Construction contractors face unique financing challenges that traditional lending often fails to address. Whether you're building spec homes, completing custom residential projects, or undertaking small commercial developments, the capital requirements for construction extend well beyond what most contractors can self-fund. Hard money construction loans provide contractors with acquisition and building funds structured around the realities of construction timelines, contractor payment schedules, and project-based revenue cycles.
The construction lending landscape has tightened considerably for smaller builders and specialty contractors. Banks increasingly focus on large-scale developments, leaving individual builders and smaller construction companies struggling to secure financing for projects that fall below institutional thresholds. Hard money lenders fill this gap, offering construction financing based on project merits, contractor experience, and property value rather than corporate balance sheet requirements. For Scottsdale-area contractors, this access to capital supports business growth and enables pursuit of opportunities that would otherwise require prohibitive cash investments.
How We Help Construction Contractors
Hard money construction loans serve contractors across multiple project types and scales. For spec home builders, these loans provide lot acquisition funding and construction draws through project completion. The loan structure recognizes that spec builders realize returns only upon sale, offering terms that accommodate the typical marketing and closing timeline. This allows builders to maintain multiple projects simultaneously rather than completing one home before starting the next.
Custom home builders use hard money financing to fund projects where homeowners haven't secured construction financing or where the owner-builder relationship requires an independent funding source. The loan can cover construction costs with the homeowner either refinancing upon completion or arranging permanent financing. This structure protects contractors by ensuring construction funds are available without depending on homeowner payment schedules or draw approvals.
Small-scale commercial construction projects, office build-outs, retail improvements, light industrial work, often fall outside traditional commercial construction lending parameters. Hard money provides solutions for these projects, funding construction based on the contractor's experience, project specifications, and property characteristics. The draw schedule structure aligns contractor payments with work completion, maintaining healthy cash flow throughout the project.
Renovation and major remodeling contractors benefit from hard money financing for substantial projects that exceed typical home improvement loan limits. When renovations involve structural changes, additions, or complete system replacements, the scope and cost warrant construction-style financing. Hard money loans accommodate these larger renovation projects with appropriate draw structures and terms that recognize the value created through substantial improvements.
Challenges We Solve
Construction contractors encounter financing obstacles that threaten project viability and business sustainability. Traditional construction lenders require extensive documentation of corporate financials, personal guarantees, and proven track records that newer contractors haven't yet established. The approval process often extends 45-60 days, causing contractors to lose opportunities to competitors with faster funding capabilities. Banks frequently impose limits on the number of simultaneous projects, constraining business growth regardless of contractor capacity.
Cash flow management presents ongoing challenges. Construction requires significant upfront material purchases and labor commitments before progress payments become available. Traditional draw schedules may not align with contractor payment obligations to subcontractors and suppliers. Projects encountering unexpected issues, weather delays, material shortages, design changes, can exhaust contingency funds and leave contractors without resources to complete work. Personal credit requirements may disqualify otherwise qualified contractors who've invested available capital in their business.
Our Approach
Our construction lending program is designed by people who understand the construction business. We evaluate applications based on your project experience, the specific construction plan, and property characteristics rather than imposing rigid corporate lending criteria. We recognize that successful contractors build their business project by project, and we're willing to work with builders at various stages of their career development.
We structure draw schedules that support healthy contractor cash flow, with reasonable upfront advances for initial material purchases and milestone-based subsequent draws. Our inspection process respects your time, we understand that waiting for draws impacts your ability to pay crews and suppliers. We maintain clear communication throughout the construction period, addressing issues promptly to keep your projects on schedule and on budget.
Local Market Expertise
Scottsdale's construction market includes diverse opportunities from luxury custom homes in Paradise Valley and North Scottsdale to infill projects in established neighborhoods. The city's steady population growth and strong housing demand support new construction across price points. The broader Phoenix metropolitan area, including rapidly growing communities like Gilbert, Queen Creek, and Buckeye, extends construction opportunities throughout the region.
Frequently Asked Questions
What experience do I need to qualify for a construction loan?
We work with contractors at various experience levels. Established builders with multiple completed projects qualify more easily and may receive better terms. However, we also consider contractors with relevant construction experience who are transitioning into independent building, particularly when they bring strong project plans and appropriate equity investment. Each application receives individual evaluation based on overall merit.
How are construction draws managed?
We establish a draw schedule based on construction milestones, foundation completion, framing, mechanical systems, drywall, and final completion. When you reach a milestone, you request a draw, we arrange inspection to verify completion, and funds are released typically within 2-3 business days. This structure ensures work is completed before payment while maintaining your cash flow for ongoing operations.
Do you finance the land purchase and construction together?
Yes, we can structure loans that include both land acquisition and construction funding. This consolidation simplifies your financing and reduces overall transaction costs. The land portion typically requires more significant equity investment than the construction component, reflecting the different risk profiles of raw land versus active construction projects.
What happens if construction costs exceed the budget?
We require contingency reserves in our construction budgets specifically for this purpose. If unexpected issues arise, we work with you to evaluate the situation and determine the best path forward. Communication is essential, contact us promptly when issues emerge so we can help find solutions rather than letting problems compound.
Can I do some of the work myself to reduce costs?
We typically require licensed contractors for all major trades, electrical, plumbing, HVAC, and structural work. For cosmetic finishes or other appropriate work, owner-builder labor may be acceptable depending on your experience and the specific project. We evaluate this on a case-by-case basis to ensure quality standards while respecting your ability to contribute sweat equity.