What do lenders think of a demolition contractor’s irregular project income?

Expect the lender to study income statements across several years, not just the best one. They will look for the pattern: how large a typical job is, how often they come, and how long gaps last. Be ready to explain any quiet period and what the company did about it.

Show the backlog. Signed contracts and a pipeline of bids give comfort that income will keep coming. Describe your customer mix too, since a spread across many clients looks safer than a few.

Lenders also care about cash. Show how the company pays for equipment, insurance and wages when no job is running, whether through a reserve, a credit line or flexible costs. Work in progress and holdbacks can distort the statements, so ask your accountant to prepare notes that explain them. Last, think about the repayment schedule. Some lenders can match payments to a lumpy income pattern; ask what options exist before you apply. A strong owner contribution or a lower loan request can also ease a lender’s concerns about uneven income. Ask what combination the lender prefers, and whether a seller loan on part of the price could help bridge the early months. Bring a simple forecast for the next year, with the assumptions written beside each line, so the lender can test your thinking and see you understand the cycle.

Key takeaways

• Present several years of results with notes on gaps.
• Show signed work and bids still pending.
• Explain how fixed costs are covered between projects.