayment schedules vary by lender. WithFunded calculation.

What lenders look at

Backlog and signed contracts.
Receivables aging and retainage.
Bonding capacity and financial statements, for larger lines.

Mistakes to avoid

Using the line for equipment. Keep it available for job costs.
Running the line at its limit. Lenders and sureties both read that as strain.

Frequently asked questions

How big a line of credit does a contractor need?: Enough to cover materials, payroll, and subcontractors for your open jobs between payments. Many contractors size it to one to two months of job costs.
What is a Contract CAPLine?: An SBA revolving line that finances costs of specific contracts. It is repaid as the contract pays and is priced at SBA-capped rates.
What does carrying a $100,000 draw cost?: At the middle of the representative band, about $1,583 a month in interest while it is outstanding.

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WithFunded has a dedicated page for contractors: construction.withfunded.com.

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How we ranked these options

This guide ranks types of financing, not individual lenders. Each option is ordered by how well it fits the need described on this page, judged on four things in this order: whether the structure matches how the money will be used and repaid, total cost, funding speed, and how hard it is to qualify. Cost figures are WithFunded calculations from published rate inputs as of November 2026: the bank prime loan rate from the Federal Reserve, the SBA maximum-rate schedule, and Federal Reserve survey data. The method follows our 2026 SMB Financing Cost Report, whose own figures use June 2026 rates.

WithFunded is a financing marketplace, not a lender. Our 2-minute form suggests a product type from the families we cover, and a funding partner reviews the request. Not every structure named in this guide is available through WithFunded: options such as SBA microloans, USDA farm loans, bank loans, and seller financing are ones you would pursue directly with the provider. They are listed because leaving out a good fit would make the ranking less useful.

Related guides

The top-ranked option on this page is business line of credit because it fits the most common version of this need. Your own best fit depends on your revenue, time in business, credit, and how fast you need the money.

Disclaimer. WithFunded and Big Think Capital are a financing marketplace; we are not the direct lender and do not guarantee funding, approval, rates, or terms. Everything on this page is a representative example only — not an offer or a commitment to lend, and not financial advice. Actual rates, fees, payments, and terms are set by the funding lender and depend on your business, credit, and the product. Where required by state law, the lender provides cost-of-financing disclosures before any agreement is signed.