The most common contractor working capital uses are: purchasing materials before milestone payments arrive, payroll during gaps between draws, bonding and insurance renewals, equipment repair or replacement, and taking on larger jobs that require upfront material costs.
Solve the draw schedule gap, protect yourself from gap months, right-size your advance, and use working capital to mobilize multiple simultaneous jobs.
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What do contractors typically use working capital for?
The most common contractor working capital uses are: purchasing materials before milestone payments arrive, payroll during gaps between draws, bonding and insurance renewals, equipment repair or replacement, and taking on larger jobs that require upfront material costs. The gap between when contractors pay for labor and materials and when they receive payment from clients is the primary cash flow challenge working capital solves.
Is MCA a good working capital option for contractors?
MCA is the right fit when: you need capital in 1–3 days, your credit score is below what banks require, or a bank's 30–90 day approval timeline would make you miss the job. It is not the right fit if you have access to a business line of credit at competitive rates. MCA is speed and access capital — it is more expensive than bank financing and is designed for short-term working capital needs, not long-term equipment financing.
How much working capital can a contractor typically access?
Contractor MCA advance amounts typically range from $10,000 to $500,000+, sized at 75–150% of average monthly revenue. A contractor depositing $40,000/month can typically access $40,000–$60,000 in first-position advance. Revenue consistency and time in business are the two primary sizing factors.
What is the difference between a construction loan and working capital for a contractor?
A construction loan finances a specific project and is repaid when the property sells or the owner refinances. Working capital fills the cash flow gaps within a project — covering material purchases, payroll, and subcontractor payments before milestone payments arrive. Most contractors cannot get construction loans quickly enough to cover operating gaps, which is why short-term working capital (MCA or business line of credit) serves a different function than project financing.
