Developing Westchester: Building a Better Balance Sheet: Smarter Financing for 2026 - Patrick Smith

As we stand on the precipice of a new year, contractors find themselves facing both opportunity and uncertainty. The ongoing impact of tariffs on material costs, inflation, and changing interest rates is causing market conditions to shift once again. While affordable housing, warehouses, and multifamily/mixed-use projects are positively trending in the Hudson Valley, many contractors and asset classes are experiencing slower workflow than they did even in the wake of the COVID-19 pandemic. 

To succeed in this environment, it is important for contractors to understand the market dynamics and work with their financial partners to implement creative financing tools that best serve this industry. From flexible credit lines to relationship-based banking, these could make the difference between stalled projects and continued growth. 

Relationship Banking vs.
Transactional Banking

Trust and relationships drive every construction project, and the same can and should apply to a financial strategy. Contractors rely on their subcontractors, and their banking partner should be viewed no differently. The right bank will take the time to understand the client’s business model, pain points, risk tolerance, and pipeline, not just treat them like a one-off project. 

This “relationship banking” is at the heart of what we do at Orange Bank & Trust Company. Clients have direct access to decision-makers within the bank, quick turnaround on lending decisions, and flexibility that’s often missing from larger institutions. Team members can be reached directly, even after hours and on weekends. We like to say that we don’t keep bankers’ hours, we keep contractors’ hours. We work closely with our clients and provide recommendations that can help them save money, improve cash flow, streamline operations, and reduce the risk of fraud. 

Financing Options that Reflect Reality

For contractors, managing cash flow is as important as managing project timelines. Delayed draws, retainage, and uneven payment cycles can cause even profitable companies to face short-term struggles. Flexible lines of credit, structured around project timelines instead of traditional repayment schedules, can keep operations moving forward.

A good financial partner will take the time to learn and understand the client’s billing cycles and offer financial solutions that support them. Lending, cash management, tech-enabled banking solutions, and client service should be structured around how contractors operate. While larger institutions are growing more cautious about construction lending, with some pulling out of the sector entirely, there is an opportunity for local and regional banks to showcase that they understand the industry by providing flexible lending options and a deeper understanding of how contractors operate. 

Equipment and Asset-Based Lending

With rising equipment prices and tightening credit conditions, asset-based lending remains a valuable option for contractors who want to leverage the value of existing equipment or receivables. This type of financing provides funds without disrupting project timelines or taking on high-cost short-term debt.

Contractors can work with their lenders to evaluate which assets could be used as collateral and understand the trade-offs (borrowing limits, depreciation, and maintenance obligations) to make the most strategic use of their balance sheets.

Creating a Financial Network

Access to financing often goes beyond simply choosing the right bank. Contractors benefit from forming a broader financial network with accountants, surety agents, legal advisors, and lenders who know one another and can collaborate to make deals happen. These relationships often lead to faster closings, better terms, and creative solutions to complex project challenges. Due to our extensive relationships within the construction and contracting industries, we frequently connect our clients with other professionals when needed. We also provide networking opportunities for contractors to meet other contractors, property managers, builders, and tradespeople.

What Comes Next 

Looking ahead, contractors who invest time in developing strong financial partnerships will be better positioned to weather the highs and lows of the construction cycle. From securing flexible working capital to expanding bonding capacity or planning to scale banking solutions for new growth opportunities, a well-structured financial foundation is key to staying competitive in 2026 and beyond.

At the end of the day, the most successful contractors will be those who approach banking the same way they approach a project: choosing the right partners, planning ahead, and making sure every piece fits together for long-term success.

Patrick Smith is SVP senior relationship manager, Construction and Trade Industry Banking, at Orange Bank & Trust Company, Middletown, N.Y.