Florida Building Contractor Business/Finance Practice Exam

Which of the following is NOT a typical type of loan a contractor would encounter?

1. Construction Loans

2. Hard Money Loans

3. Credit Card Loans

4. Permanent Loans

The correct answer is: Credit Card Loans

Contractors typically encounter various types of loans specific to their project needs and financial situations. Among those, construction loans, hard money loans, and permanent loans are all standard financing options in the construction industry: - Construction loans are short-term loans specifically designed to cover the costs of building a project. They are disbursed in phases as construction progresses and typically have variable interest rates. - Hard money loans are a type of asset-based financing where a borrower receives funds secured by real property. These loans are often used when a contractor needs quick access to capital or cannot qualify for traditional financing. - Permanent loans, often known as long-term financing, are loans that once construction is complete, replace the construction loans. These are typically used to stabilize the project and secure a lower, fixed interest rate over an extended period. In contrast, credit card loans are not a typical type of loan for contractors in the same way that the others are. They provide revolving credit, which can be useful for smaller purchases or immediate expenses, but they are not structured to finance larger construction projects or meet the specific financial needs that arise from them. Therefore, credit card loans do not align with the common loan types typically encountered by contractors, making this option the least relevant in the context of