The third week of June has a shape. Three jobs running, a fourth mobilizing after the Fourth, crews booked into August, and the biggest number in the business sitting in receivables you can’t spend yet.
The work is sold. The gap is timing.
I want to walk through how a construction file reads from the funding side, because most contractors get handed structures built for retail, and the fit is usually wrong.
The payment chain is the actual problem
An owner releases a draw to the GC. The GC pays you. If your contract carries a pay-when-paid clause, your invoice does not start moving until that first wire lands, and you’re two links down the chain with the payroll obligations of a much bigger company.
Billed in March, wired in May is a normal file in this trade. Not a broken one.
Then retainage. Most of the contracts that cross my desk hold 5 or 10 points of every invoice until closeout. On a $2,000,000 job, that is $100,000 to $200,000 of finished, signed-off work you already covered payroll on.
Worth reading that clause before you price the next bid.
How underwriting reads a contractor file
Construction deposits are lumpy. A $190,000 wire in March, a quiet April, two wires in May. That pattern spooks desks that mostly see retail. It reads as normal to a desk that sees contractor files every week.
What gets weighed is volume across four to six months, and how the account behaves in the quiet weeks between wires. A file that dips near zero every time a draw runs late reads riskier than one that holds a floor. Time in business counts too, mostly because it says whether you have already lived through a slow GC.
If your company runs out of New York, I covered the broader documentation picture in business funding in New York.
Match the structure to the gap
Iron
Equipment financing is the cleanest fit in this trade. The excavator or the dump truck secures the deal, and the payment is fixed and monthly over a term measured in years. The machine earns while it pays for itself.
The catch is age. Older iron draws shorter terms and bigger down payments, so price the ten-year-old machine honestly before you count on it.
Receivables
Invoice factoring turns a slow-paying GC into same-week liquidity. You sell the invoice, the factor wires most of it up front, and the balance comes back when the GC pays, minus the fee.
The fee is the part to respect. At 2.5 percent per 30 days, a GC who pays in 60 costs you 5 points. On work you bid at 12 percent margin, that is nearly half the job. On work you bid at 25, it barely registers.
Same product. Different answer.
Payroll weeks
A revolving line fits the week-to-week gap. You draw for payroll and repay when the check clears. You only pay for what you actually used. It is also the slowest yes on this page, and newer subs with thin files are usually offered less than they hoped for.
Mobilization
Revenue-based funding is the fast structure. It is priced on a factor and paid back daily or weekly out of deposits. It can close in days. It exists for the job that starts in two weeks where the deposit doesn’t cover labor and materials up front. The speed is real and so is the price, which is why sizing matters more here than anywhere else.
Two ways to cover the same $180,000 gap
A scenario we see every month. A sub finishes $220,000 of billed work. The GC’s terms say 60 days and usually mean more. The next job needs payroll and materials now.
Option one, factor the invoice. At 85 percent up front you see $187,000 this week. If the GC pays on day 60 at 2.5 per 30, the fee is $11,000 and the reserve comes back to you. If the GC drags to day 90, the fee climbs to about $16,500.
Option two, revenue-based funding for $180,000 at a 1.30 factor. Payback is $234,000. The cost is $54,000.
When the invoice is clean and the GC verifies, I would take the factor, and it is not close. The revenue-based route earns its place when the receivable is disputed or the GC will not cooperate with verification, because then the factor cannot buy the invoice and speed is what is left. Size it to the job’s margin, not to the biggest number a funder offers.
Set it up in the strong month
Underwriting reads your last four to six months, so the file you submit in a strong stretch is a different file than the one you submit the week payroll wobbles.
Back in February, a paving contractor waited until eight days before mobilization to start a revolving line file. The file was fine. The calendar was not, and the job started a week late.
Even if nothing gets signed this season, read your retainage clause and your pay-when-paid clause before the next bid. The gap is much easier to price before you are standing in it.