Construction runs on cash you don't have yet. You buy steel before the first draw. You pay crew before the inspection. You fund insurance and bonding before the GC even signs the contract. Every other industry gets paid and then spends. Construction spends and then waits 30, 60, sometimes 90 days to get paid.
That gap between outlay and income is where construction companies go broke. Not because the work isn't there. Not because the bids aren't profitable. Because cash doesn't arrive when bills do.
We fund construction companies every week. GCs, subcontractors, specialty trades, demolition crews, paving outfits. The pattern is always the same: a profitable business starved for working capital because of how construction payment cycles actually work.
Why Construction Cash Flow Is Fundamentally Broken
Most businesses operate on a simple cycle. Deliver product or service, send invoice, get paid in 15-30 days. Construction doesn't work like that. Construction has draws.
A draw is a progress payment tied to milestones. Finish the foundation pour, submit paperwork, wait for the inspector, wait for the architect to sign off, wait for the lender to release funds. That chain can take 4-8 weeks after the work is physically done. Meanwhile, the concrete supplier wants payment in 30 days, your crew expects a check every Friday, and the equipment rental company doesn't care about your draw schedule.
The upfront materials problem
Lumber, steel, concrete, electrical components -- all purchased before work starts. A $400,000 commercial build might require $85,000 in materials before you pour the first footer. Your supplier gives you net-30 terms if you're lucky. The first draw won't arrive for 6-8 weeks. That's a $85,000 hole in your cash flow before you've billed a dollar.
The payroll gap
A crew of 12 at an average of $28/hour costs roughly $13,440 per week. Over a 6-week draw cycle, that's $80,640 in payroll alone. Miss one Friday and your best guys start looking for other work. Lose your crew mid-project and you miss the deadline. Miss the deadline and you eat liquidated damages. One payroll gap cascades into a $50,000 problem.
The bonding trap
Want to bid on a $750,000 municipal project? You need a performance bond. That bond premium runs 1-3% of the contract value -- $7,500 to $22,500 upfront. The surety company wants to see liquidity. If your cash is tied up in materials on your current job, you can't bond the next one. So you watch profitable work go to competitors because your capital is locked in a project that hasn't paid you yet.
The GC payment chain
If you're a subcontractor, you're at the mercy of the GC's payment timeline. The owner pays the GC. The GC pays you. If the owner is slow, the GC is slow, and you eat the delay. Industry average for sub payment: 60-67 days after invoice. Two months of carrying costs on labor and materials you've already deployed.
Three Real Scenarios
These are composites from actual applications we've reviewed. Names changed, numbers real.
Scenario 1: GC needs $85K for steel before first draw
A general contractor in Phoenix lands a $1.2M commercial tenant improvement. The steel package alone runs $85,000, due on delivery. The first draw is tied to completion of framing -- 6 weeks out minimum. The GC has $30,000 in the bank. His current project still has a $40,000 retainage hold that won't release for another 45 days.
He needs $85,000. His bank wants 90 days and two years of tax returns. The steel supplier wants a cashier's check on delivery day, which is in 11 days.
The math:
Funding amount: $85,000
Factor rate: 1.25
Total repayment: $106,250
Cost of capital: $21,250
Daily remittance: ~$590 over 6 months
Gross profit on the $1.2M project: ~$216,000
Net after funding cost: $194,750
The $21,250 cost bought him the ability to execute a project worth $216,000 in gross profit. Without the capital, the project goes to someone else. (For more on how factor rates determine total cost, see our factor rate breakdown.)
Scenario 2: Subcontractor waiting on GC payment for 60 days
An electrical subcontractor in Atlanta completed a $140,000 phase on a hospital renovation. Invoiced the GC on March 1. It's now April 30 and the GC says the owner hasn't released funds yet. "Should be next week." That's what they said three weeks ago.
Meanwhile, the sub has $22,000 in payroll due Friday, a $9,400 supply house bill at 45 days, and a truck payment of $1,800. He needs $35,000 to stay current while the GC sorts out payment.
The math:
Funding amount: $35,000
Factor rate: 1.22
Total repayment: $42,700
Cost of capital: $7,700
Daily remittance: ~$356 over 4 months
When the GC finally pays the $140,000 invoice, the sub clears the advance and pockets the rest. The $7,700 cost prevented a payroll miss, a supplier credit default, and a truck repo. All three of those outcomes would have cost more than $7,700.
Scenario 3: Equipment purchase to bid on bigger jobs
A paving company in Dallas has been subbing out milling work because they don't own a cold planer. Rental runs $4,500/week. A used Wirtgen W 100 comes up for $62,000. If they own the machine, they can bid direct on municipal paving contracts worth $200K-$500K each instead of subbing the milling to someone else at a 35% markup.
The company does $55,000/month in revenue. Strong cash flow, 4 years in business. But $62,000 in one shot would wipe out their reserves.
The math:
Funding amount: $62,000
Factor rate: 1.20
Total repayment: $74,400
Cost of capital: $12,400
Saved rental costs per year: ~$72,000 (assuming 16 weeks of use)
New bid capacity: $200K-$500K contracts
The machine pays for itself in avoided rental costs within 3 months. The new bid capacity is gravy on top.
What Qualifies a Construction Company
We look at three things. That's it.
