Yes — contractors, roofers, HVAC companies, plumbers, electricians, and general contractors are among the most common merchant cash advance recipients. Approval is based on consistent monthly bank deposits, not the timing of individual draw payments or retainage releases. MCA working capital bridges the gap between upfront labor/materials/equipment costs and delayed or partial draw payments — funded in as little as 24–72 hours with no collateral required.
Why Construction Has Unique Cash Flow Challenges
Construction businesses operate in a cash flow environment unlike almost any other industry. You incur large upfront costs — labor, materials, equipment rental, insurance — before receiving a single draw payment. Then when payment does come, it's often partial, delayed, or subject to retainage that won't be released for months.
The Construction Cash Flow Cycle
Understanding the payment hierarchy is essential to understanding why cash flow problems occur:
Construction Payment Hierarchy — and Where Cash Gets Stuck
Each tier collects before paying the next. If the GC is slow, every sub and supplier waits. If there's a dispute at the owner level, the entire payment chain freezes.
The 5 Cash Flow Problems Specific to Construction
- Retainage: 5–10% of every draw is withheld until project completion. On a $1 million project, that's $50,000–$100,000 held for months or years. Retainage is contractually owed but functionally unavailable.
- Front-loaded costs: Labor, mobilization, material purchases, and equipment happen at the START of a project before the first draw arrives. You fund the front end of the project with your own cash.
- Draw schedule delays: Many contracts require 30–45 days between draw requests and payment. An owner inspection, a lien waiver requirement, or administrative slowdown can push that to 60–90 days.
- Seasonality: In most of the U.S., construction peaks April–October and slows sharply November–March. Overhead (insurance, equipment payments, key labor) doesn't stop in winter.
- "Pay-when-paid" / "Pay-if-paid" clauses: Many GC contracts don't obligate payment to subs until the owner pays the GC. Your right to payment may be contingent on things entirely outside your control.
Funding Options for Construction Businesses
Not all funding options are equal for contractors. Here's what works, what doesn't, and why.
1. Merchant Cash Advance (MCA)
T.A.G. Offers ThisMCAs are the most common emergency capital tool for contractors. Approval is based on bank deposit history — which for most contractors is steady even if individual project timing is lumpy. An MCA bridges the gap between when you buy materials and when the draw arrives. Repayment via holdback (daily ACH) adjusts with your revenue — slower deposit months mean lower repayment amounts.
Best for: Material purchases, payroll between draws, bridge between project start and first payment, emergency mobilization costs.
2. Business Line of Credit
A business line of credit (LOC) is ideal for recurring working capital needs. Draw when you need materials, repay from the progress draw, draw again for the next project. You pay interest only on what you use. LOCs are more efficient than MCAs for recurring needs but require better credit (580+ FICO). Bank LOCs require 680+ FICO and 2+ years in business.
Best for: Established contractors with 580+ FICO who need flexible revolving capital across multiple projects.
3. Construction Invoice Factoring
B2B / Specialized ComplexConstruction factoring is available but more complex than standard factoring. Factors require lien waivers, verify project completion status, and must understand pay-when-paid clauses. Not all factors handle construction — seek out specialists. Advance rates are typically lower (70–80%) than standard B2B factoring due to higher dispute risk. Progress billing invoices are harder to factor than invoices for completed milestones.
Best for: Subcontractors with completed-work invoices, no credit history, and creditworthy GC customers.
4. Equipment Financing / Lease
If your working capital need is specifically to purchase equipment — an excavator, concrete mixer, crane, aerial lift, or commercial vehicle — equipment financing is almost always cheaper than a general MCA or term loan. The equipment serves as collateral, making credit requirements lower. Section 179 allows you to deduct the full cost of equipment purchases in the year placed in service (up to $1.16 million in 2026).
Best for: Equipment purchases specifically. Not for materials, payroll, or operating costs.
5. SBA 7(a) Loan
For large, established contractors with good credit, an SBA 7(a) loan provides the lowest cost working capital available. Construction businesses are SBA-eligible. The challenge: 30–90 day approval timeline and 650–680+ FICO requirement eliminate most contractors who need emergency capital. SBA is a planning tool, not a crisis tool. Apply in the off-season; bridge with an MCA while you wait.
Best for: Established contractors planning months ahead, with strong credit and financials, seeking larger amounts at low rates.
How to Fund a Construction Project from Start to Finish
The most common contractor mistake is treating each project as a standalone cash event. Smart contractors set up capital before the project starts, not after.
Negotiate front-loading into the draw schedule
Many payment schedules are negotiable. Push for a mobilization draw (10–20% upfront at contract signing) to cover initial material purchases and mobilization. This is standard in most commercial construction — ask for it every time.
