How to finance the construction materials for a project

Materials account for about half the cost of a building in Colombia, and they are bought before much of the project’s money arrives. This guide compares the financing options available to a builder and when each one makes sense.

Updated: October 9, 2026

50.7%

share of materials in building construction costs (DANE ICOCED, August 2026)

6.90%

annual increase in construction costs as of August 2026

+14.1%

annual increase in labor, the component that pushed costs the most

68.2%

of the housing supply was still in pre-sale in July 2026 (Camacol)

Why cash gets tight at the start of a project

In a project with a pre-sales trust (fiducia de preventas), buyers’ money stays with the trustee until the project reaches its break-even point. Meanwhile the builder starts with its own capital: studies, permits, foundations and the first materials purchases. In July 2026, 68.2% of the housing supply was still in pre-sale, and in a Camacol Bogotá y Cundinamarca survey 61% of firms reported serious difficulty reaching break-even on time because of buyer cancellations.

Costs add to the pressure. With the 2026 minimum wage increase, labor rose 14.1% over the year and total construction costs 6.90%. Every peso the project spends on materials at the start is a peso that is not available for payroll.

Options to finance materials

Option	How it works	What to consider
Own capital	The builder pays for materials with its own cash or partner contributions.	No direct financing cost, but it ties up capital that could support other projects.
Bank construction loan	The bank finances up to a share of the project cost and disburses against construction progress. Bancolombia, for example, finances up to 80% with a mortgage on the land.	Requires a mortgage, insurance and often pre-sales or break-even before the first disbursement. The average rate was 13.71% in pesos as of August 2026 (Camacol).
Supplier credit	The supply store or distributor gives you time to pay for its own products.	Works with one supplier at a time. Credit from hardware stores and home centers is usually designed for individuals and self-builders, with low limits.
Factoring and confirming	Receivables are advanced, or a third party pays suppliers against approved invoices.	Depends on registered electronic invoices and the quality of the payer.
Revolving line for materials	A credit line to buy from several suppliers, with 30, 60 or 90-day terms. The amount is released as you repay.	Covers materials purchases. It works alongside a construction loan during stages without disbursements.

How much you need at each stage

DANE breaks down the cost of a typical concrete-frame building as follows. Use it as a starting point to estimate how much material you buy at each stage and when:

Share of each chapter in total cost, concrete-frame system (DANE ICOCED, August 2026)
Stage	Share of cost
Preliminaries, excavation and foundations	19.6%
Structure and roof (includes building services)	45.8%
Masonry and plastering	7.3%
Finishes	27.3%

The structure accounts for almost half the cost and is usually built before the project has received all of its disbursements. It is the stage where buying concrete and steel on terms matters most.

How to choose

Build the project’s cash flow by stage and mark the months where materials purchases exceed available income.
Use a construction loan for the whole project if you meet its requirements, and check when the first disbursement arrives.
Cover materials gaps with a revolving line on 30, 60 or 90-day terms, especially during foundations and structure.
Pay upfront when you have the cash. It builds payment history and improves the credit terms you are offered later.

A useful fact for negotiating: since 2022, Law 2024 of 2020 requires commercial invoices to be paid within 45 calendar days, except between large companies. That is why many small suppliers cannot offer long terms directly, and a line that pays them on delivery lets you ask for better prices and delivery terms.

Parex offers the revolving materials line in Bogotá, Medellín, the Coffee Region, Barranquilla and Cartagena.

Materials on creditConstruction materials for builders, paid upfront or on creditA revolving line for builders in Bogotá, Medellín, the Coffee Region, Barranquilla and Cartagena.Bogotá and the SabanaConstruction materials in Bogotá, paid upfront or on creditProjects in Bogotá, Soacha and the western Sabana. Upfront or 30, 60 or 90-day credit.Medellín and AntioquiaConstruction materials in Medellín, paid upfront or on creditProjects in the Aburrá Valley and eastern Antioquia. Upfront or 30, 60 or 90-day credit.Barranquilla and AtlánticoConstruction materials in Barranquilla, paid upfront or on creditProjects in Barranquilla, Soledad, Puerto Colombia and Malambo. Upfront or 30, 60 or 90-day credit.

Sources