Can you advance against retainage?

Usually at a reduced advance rate, and evaluated separately from current billings. Retainage is real earned revenue but its collection depends on closeout and punch completion, so lenders discount it rather than ignore it.

Will this conflict with our surety or bonding company?

It can if not coordinated, since sureties often claim a position on contract receivables. We work with your surety up front rather than discovering the conflict at closing. Bonded contractors are financeable — the sequencing just has to be right.

How is this different from an equipment loan?

Equipment financing buys an asset and is secured by it. This facility funds the operating gap between performing work and getting paid for it. Most growing contractors need both, and they should not compete for the same collateral.

Our WIP shows underbillings. Is that a problem?

Underbillings need explanation but they are not disqualifying — they often reflect timing of pay app approval rather than trouble. What underwriters react badly to is a WIP schedule that is stale, inconsistent with the AR aging, or produced only when a lender asks for it.

Between the work and the draw

Working Capital for Construction Companies

Construction runs on a structural mismatch: you pay subs and suppliers on 30-day terms while the owner pays draws 45 to 60 days after a pay application that itself lags the work by weeks. Add 5-10% retainage held until closeout and a profitable contractor can be cash-negative on a job that is going perfectly. Growth makes it worse, because every additional job widens the same gap.

Quick answer

Working capital for construction companies bridging the gap between performing work and receiving the draw. Cover subs, materials, and retainage. $100K-$15M.

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You are probably here because

Subs and suppliers are due before the current draw is funded

Retainage across active jobs is holding six or seven figures you have already earned

You are turning down work because bonding or cash cannot support another simultaneous job

An owner or GC has slipped their pay cycle and the whole schedule is compressing your cash

How we structure it

Facility size$100K – $15M

Term12 – 36 months, revolving against pay applications

Advance basisProgress billings and approved pay apps, retainage considered separately

Time to fund1 – 3 weeks

What we need to give you an answer

Have these together and you will know where you stand in 24-48 hours instead of three weeks.

Work-in-progress schedule — the single most important document in a construction credit file

AR aging with job-level detail, including retainage held by job

Contract type mix: cost-plus, GMP, and lump sum carry different risk profiles

Bonding relationship and whether the surety has an existing position on receivables

How it played out

Six simultaneous jobs and a widening retainage balance

A mechanical subcontractor in Colorado was running six jobs at once with $1.9M in combined progress billings outstanding and $640,000 held in retainage. Every additional award made cash worse, not better. Their bank line was $750,000 and fully drawn. We put a $2.5M revolving facility in place, advancing against approved pay applications with retainage evaluated separately at a lower advance rate. The contractor took on two additional jobs the same quarter and stopped paying subs late.