Bridge material and labor costs
You'll spend heavily before the first draw arrives. An MCA or LOC draw covers material purchases and first payroll cycle. Target: have capital in place 1 week before project mobilization starts.
Submit draws on schedule — no delays
Every day you delay a draw request is a day of free financing for the GC or owner. Submit draws on the first available date per the contract. Track lien waiver deadlines and don't let them slip — missed deadlines can void your lien rights.
Aggressively pursue retainage release
File all required close-out documents (final lien waivers, punchlist completion certificates, warranty documents) immediately. Every day of delay in releasing retainage is a day your cash is locked up. If retainage is unreasonably withheld, most states have "prompt payment" statutes that allow interest charges.
Pre-secure credit before you need it
Establish a business line of credit or MCA relationship in your peak season when revenue looks strong — not during the slow season when deposits are thin and approval is harder. Capital is easiest to get when you don't need it urgently.
Retainage: What It Is and How to Manage It
Retainage is the single biggest structural cash flow problem in construction. Here's how to manage it:
- Know your retainage percentage before signing: Standard is 5–10%. Negotiate to have retainage reduced or eliminated as the project approaches 50% completion — this is common practice on larger projects.
- Track retainage separately: Know exactly how much retainage is held on every active project. This is money you're owed but don't have. Build it into your cash flow projections.
- File a preliminary notice / Notice to Owner: In most states, this protects your lien rights. Without it, you may lose the ability to file a mechanics lien if payment is withheld.
- Use retainage to calculate your "true" working capital need: If you have $200K in active projects at 10% retainage, you have $20,000 that won't arrive until project completion. Factor this into how much bridge capital you need.
- Prompt payment laws: Most states require retainage to be paid within 30–60 days of substantial completion. Know your state's statute and use it.
Seasonal Cash Flow Planning for Contractors
Most construction businesses in the U.S. see revenue drop 40–70% from peak season (May–September) to slow season (November–February). Here's how to plan for it:
What MCA Underwriters Look for in Contractor Applications
MCA approval for contractors is based on bank deposit history — not individual project size or revenue. Here's what funders evaluate:
- Average monthly deposits (AMD): 3–6 months of bank statements. Lumpy deposits are OK — funders understand seasonal revenue. They're looking for the average, not month-by-month consistency.
- Time in business: 6 months minimum. Established contractors (2+ years) get better rates.
- NSF frequency: Excess NSFs signal cash management problems. Under 5/month is acceptable; more than 10/month may reduce your offer or cause a decline.
- Open position count: How many other active MCAs do you have? Most funders will approve first position only; some allow second position. Stacking without funder approval is a default risk.
- Industry: Construction is accepted by most MCA funders. Some restrict high-risk sub-niches (underground explosive work, offshore construction). General contracting, roofing, HVAC, plumbing, electrical are all accepted.
Contractor Capital in 24–72 Hours
T.A.G. works with 40+ funders that understand construction cash flow cycles. 10-minute application. Soft pull only. $10,000–$1,000,000. Same-day decisions on complete files.
Apply for Contractor Capital →Frequently Asked Questions
- Can contractors get merchant cash advances?
- Yes. Construction and contracting businesses are among the most common MCA recipients. Roofers, HVAC companies, plumbers, electricians, and general contractors all qualify based on monthly bank deposits. The key is consistent revenue through bank deposits — not the timing of individual project draws. Most MCA funders approve contractors with 6+ months in business, $10,000+ monthly deposits, and 500+ FICO.
- What is retainage, and can it be financed?
- Retainage (also called retention) is a portion of the contract price — typically 5–10% — withheld by the project owner or general contractor until substantial completion. On a $500,000 project at 10% retainage, $50,000 is held until the end. Retainage can be financed through specialized construction factoring companies. MCAs can also bridge the cash gap while retainage is held. Track your total outstanding retainage as a line item in your cash flow projection.
- What is a mechanics lien, and why does it matter for cash flow?
- A mechanics lien is a legal claim attached to a property for unpaid work or materials. Filing a mechanics lien is a contractor's most powerful tool to force payment — it clouds the property title and prevents refinancing or sale until the lien is resolved. Lien rights have strict deadlines (varies by state: 60–150 days after last work). Filing a preliminary notice / Notice to Owner preserves your lien rights. Never skip this step — losing lien rights eliminates your leverage for collecting on disputed invoices.
- How does seasonality affect MCA approvals for contractors?
- MCA approval amounts are based on average monthly deposits over the past 3–6 months. If you apply in January after a slow November–December, your offer will be based on winter deposits — not your summer peak. Apply for capital in peak season (April–September in most markets) when your bank statements show strongest performance. Establish your MCA relationship in spring; use it year-round including winter.