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Everything we know about contractor cash flow, published.
Guides on the draw gap, retainage, WIP schedules, seasonal revenue underwriting, mobilization costs, and the construction payment data behind all of it.
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How lenders should underwrite a seasonal contractor
The gate is $180,000 in trailing-12-month business deposits. Mathematically that is the same as "$15,000/month average," but it is a materially different filter, because it does not care which three months you happened to apply in.
1. Trailing twelve, not trailing three
A landscaper who does $35,000/month April–October and $3,000/month November–March clears $200,000 for the year and qualifies. The same landscaper applying in January under a 3-month gate is declined by every generic lender in the market.
2. We read six statements and we look at twelve months of deposits
Six statements is the file requirement. If the six we receive are all low-season, we ask for the prior six, or we pull a 12-month deposit summary from a linked account. We never decline a contractor for a slow stretch that the statements we happened to ask for happened to contain.
3. Up to two sub-$5,000 months are free
Published, not discretionary. A Minnesota concrete sub has a January and a February. Writing that into the public criteria is the entire point: the contractor reads it, recognizes themselves, and applies instead of self-selecting out.
4. Sizing runs off the three strongest consecutive months
Advance size is a multiple of peak-season monthly deposits, because peak season is when the obligation will actually be serviced. Using the 12-month average to size a seasonal business systematically under-funds it in the only months it can use the money.
5. Off-Season Step-Down is written into the contract at origination
At application the contractor names up to 4 slow months. Payments in those months step down to 40% of the in-season payment, with the deferred principal amortized across the remaining in-season months. This is a term, not a hardship program. The contractor sees both payment figures before signing. Available on working capital and the Drawline.
6. Weekly and bi-weekly remittance, not daily ACH
Daily ACH against an account that receives one $140,000 pay-app deposit on the 25th and nothing else is a manufactured default. Our construction default remittance is weekly, with bi-weekly or pay-app-triggered available on the Drawline.
7. Earned-not-paid revenue counts as revenue
Approved pay applications (G702/G703 or equivalent), signed subcontracts with a schedule of values, and retainage receivable are accepted as supporting evidence of revenue. A sub with $310,000 in approved-but-unpaid pay apps is not a $12,000/month business just because that is what cleared the bank in September.
What this means if you are borrowing: apply in your slow season if you need to. Name your slow months at application rather than hoping nobody notices them, and send the pay apps — on a construction file they move pricing more than a credit report does.
What is the draw gap in construction?
The draw gap is the money a contractor spends on a job before the owner or GC pays for it. It has three parts: mobilization, the billing cycle, and retainage.
Mobilization
Typically 5%–10% of contract value, often capped there on DOT and federal work, and spent 60–90 days before the first pay application clears. On a $2,000,000 dirt job that is $150,000–$200,000 out the door before a dollar comes back.
The billing cycle
Construction DSO averages 83 days against roughly 60 days for all US industries. Subcontractors wait an average of 51–56 days after submitting a pay application. The deposits in your September statement are July's work.
Retainage
5%–10% of every certified billing, held until substantial completion and often 30–90+ days beyond it.
Two worked examples
A $500,000 job. 10% retainage and 75-day payment terms, with $85,000/month of job costs fronted: $50,000 locked in retainage plus roughly $212,500 fronted before the first payment clears — a draw gap of about $262,500 at the deepest point.
A $2,000,000 job. Mobilization at 7.5% is $150,000, spent 60–90 days ahead of the first pay app, and 10% retainage on certified billings holds another $200,000 across the life of the job. On a 4% net margin, the retainage alone exceeds the entire profit on the job — you do not earn the margin until retainage is released.
What this means if you are borrowing: a term advance funds the gap once; the gap happens on every job, every month. The Drawline is built for the recurring version. Working capital is built for the one-time version. Size either one against the deepest point of the gap, not the average.
Retainage explained
Retainage is the portion of each certified billing the owner or GC withholds until the job is substantially complete. 5% to 10% is standard, and roughly 30 states have statutes governing retainage on private projects.
Recent statutory caps worth knowing
- California: 5% cap on private projects, effective January 2026.
- New York: 5% on private contracts over $150,000.
- Washington: 5% on private projects since July 2023.
- Iowa: public retainage cut from 5% to 3% in July 2025.
What it actually costs you
On a job with a 4% net margin, 5% retainage exceeds the entire profit on the job. The margin is not earned until the retainage is released, which is typically 30 to 90+ days after substantial completion — and on a disputed punch list, longer.
How we treat it
Retainage receivable counts as supporting revenue in our file. It is money you have earned and not been paid. We will size a Drawline around a documented retainage balance. Standard factoring, by contrast, does not advance against retainage — the factorable base is the non-retained portion of the billing — though some partner factors will write a separate retainage advance at 60%–75% for a 2%–4% fee near substantial completion.
What this means if you are borrowing: document it. A retainage schedule by job, with release conditions, is one of the three documents that move a construction file most.