1. Time in business: 6 months minimum. We need to see that you've survived at least one project cycle. 18+ months gets you better rates because you've proven you can manage the draw cycle without going under.
2. Monthly revenue: $15,000 minimum. This shows up in your bank statements as deposits. It can be lumpy -- construction revenue usually is. A $45,000 deposit followed by nothing for 3 weeks and then a $60,000 deposit is fine. We understand draw schedules. We're looking at the trend, not the smoothness.
3. Bank statements: 3 months. This is the application. Three months of business bank statements. We look at average daily balance, deposit frequency, negative days, and overall cash flow trajectory. No tax returns. No P&L. No collateral appraisal.
Credit score matters less than you think. We've funded contractors with 520 FICOs who had strong cash flow. We've turned down contractors with 740 FICOs whose bank statements showed negative balances every other week. Cash flow is the underwriting metric.
What Construction Funding Costs
Construction companies typically see factor rates between 1.15 and 1.40. Where you land depends on your profile.
- Strong profile (2+ years, $50K+/mo revenue, consistent deposits): 1.15 - 1.25
- Moderate profile (6-24 months, $15K-$50K/mo, seasonal swings): 1.25 - 1.35
- Higher risk (newer company, lower revenue, existing obligations): 1.35 - 1.45
Sample cost on $75,000:
Factor rate: 1.25
Total repayment: $93,750
Cost of capital: $18,750
Estimated term: 6 months
Daily remittance: ~$520
That $520/day needs to fit inside your cash flow without squeezing operations. On $50,000/month in revenue (~$2,273/business day), that's about 23% of daily revenue. That's tight. On $80,000/month (~$3,636/business day), it's 14%. Much more comfortable. We'll tell you upfront if the remittance is too aggressive for your revenue.
When Construction Funding Makes Sense
The test is simple. Will the capital generate more than it costs?
Yes -- bridge to a draw. You have a signed contract. The work is in progress. The draw is coming. You just need cash to survive the gap between now and then. The funding cost is a fraction of the project profit.
Yes -- equipment that creates revenue. A new machine lets you bid on work you currently can't. Or it replaces a rental that costs more per month than the advance repayment. The ROI is measurable.
Yes -- payroll continuity. Losing a crew costs more than the funding. Recruitment, training, missed deadlines, liquidated damages. The math almost always favors keeping your people.
Yes -- bonding capacity. If $15,000 in bonding premium lets you bid on a $500,000 contract with $90,000 in gross profit, the funding cost is a rounding error.
When It Doesn't Make Sense
No -- covering losses. If your projects aren't profitable, capital doesn't fix that. It makes it worse. An extra $18,000 in repayment on top of unprofitable work accelerates the problem.
No -- speculative bids. Taking $50,000 at a 1.30 factor rate to chase a project you might not win is gambling. Fund equipment and materials when you have a signed contract, not a hopeful estimate.
No -- when a bank will do it. If you have 2+ years of tax returns, a 680+ credit score, and 60 days to wait, a bank term loan or SBA loan costs dramatically less. A bank charges 8-12% APR. An MCA at a 1.25 factor rate over 6 months works out to roughly 50% equivalent APR. The bank is cheaper if you can get it. Most construction companies can't -- 78% of small contractor applications get denied by traditional banks.
The Application Process
Here's how it works with us, step by step.
Step 1 (5 minutes): Submit basic info -- business name, monthly revenue range, industry. No credit pull.
Step 2 (same day): A Westline rep calls. We ask about the business, the use of funds, and current obligations. Then we request 3 months of bank statements.
Step 3 (4-6 hours): We review the statements. If approved, we send an offer with the funding amount, factor rate, total repayment, and daily remittance. No hidden fees. The factor rate is the full cost.
Step 4 (same day or next morning): You sign. Money hits your account. That steel order gets placed, the crew gets paid, or the bond premium goes out.
Total timeline: 24-48 hours from application to funds in your bank account. Compare that to 60-90 days at a bank, assuming they say yes.
Frequently Asked Questions
Can construction companies get a merchant cash advance?
Yes. Construction companies qualify based on bank statement deposits, not contract type. You need 6+ months in business and at least $15,000/month in revenue. We look at cash flow patterns, not credit score. Funding ranges from $5,000 to $2,000,000 with approval in 24 hours.
How fast can a construction company get funded?
Most construction companies receive funds within 24 to 48 hours of submitting a complete application. You provide 3 months of bank statements, we review cash flow, and if approved, money hits your account the next business day. No collateral appraisal, no SBA paperwork, no 60-day wait.
What can construction funding be used for?
Anything your business needs. Common uses: upfront material purchases before a draw, payroll between progress payments, equipment purchases or repairs, bonding premiums, insurance renewals, and bridging the gap when a GC pays 60-90 days late. No restrictions on how you deploy the capital.
What does construction business funding cost?
Factor rates for construction companies typically range from 1.15 to 1.40. On a $75,000 advance at a 1.25 factor rate, total repayment is $93,750. The $18,750 difference is the cost of capital. Daily remittance runs roughly $520 over 6 months.
Do I need to put up equipment or property as collateral?
No. A merchant cash advance is based on your future receivables, not collateral. We do not place liens on equipment, vehicles, or real property. Qualification is based on your bank statements and cash flow history.