General Contractor Working Capital in Texas

Who's Actually Pulling Working Capital in Texas

Texas GCs come in a few distinct profiles, and the working capital need looks different for each. The most active borrowers we work with are mid-sized commercial shops — $2M to $15M in annual revenue — running ground-up tilt-wall warehouse construction along I-10, tenant improvement packages in the DFW Metroplex, or school and municipal work under CMAR contracts with the big ISDs. There's also a large contingent of residential production GCs in the Austin–San Antonio corridor and the Houston suburbs who are managing 20–50 active homes at any point and getting squeezed between builder draws and lumber and framing subcontractor invoices. Deal sizes for working capital in Texas typically run $100,000 to $1,500,000, with the sweet spot around $250,000–$600,000 for the commercial segment and $75,000–$250,000 for residential operators.

The buyer who calls us isn't usually in a crisis — they've won a contract, mobilization is imminent, and the first draw is 45 days out. They need the float to pay their super, their concrete sub's deposit, and two weeks of crew labor before the owner's first pay application clears. That's a normal Texas construction cycle, not a distress signal.

What Texas Throws at Your Cash Flow

Anyone who's built in Texas knows the climate isn't just uncomfortable — it's a project scheduling variable. Gulf Coast heat and humidity between May and September routinely push pour times to pre-dawn windows, compress daily productivity, and extend schedules on anything with masonry or exposed structural steel. When schedules slip, draws slip. Working capital is the buffer that keeps overhead funded while the schedule catches up.

On the regulatory side, Texas operates without a state contractor licensing board — licensing is done at the city or county level, which means a GC operating across Houston, Austin, and San Antonio is managing three separate permit ecosystems. The City of Austin's Development Services Department has moved toward electronic permitting but still runs longer review cycles on projects in the Barton Springs Zone or with heritage tree impacts. Houston operates under a relatively permissive ordinance framework but requires registered third-party inspection for commercial work. Permit delays don't pause payroll.

Texas also enforces its own Prompt Payment Act (Chapter 28, Property Code) — owners must pay GCs within 35 days of approval, GCs must pay subs within 7 days of receipt. That 7-day pass-through requirement is aggressive. If your owner is slow, you're personally funding that sub payment gap. A revolving working capital line is the right tool for this, not a term loan you're paying interest on while you wait.

For prevailing wage work — TxDOT, municipal bond projects, school construction — Chapter 2258 of the Texas Government Code governs wage rates on public projects. Certified payroll is mandatory, and payroll cycles don't flex. That's another direct driver of working capital demand in the Texas public-sector GC market.

How Working Capital Is Structured for Texas GCs

Most Texas GCs we work with end up in one of two structures: a revolving business line of credit or an unsecured working capital term loan. The line of credit is the more flexible instrument — you draw when you need it, pay it back as draws arrive, and carry it across multiple projects. It's better suited to GCs running concurrent jobs with overlapping cash cycles. Term loans are simpler to underwrite and faster to close, but you're paying interest on the full balance whether you need it or not.

For established Texas operators with solid bank relationships, revolving lines often come from regional banks — Frost, Cullen/Frost, Prosperity, Axiom — at rates in the 8.5–11% APR range on secured structures. SBA 7(a) working capital loans hit the same range and carry terms up to 10 years, with loan amounts up to $5,000,000, but the 30–45 day approval timeline makes them poor tools for immediate mobilization needs.

Alternative and online lenders close in 24–72 hours and are willing to lend to operators with 12–18 months in business, but APRs climb fast. Merchant cash advances — which some Texas GCs fall into through aggressive broker channels — carry 80–150% APR equivalents and should be a last resort, not a first call.

Origination fees across the market run 1–3% of the loan amount. Build that into your cost-of-capital math before you compare line options.

The money itself gets used for predictable things: framing sub deposits, material purchases before the lumber yard will extend terms, temporary labor for mobilization, equipment rental during the early project phase, and bridging certified payroll on public jobs. It is not long-term capital — you want to cycle it in and out within 60–120 days on a per-project basis.

What You Need to Qualify in Texas

Time in business matters more than most GCs expect. SBA and bank products standardly require 24 months of operating history. Alternative lenders will go as low as 12 months on strong revenue, but you'll pay for it. If your entity was freshly formed but you rolled an existing book of business into it, document that continuity — lenders can follow predecessor revenue if the paper trail is clean.

Credit floors: 640+ FICO for bank and SBA products, 580–600 for alternative lenders. Scores in the 620–679 range typically add 2–4 percentage points to your rate. Given that about 1 in 5 credit reports contains an error, pull your personal and business reports before you apply — a surprise collections item on a subcontractor you paid two years ago can tank a deal.

Revenue minimums for unsecured working capital lines typically sit at $150,000–$250,000 in annual revenue, though for lines above $500,000 most lenders want to see $500,000 or more. Lenders will also look at your debt service coverage — a minimum 1.25x DSCR is the standard floor, and they'll typically cap total debt service at 45–50% of gross monthly revenue.

For the application itself, a Texas GC should pull together: 12 months of business bank statements (the full 12 — don't redact), your two most recent business tax returns, current AR and AP aging schedules, your contractor registration or business license for each municipality you operate in, and a copy of the contract or award letter for the project driving the capital request. If you're a sole proprietor or single-member LLC — common in the Texas residential market — expect the lender to pull personal returns as well.