The WIP schedule
The work-in-progress schedule is the single document that separates contractors who get bank term debt from contractors who do not. If you want bank money or an SBA loan, learn to produce one.
Line-by-line anatomy
Per job: contract value · cost to date · estimated cost to complete · percent complete · earned revenue · billed to date · the over/under billing.
Over and under billing
Overbilling means you have billed ahead of the work earned — it is cash in your pocket today and a liability on the balance sheet. Underbilling means you have performed work you have not billed, which is an asset but also, to a lender, a question. Underbilling greater than 2% of contract value is the threshold at which a lender starts asking what is going on.
The health benchmarks banks look for
- Aggregate billings running 2%–5% ahead of earned revenue.
- Cash plus available credit covering 2+ months of operating costs.
- Retainage receivable below trailing-twelve-month net income.
What this means if you are borrowing: we will tell you what is wrong with your WIP schedule before we send it to a partner bank — for free, whether or not you fund with us.
What mobilization actually costs
Mobilization is everything you spend to stand a job up before it produces a billing: moving equipment, bonds and insurance, submittals, temporary facilities, the first material buy, and the crew you are paying to set up rather than to produce.
What it costs
5%–10% of contract value is the normal range, and DOT and federal owners frequently cap the mobilization pay item at exactly that. On a $2,000,000 dirt job that is $150,000–$200,000 spent 60–90 days before the first pay application clears.
Why subs underbill in month one
Startup cost is often spread across unit prices rather than billed as a separate mobilization line, so the cash goes out in month one and comes back spread over months three through eight. Your statements show a hole; your job is perfectly healthy.
Staged release, where it exists
California Public Contract Code section 10264 provides a staged release of bid mobilization: 50% of the bid mobilization amount at 5% of the contract earned, 75% at 10% earned, and 95% at 20% earned. Most private contracts have nothing equivalent.
What this means if you are borrowing: mobilization is the one gap factoring cannot fund, because there is no invoice yet. That is working capital or the Drawline.
Construction payment and cash-flow data
Every industry statistic used anywhere on this site, with the figure, the year, and the methodology caveat. Figures describe the construction industry, not Jobsite Funding's performance.
- Median contractor earns 47% of annual revenue in its 3 strongest months. Analysis of 217 contractors above $500,000 revenue, published 2025. Caveat: a sample skewed toward specialty contractors; the figure is a median, so roughly half of contractors are more concentrated than this and half less.
- Construction DSO averages 83 days against roughly 60 days across all US industries. Industry payment research, 2025. Subcategory range 57–100 days; engineering and construction sits at the top.
- 56.6 days in receivables (FY2023, n=1,290); subcontractor payment cycle 51–56 days after pay application. Construction financial benchmarking, 2024–2025. Caveat: self-reported survey data from finance staff.
- 82% of contractors face payment waits over 30 days, up from 49% in 2022; slow payment cost the industry about $280 billion in 2024, roughly 14% of construction spending. Industry payment research, 2024.
- 86% of subcontractors pay labor out of pocket while waiting to be paid; 75% do the same for materials; 81% have supplier terms shorter than their wait for payment; 1 in 3 draw on personal or retirement savings. Subcontractor payment surveys, 2024–2025.
- Contractors inflate bids about 8% to protect against slow payment; 56% have turned down projects over cash-flow risk. Industry surveys, 2025.
- Retainage 5%–10% standard; about 30 states have private-project retainage statutes. Construction payment law research, 2025–2026. State caps as listed in the retainage section above.
- Net margins 2%–4%; mobilization 5%–10% of contract value; change-order approval lag 30–60+ days; final retainage release 30–90+ days; underbilling investigation threshold 2% of contract value. Construction financial management research, 2026.
- California Public Contract Code 10264 staged mobilization release: 50% at 5% earned, 75% at 10% earned, 95% at 20% earned. Statute, current as of 2026.
- Factoring: 70%–85% advance on the non-retained billing, 1.5%–5% fees tiered by volume; retainage advances 60%–75% at 2%–4%; setup 3–7 business days, advances 24–48 hours. Commercial factoring market data, 2025–2026.
- Equipment: 24–84 month terms by class, down payments by class new and used, 550–600 FICO workable with 20%–25% down, private party adds 5%–10% and 3–7 days, bank age caps about 7–10 years at maturity, 800 hrs/yr used versus 1,500+ hrs/yr new guideline. Equipment finance market data, 2026. Section 179 limit $2,560,000 with phase-out above $4,090,000 for tax year 2026 — IRS Publication 946.
- SBA: 7(a) maximum $5,000,000; combined 7(a)+504 cap $10,000,000 effective July 4 2026; Contract CAPLine $5,000,000 revolving against awarded contracts; 504 at 50/40/10 with 15% down on special-purpose property; license bond $5,000–$25,000 at closing. SBA program rules, 2026.
