The short answer
Yes — a Florida construction company can secure equipment, working capital, and project financing while carrying an open federal or state tax lien. The three workable structures are IRS lien subordination, purchase-money security interest (PMSI) equipment financing, and revenue-based working capital that does not depend on lien-priority collateral. The wrong move is walking into a traditional bank — the right move is matching the structure to the lien.
Tax liens are one of the most common reasons Florida contractors get declined for financing they could otherwise easily support. The revenue is there, the backlog is there, the equipment need is there — but a bank sees the lien on the credit report and the file dies before underwriting. Understanding why banks decline and which alternative structures actually work is the difference between stalled growth and a funded project.
Why a Tax Lien Kills Bank Financing
A federal tax lien is a public claim by the IRS against all of a taxpayer's property — real, personal, and financial. When the IRS files a Notice of Federal Tax Lien (NFTL) with the Florida Secretary of State, that filing establishes priority over any subsequent lender who takes a security interest in the same collateral.
Banks underwrite to a first-position collateral requirement. If a $180,000 tax lien is already on record, a new bank loan cannot take priority on business assets — the bank is exposed. That is why the bank declines, regardless of the strength of the underlying business.
Path 1 — Equipment Financing With a PMSI
The most straightforward path for a Florida contractor with an open lien is equipment financing structured as a purchase-money security interest. Under Article 9 of the Uniform Commercial Code, a lender who provides the funds specifically to acquire a piece of equipment can perfect a PMSI in that equipment — and that PMSI takes priority over a pre-existing tax lien on the newly acquired collateral.
In practice, this means a Florida contractor with an open $150,000 IRS lien can still finance a $220,000 excavator, dump truck, skid steer, or lift — because the lender's PMSI on that specific piece of equipment sits ahead of the tax lien on that specific asset. The lien remains on everything else the business owns; it just does not touch the newly financed equipment. See our Florida construction equipment financing hub for equipment-specific programs, and the Section 179 tax deduction guide for the same-year write-off treatment.
Path 2 — IRS Lien Subordination
For larger working capital or real estate deals where the new lender needs blanket collateral, the IRS can voluntarily subordinate its lien under IRC §6325(d). The taxpayer files Form 14134 (for real estate) or Form 14135 (for other property), demonstrating that subordination ultimately improves the IRS's collection outcome — usually because the new financing keeps the business operating and generating tax revenue.
Subordination is not instant. IRS processing typically runs 30 to 45 days. Aberdeen coordinates the subordination request in parallel with lender underwriting so the timeline compresses as much as possible.
Path 3 — Revenue-Based Working Capital
A third path — increasingly the workhorse for small-to-mid Florida contractors — is revenue-based working capital that does not depend on priority collateral. These programs underwrite to business bank deposits, time in business, and the status of the tax obligation (installment agreement in place, no acceleration). A UCC-1 blanket lien is typically filed but the lender accepts secondary position behind the tax lien because the underwriting is fundamentally cash-flow driven, not collateral driven.
Comparison at a Glance
| Structure | Best For | Timing | Requires IRS Coordination? |
|---|---|---|---|
| Equipment PMSI | Single-asset financing | 5–10 days | No |
| IRS lien subordination | Large working capital or CRE deals | 30–60 days | Yes |
| Revenue-based working capital | Payroll, materials, cash flow gap | 7–14 days | No (installment agreement helps) |
Positioning the File for Approval
Four documentation items materially improve approval odds on any tax-lien file:
- Copy of the IRS lien filing (or state equivalent) with balance and date.
- Signed installment agreement with the IRS or state, current and in good standing.
- Three to six months of business bank statements demonstrating the business services the installment payment and operating cash flow.
- Contract backlog or work-in-progress schedule showing the pipeline the financing will support.
A file with all four items closes materially faster and at better pricing than a file without them. Aberdeen packages every construction financing file this way before submission — it is the single biggest lever a contractor has over the outcome.
When the Answer Is "Resolve the Lien First"
Honesty matters here. If the lien is under active accelerated collection, if there is no installment agreement, or if the balance is climbing faster than the business generates cash, the right first move is a call to a tax resolution specialist — not a new financing application. Financing a business into deeper trouble is not a service. Aberdeen will tell you plainly when the file is not fundable and what the sequence should look like instead.
Frequently Asked Questions
Can a Florida construction company get financing with an open IRS tax lien?
Yes — but the structure has to account for the lien. An open federal tax lien takes priority position over most new lenders, which eliminates traditional bank underwriting. The workable paths are: (1) a subordination agreement with the IRS that lets a new lender take first position on specific collateral, (2) a payoff financing structure where new loan proceeds pay the lien in full at closing, or (3) revenue-based working capital that does not require priority collateral.
What is an IRS lien subordination and how does it work?
The IRS can voluntarily subordinate its tax lien to a specific new lender under Section 6325(d) of the tax code. In practice, this means the IRS agrees in writing that the new lender's UCC or mortgage takes priority ahead of the tax lien on named collateral. The IRS approves subordination when doing so ultimately increases the government's chance of collecting the tax debt — for example, when new financing lets the business continue operating and generating revenue.
Can I finance equipment if I have an unresolved tax lien?
Yes, in most cases. Equipment lenders can perfect a purchase-money security interest (PMSI) in the specific equipment being financed, which takes priority over a pre-existing tax lien on that piece of collateral. This is the most common path for Florida contractors who need a new excavator, dump truck, or lift while carrying an open lien.
Do I need to be on an IRS installment agreement first?
It helps materially. A structured IRS installment agreement demonstrates the tax obligation is being addressed and is not accelerating. Many revenue-based lenders will approve files with an open lien only when there is documentation of a current, in-good-standing installment agreement.
How much revenue do I need to qualify?
For revenue-based working capital with an open lien, Aberdeen typically needs to see $40,000+ in average monthly business deposits and 12+ months in business. For equipment financing with a lien, the equipment itself carries most of the underwriting weight — revenue thresholds are lower.
Will the lender pull my personal credit?
Yes, but personal credit is not the primary factor when a tax lien is present. Lenders focus on business cash flow, the age and status of the lien, whether an installment agreement is in place, and the collateral structure.
How long does approval take with an active lien on file?
Equipment financing with a PMSI: typically 5–10 business days. Working capital with a lien in place: 7–14 business days, longer if an IRS subordination is required (subordination requests to the IRS take 30–45 days to process).
Ready to Get Your Construction Deal Funded?
Aberdeen Financial Group structures equipment, working capital, and project financing for Florida contractors — including files with open tax liens. Free consultation, no obligation, one business day response.