SBA lenders approved 1,156 7(a) loans to new single-family housing contractors, the builders who build for owners rather than for sale, between October 2023 and June 2026, about $359 million from 178 lenders. The median loan was $150,000, level with the national $150,300, but the median rate was 10.75% against 10.25%, and 48.8% of loans went through SBA Express. Start-ups were only 2% of loans and acquisitions 2%, at a median of $1,500,000. Lenders decide on the work-in-progress schedule, how customer deposits and draws are handled, and the builder's backlog.
| Measure | New Single-Family Housing Construction (except For-Sale Builders) | All industries |
|---|---|---|
| SBA 7(a) loans approved | 1,156 | 162,355 |
| Median loan | $150,000 | $150,300 |
| Middle half of loans | $50,000 – $288,300 | $50,000 – $500,000 |
| Loans of $1 million or more | 6.9% | 12.9% |
| Median rate at approval | 10.75% | 10.25% |
| Middle half of rates | 9.99% – 12% | 9.3% – 11.25% |
| Acquisitions (change of ownership) | 23 (2%) | 16,849 (10.4%) |
| Median acquisition loan | $1,500,000 | $693,000 |
| Lenders that made these loans | 178 | 1,648 |
| SBA 504 loans (real estate, equipment) | 84 | 16,714 |
Approvals FY2024 – FY2026 to date (1 Oct 2023 – 30 Jun 2026), cancelled loans excluded. Source: SBA 7(a) and 504 FOIA loan records, as of June 30, 2026.
- SBA 7(a) loans approved
- 1,156 (Oct 2023 – Jun 2026)
- Median loan
- $150,000 (national $150,300)
- Median rate at approval
- 10.75% (national 10.25%)
- SBA Express share
- 48.8% of loans
- Acquisitions
- 23 loans (2%), median $1,500,000
- Start-ups
- 2% of loans
Who is in this code, and who is not
NAICS 236115 is the general contractor that builds a new single-family house under contract for someone else: a custom home on the client's lot, a house for a family that holds its own construction loan, a rebuild after a fire. It excludes for-sale builders, the firms that buy land and build houses to sell, which carry their own code.
The distinction matters for SBA lending. A contract builder is an operating business: it earns a margin on work performed and holds no houses as inventory. A builder of homes for sale holds property for resale, which SBA's standard term loan is not designed to finance; SBA's Builders CAPLine is the program built for construction for resale. A company that does both should expect a lender to ask how much of its activity is which. See SBA CAPLines.
What the figures say
From FY2024 through June 2026, SBA lenders approved 1,156 7(a) loans in this code, worth $359,464,800, from 178 lenders. The median loan supported 3 jobs, consistent with builders who run a small core crew and subcontract most trades.
| Figure | Contract home builders | National | Reading |
|---|---|---|---|
| Median loan | $150,000 | $150,300 | Equipment, vehicles and working capital between draws |
| Middle half of loans | $50,000 to $288,300 | A quarter were $50,000 or less | |
| 90th percentile | $500,000 | Exactly the SBA Express ceiling | |
| Loans of $1 million or more | 80 (6.9%) | Above the SBA Express limit; each one fully underwritten | |
| Median rate | 10.75% (middle half 9.99% to 12%) | 10.25% | Above national; a quarter at 12% or more |
| Fixed-rate share | 10.5% | ||
| SBA Express | 48.8% of loans | Nearly half decided on the lender's own process | |
| Start-ups | 2% of loans | Lenders want a record of completed homes | |
| Acquisitions | 23 (2%), median $1,500,000 at 9.75% | 10.4% of loans | Very rare, and ten times the median loan |
| SBA 504 | 84 loans, median $600,000 | Offices, shops and equipment yards |
The rate follows the loan size and the program. SBA caps variable 7(a) rates at the base rate plus 6.5% for loans of $50,000 or less and plus 6% from $50,001 to $250,000, against plus 3% above $350,000, and most loans here sit in the upper tiers. SBA Express, which goes up to $500,000 with a 50% guaranty, leaves the lender with more risk than a standard 7(a), which carries 85% on loans of $150,000 or less and 75% above, and pricing reflects that. See SBA 7(a) vs SBA Express.
Reading a builder's balance sheet
A contract builder spends money on a house before the next draw arrives and often holds a client's deposit before any work is done. Both show up on the balance sheet, and an underwriter reads them before the income statement.
| Line | What it is | The lender's question |
|---|---|---|
| Customer deposits | Money received for work not yet done | Is current cash really this job's deposit, spent on the last job? |
| Billings in excess of costs (overbilling) | Draws collected ahead of progress | Is the builder funding operations with clients' money? |
| Costs in excess of billings (underbilling) | Work done but not yet drawn | Will the draw come, or is this a cost overrun? |
| Accounts payable to subcontractors and suppliers | What the builder owes on open jobs | Are payables current, or are subs being paid late to cover gaps? |
| Warranty reserve | Obligations on completed homes | What comes back after closing, and is it provided for? |
The work-in-progress schedule ties those lines together: for each job, the contract price, estimated cost, cost to date, percent complete, billed to date and the margin being earned. A builder that keeps one, and whose margins hold from estimate to completion, is a much easier credit than one whose books show only cash in and cash out. Many small builders keep cash-basis books, which can make a year look strong or weak depending on when a large draw landed. See cash versus accrual financials.