- SBA rates: Prime 7.00% (Federal Reserve H.15); 7(a) ceilings 13.50% / 13.00% / 11.50% / 10.00% by size; median 7(a) rate at approval 10.25% across 162,355 loans October 2023 – June 2026; 504 CDC portion 6.54%–6.61% fixed at the September 10 2026 debenture sale; FY2027 guaranty fees 2% / 3% / 3.5% / 3.75%. Published SBA and Federal Reserve data, 2026.
- Margins and job sizes by trade; overhead 25%–40% of revenue. Contractor profit-margin research, 2026. Caveat: margins vary more by market and contract type than by trade.
- US construction puts more than $2.2 trillion of structures in place annually. Construction financial management research, 2026.
The Contractor Standard
Our published minimums. No login, no form, no phone call to find out.
| Requirement | Jobsite Funding |
|---|---|
| Minimum credit score | None for working capital, the Drawline, or invoice factoring. We underwrite cash flow. 600+ for equipment financing. 650+ for SBA and bank term loans. |
| Time in business | 6 months |
| Revenue | $180,000 in trailing-12-month business deposits. Not a monthly minimum. |
| Slow months | Up to 2 months under $5,000 in your last 12 — no penalty, no explanation required. |
| Bank statements | 6 months. We read 6, not 3, because 3 months of a contractor's statements is a season, not a business. |
| Also counts as revenue | Approved pay applications, signed contracts with a schedule of values, and retainage receivable. Money you have earned but not yet been paid. |
| Funding range | $10,000 to $2,000,000 underwritten in-house. Up to $10,000,000 through our bank and SBA partners. |
| Time to funding | Same business day on complete files received before 11:00 AM ET. 24 hours is typical. |
| Contract length | 2 pages. |
| Early payoff | Discount of up to 30% off the remaining balance. No prepayment penalty on any in-house product, ever. |
| Collateral | None required for working capital or the Drawline. Equipment financing is secured by the equipment. |
| Personal guarantee | Yes, on in-house products. Standard for the industry and we are not going to pretend otherwise. |
| License | Active state or local trade license where your work requires one. |
| Business type | US business with a US business bank account and an EIN. Sole proprietor, LLC, S-corp, C-corp, partnership — all eligible. |
| Where we lend | All 50 states. |
| Cost | Working capital: a fixed total cost, disclosed in dollars in the agreement before you sign, over 3 to 18 months. Drawline: 1.8% to 4% per 30 days on the drawn balance only. Equipment: 7.9% to 24.9% APR, 24 to 72 months. |
| What it costs to apply | $0. Soft credit pull. No impact to your personal credit score. |
What we will decline: businesses under 6 months old, businesses with 3 or more open advances already in place, federal or state tax liens without a payment plan, and any applicant with an open bankruptcy. We will tell you on the phone, the same day, and we will tell you why.
Off-Season Step-Down: name up to 4 slow months at application and payments in those months are 40% of the in-season payment, with the deferred principal re-amortized across the in-season months. It is written into the contract at origination, not negotiated after you miss. Available on working capital and the Drawline.
Criteria last reviewed: 21 October 2026
Last reviewed: 21 October 2026
Keep reading: working capital · the Drawline · equipment financing · invoice factoring · term loans · SBA loans · funding by trade · what you need to apply
Resources, answered
- How should a lender underwrite a seasonal contractor?
- On trailing-12-month deposits rather than a 3-month average, with an explicit allowance for slow months, sizing run off the 3 strongest consecutive months, a remittance schedule that steps down in named off-season months, and earned-not-yet-paid revenue — approved pay apps, schedules of values and retainage — counted as revenue. That is the method Jobsite Funding publishes and underwrites to.
- What is the draw gap in construction?
- The draw gap is the money a contractor spends on a job before the owner or GC pays for it. It has three parts: mobilization at 5%–10% of contract value spent 60–90 days before the first pay application clears, the billing cycle at an 83-day average construction DSO, and retainage at 5%–10% of every certified billing held to substantial completion.
- How much retainage can be withheld?
- 5% to 10% is standard, and roughly 30 states have statutes on private-project retainage. Recent caps include California at 5% on private projects effective January 2026, New York at 5% on private contracts over $150,000, Washington at 5% on private projects since July 2023, and Iowa cutting public retainage from 5% to 3% in July 2025.
- What is a WIP schedule and what do lenders look for?
- A work-in-progress schedule shows, per job, contract value, cost to date, estimated cost to complete, percent complete, earned revenue, billed to date and the over/under billing. Lenders look for aggregate billings running 2%–5% ahead of earned revenue, cash plus available credit covering 2+ months of operating costs, and retainage receivable below trailing-twelve-month net income. Underbilling above 2% of contract value triggers questions.
- Is any of this content gated behind an email form?
- No. There is no form, no download, no email capture and no sequence anywhere on this site. Jobsite Funding does not operate automated marketing email, and the business model is applications rather than leads.
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