Key takeaways
- GCs carry the whole project: subs, suppliers, and supervision often get paid before the next draw arrives.
- A line of credit is often the most efficient tool for repeated draw gaps. Working capital fits one-time mobilization costs.
- Funding helps with cash flow, but it doesn't replace bonding, and it can't fix a job that was underbid.
Why GCs run short on cash
- You pay first. Subs, suppliers, rentals, and supervision all need to be paid to keep the job on schedule.
- Draw inspections and approvals. Owners and construction lenders often inspect progress before releasing funds, which takes time.
- Retention. A share of each payment can be held until the project is complete.
- Change orders. Extra work often starts before the change order is approved and paid.
- Multiple projects. Running several jobs at once multiplies every one of these gaps.
The draw schedule gap
Most larger projects pay on a draw schedule tied to milestones. You complete the work, request the draw, wait for inspection and approval, then wait again for the funds to be released. On residential remodels in California, progress payments also can't get ahead of the work completed, and down payments are capped at $1,000 or 10% of the contract price, whichever is less.
What it costs you: late payments to subs damage relationships, slow the schedule, and can lead to liens. A funding bridge can protect all three.
Funding options for general contractors
| Option | Best GC use | Typical speed |
|---|---|---|
| Business line of credit | Repeated gaps between draws across multiple projects | Several days to a few weeks |
| Working capital / MCA | Mobilization, deposits, and paying subs on a specific job | Often 1–3 business days |
| Invoice factoring | Approved invoices owed by commercial owners or developers | Often a few days once set up |
| Equipment financing | Trucks, trailers, lifts, and job-site equipment | Several days to 2 weeks |
| Bank or SBA loan | Long-term growth, an office or yard, or an acquisition | Weeks to months |
For a full product breakdown, see our business funding guide for California contractors.
Run the numbers on a project
Say you're building a $250,000 home addition. Total costs run about $200,000, and you need $70,000 to pay subs and suppliers before the first draw is released.
Illustrative example only. Your rate and terms will differ.
The project still clears $29,000. But a $21,000 cost is a big share of the margin, which is why GCs with regular draw gaps often save money with a line of credit, where you pay interest only on what you use. Our working capital guide compares the two.
How general contractors qualify
- 6+ months in business and $10,000+ in monthly deposits for most of our funding partners
- An active contractor license. In California, general contractors typically hold the B General Building classification. Outside California, the license your state requires.
- Your last 4 months of business bank statements as PDFs, plus a photo ID
- Helpful for larger requests: your current contracts, draw schedules, and a work-in-progress summary
Large draw deposits can make monthly revenue look uneven, so be ready to explain the pattern. For the full checklist, read how contractors qualify for funding.
Project cash playbook
- Map the cash curve before you sign. Compare when you pay subs with when each draw is likely to arrive.
- Front-load your schedule of values where the contract and law allow, so early draws match early costs.
- Submit draw requests the day milestones are hit, with photos and documentation ready for inspection.
- Get change orders signed before the work starts whenever you can.
- Set up a line of credit before you need it, so short-term funding is a backup, not your only option.
Ready to keep every project moving?
See what your construction company qualifies for in about 2 minutes. Free, no obligation, and the initial review uses a soft credit inquiry.
Frequently asked questions
Can general contractors get funding to pay subs before a draw?
Yes. Working capital or a line of credit can cover subs and suppliers while you wait for the draw, as long as your deposits can support the repayment.
Is business funding the same as a construction loan?
No. A construction loan is usually the owner's financing for the project. Business funding is capital for your contracting company's own cash flow.
Does funding replace a performance bond?
No. Bonding is a separate guarantee required on many projects. Funding can help with cash flow, but it doesn't satisfy bonding requirements.
What license do general contractors need in California?
General contractors in California typically hold the B General Building classification. Funders usually verify that your license is active.
Do you fund general contractors outside California?
Yes. Funding Expansion works with licensed contractors nationwide.
This guide is general information, not legal, tax, or financial advice. Funding Expansion is a commercial funding broker, not a lender. Funding is provided by third-party funding partners and is subject to qualification. Amounts, costs, and timing vary.