Construction Factoring & Contractor Receivables Funding
Construction has the widest gap in business finance between when work is done and when it is paid for: you bill monthly progress payments that GCs and owners pay in 45 to 90 days, retainage holds back another 5-10% until completion, and pay-when-paid clauses push everyone's delay onto the subs at the bottom of the chain — all while crews get paid every Friday. Construction factoring narrows the gap by advancing against approved pay applications, typically 70-80% in this industry once retainage and offset risk are accounted for, with approval based on the credit of the GC or owner being billed rather than your own. Fewer factors serve construction than freight or staffing because of the lien-and-retainage complexity, which is exactly why finding the right program matters — and why for many contractors, especially under a few million in revenue, the simpler answer is our revenue-based funding: an advance against your overall deposits from $25,000 in monthly revenue, approved on deposit strength and funded within about 24 hours of a signed agreement, no pay-app verification required. Y Millennial Funding offers construction factoring and offers revenue-based advances. Factoring and revenue-based advances are purchases of receivables, not loans. Not all applicants qualify.
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Industry Snapshot
Construction factoring serves subcontractors above all — electrical, mechanical, concrete, framing, drywall, roofing crews on commercial jobs — plus GCs, specialty trades, and site-work contractors billing progress payments to developers, GCs, or public owners. It fits contractors whose problem is the gap between weekly payroll and 60-day pay apps, especially those scaling onto bigger commercial projects.
$300,000 - $25,000,000 annual revenue
$25,000 - $1,000,000 in monthly factored volume
Why Traditional Lenders Struggle with Construction Factoring & Contractor Receivables Funding
Banks treat construction receivables as barely-collateral: progress billings are subject to retainage, backcharges, offsets, and pay-when-paid clauses, so a bank discounts them heavily or excludes them from a borrowing base entirely. Add project-based revenue that looks lumpy on financials and the industry's failure rate, and most contractors — especially subs under a few million in revenue — simply cannot get a working-capital line sized to their actual payroll float.
Why Revenue-Based Funding Works for Construction Factoring & Contractor Receivables Funding
Receivables funding fits construction because it is built around how contractors actually get paid: factoring advances against approved pay apps so weekly payroll stops depending on 60-day payments, with approval riding on the GC or owner's credit rather than the sub's. Where the paperwork burden of construction factoring outweighs the benefit — common for smaller contractors — a revenue-based advance against total deposits funds in about 24 hours with no pay-app verification at all. Y Millennial Funding offers construction factoring and offers revenue-based advances; we can help you decide which fits the job. Not all applicants qualify.
See if your construction factoring & contractor receivables funding business pre-qualifies
Checking your options takes under a minute and won't affect your credit. Approved on revenue, not credit score.
Prefer to talk? Call (855) 774-6461Common Uses of Funding
Weekly payroll for crews between progress payments; materials for the next phase or the next job; equipment rental and repairs; mobilization on new projects; and bridging retainage held until substantial completion.
Common Challenges
GCs and owners paying progress billings in 45 to 90 days while payroll runs weekly and suppliers want net-15; retainage holding 5-10% of every invoice until project completion; pay-when-paid clauses pushing risk down the chain to subs; materials prices moving between bid and buy; and bonding capacity tied to working capital, so cash constraints cap the size of jobs you can win.
How Repayment Works
Construction factoring is the purchase of your approved progress billings or completed-work invoices: submit the approved pay application or invoice, receive an advance — typically 70-80% in construction, reflecting retainage and offset risk — and the factor collects from the GC or owner, remitting the balance minus fees. Fewer factors serve construction than other industries, which is where finding the right program matters. Y Millennial Funding offers construction factoring and also offers revenue-based advances, which for many contractors is the simpler fit.
Seasonal Considerations
Construction cash flow follows the building season: spring ramp-up demands mobilization and materials cash before the first pay app is even submitted, summer peak means maximum payroll float, and winter slowdowns in cold climates squeeze collections on finishing work. Factoring scales with billed work, and a revenue-based advance sized to season smooths the ramp months.
Regulatory Environment
Construction receivables are the most legally layered in factoring: mechanic's lien rights, retainage statutes, pay-when-paid and pay-if-paid clauses, and lien waivers all affect what an invoice actually collects, and rules vary by state. Factoring is the sale of receivables, not a loan; programs verify approved pay applications and manage lien waivers as part of funding. Not all applicants qualify.
Industry Terminology
Key terms: progress billing / pay application (the periodic invoice for work completed), retainage (the 5-10% withheld until completion), lien waiver (the release signed as payments are made), mechanic's lien (the statutory security right in the property), pay-when-paid (clauses tying sub payment to owner payment), schedule of values, substantial completion, and AIA billing (the standard pay-app format).
Nationwide Construction Factoring & Contractor Receivables Funding Funding
Y Millennial Funding works with construction factoring & contractor receivables funding businesses across the United States. Because our funding is revenue-based and delivered electronically via ACH, we are able to work with businesses nationwide — not just in a single region. Wherever your business operates, we can underwrite based on your revenue history and get you funded quickly.
Local Markets We Serve
Below are some of the markets where we have dedicated local expertise in construction factoring & contractor receivables funding funding.
Frequently Asked Questions
Common questions about construction factoring & contractor receivables funding business funding.
Related Industries
Helpful Tools
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