A healthy bank balance that is mostly client deposits is not liquidity. Lenders look for cash the builder has earned.
Backlog, the rate cycle and working capital
Custom home demand depends on clients' ability to finance a build, so it moves with mortgage and construction-loan rates. Lenders therefore read a builder's signed backlog alongside its history: contracts in hand, with deposits received, carry more weight than a pipeline of prospects. In colder states, lenders also expect winter slowdowns and look for working capital that carries the business through them.
That is why so many loans are small and short. A builder's recurring need is to carry payroll and materials between draws, which is working capital, not a single large purchase. An SBA term loan for working capital runs up to 10 years; a revolving line often fits the need better. See lines of credit for general contractors and line of credit versus term loan.
Cash flow is tested the standard way: SBA requires debt service coverage of at least 1.15x, and 1.0x globally once the owners' personal obligations are included. For a builder whose income is concentrated in a few homes a year, lenders look at more than one year to see a normal level.
Buying a home builder
Only 23 loans, 2% of the total, financed a change of ownership, at a median of $1,500,000 and a median rate of 9.75%. A custom builder's business usually is its owner: the reputation clients hire, the license, the relationships with architects and subcontractors. A median acquisition loan ten times the industry's median loan points to the firms that do sell: larger builders with project managers, a sales process and a backlog that does not depend on one person.
- Structure. Warranty and defect claims on homes already built can follow the company. Buyers often prefer an asset purchase, which leaves more of that exposure with the seller, though it does not remove every claim. See asset versus stock purchase financing.
- Licensing. The builder's license often rests with an individual, so the buyer needs to qualify or keep a licensed qualifier. Because the seller may not stay on as an owner, officer or employee, that qualifier usually cannot be the seller.
- Equity and seller terms. At least 10% of total project costs; a seller note counts toward up to half only on full standby for the life of the SBA loan; no earnout to the seller.
- Valuation. Required where the amount financed, less appraised real estate and equipment, exceeds $250,000; the purchase loan cannot exceed it.
- Transition. The seller may consult for up to 12 months, or up to 24 months under SOP 50 10 8.1 from 1 October 2026.
- From 1 October 2026, financial due diligence on every change of ownership, 1.25x coverage on historical results, and amortization over no more than 10 years except for real estate.
Preparing a builder's SBA file
SBA's standard list: business tax returns for 2–3 years, a P&L and balance sheet with a year-to-date P&L through last month-end, a debt schedule with copies of notes being refinanced, and personal tax returns and a personal financial statement for each owner of 20% or more. For a contract builder, add:
- A work-in-progress schedule for open jobs, and a list of homes completed in the last two years with contract price and final margin
- Signed contracts in backlog, with deposits received
- The contractor license and certificates of liability, builder's risk and workers' compensation insurance
- For equipment or vehicle purchases, quotes for what is being bought
- The owner's resume, which supports Form 1919's management experience
Builders that have covered gaps between draws with merchant cash advances need to address them first; SBA will not refinance an active advance, and from 1 October 2026 an advance becomes eligible only once converted to a term loan that has amortized for at least 24 months with no new advance since. See refinancing cash advances for contractors.
Transparent builds the full lender package, financing model, lender presentation, blind teaser and underwriting memo, in a day once the documents are in. 178 lenders approved a loan in this code in the period; with 278 SBA lenders in Transparent's book, the file can go to the ones that understand draws and work-in-progress. On SBA loans the lender pays Transparent, not the borrower. Related trades: residential remodelers and framing contractors.
Common questions
- Can a custom home builder get an SBA loan?
- Yes. SBA lenders approved 1,156 7(a) loans to contract home builders from October 2023 to June 2026, at a median of $150,000. Nearly half, 48.8%, went through SBA Express.
- Can an SBA loan finance homes I build to sell?
- Not through a standard term loan. A builder who buys lots and builds for sale is classified separately, and SBA's Builders CAPLine is the program designed for construction for resale. Contract builders, who build for owners, borrow on ordinary 7(a) terms.
- Why is the SBA rate for home builders higher than average?
- Mostly loan size and program. The median rate was 10.75% against 10.25% nationally; SBA allows higher rate caps on smaller loans, and SBA Express loans carry a 50% guaranty rather than 75% to 85%.
- Do lenders count customer deposits as the builder's cash?
- No. Deposits and draws collected ahead of work are owed to clients in work. Lenders look for cash the builder has earned, using the work-in-progress schedule to separate the two.
- Are home building companies bought with SBA loans?
- Rarely: 23 loans, 2% of the total, at a median of $1,500,000. That size points to larger firms whose backlog and reputation do not depend on the owner alone; a builder that is its owner is hard to finance for a buyer.