Draws, retainage and pay-when-paid
On most jobs the contractor finances the work. You mobilize, buy materials and run payroll, then submit a pay application. The owner's lender or inspector reviews it, the draw is released, and only then does the general contractor pay subs, often under a pay-when-paid clause. Each step adds time.
Retainage sits on top of that. A slice of each draw is withheld until the punch list is done and the job is closed out, so a profitable project can still leave you short of cash for months. Run several jobs at once and retainage becomes one of the largest assets on the balance sheet, yet one of the hardest to borrow against.
What lenders look at on a contractor
- Backlog and WIP schedule. Signed work ahead and a current work-in-progress schedule.
- Bonding capacity. Your surety relationship signals financial strength. New debt can affect it, so lenders and sureties both care how deals are structured.
- Equipment resale value. Excavators, loaders and dump trucks with strong resale markets make solid collateral.
- Who pays you. Public owners, private developers or other contractors, plus how much of your A/R is retainage.
Asset-backed options that fit the trade
| If you need to… | Look at | Why it fits |
|---|---|---|
| Adding an excavator, loader or vocational truck | Equipment Financing | Machines with strong resale value finance well on their own. |
| A fleet of paid-off equipment and a cash crunch between draws | Equipment Sale-Leaseback & Cash-Out | Unlocks equity in iron you already own while you keep running it. |
| Steady receivables and a sizeable equipment fleet | Asset-Based Lending | A revolving line sized to your assets, not one month's deposits. |
| Buying your yard or shop, or refinancing into longer terms | SBA 7(a) Loan | Long terms lower the monthly load on the business. |
Two ways to apply: application-only or full documentation
Excavators, loaders, dozers and dump trucks can be financed on a short application or on a full file. Application-only means the signed application, your driver's license, the equipment invoice, bill of sale or lease payoff letter showing the year, serial number or VIN, and hours or mileage, plus usually three months of bank statements. It moves fast, often with a same-day decision on a clean file. In exchange, expect lower ceilings on the amount, often more money down, typically higher rates and shorter terms, a narrower set of programs, and stricter cutoffs on machine age and time in business. Lenders can still request more documents once they review it.
A full documentation file adds tax returns, financial statements, your work-in-progress schedule or signed contracts, and proof of insurance. It's more work and more time, yet it's usually how contractors reach larger equipment packages, longer terms and lower down payments, depending on the lender and your file, and solid financials can carry a newer company or a thinner credit profile. If you're unsure, begin application-only and switch to full documentation whenever you like; our team will flag it if a lender asks for more. See our side-by-side guide to both paths.
Mistakes that squeeze contractors
- Making payroll with short-term money. Draws arrive in lumps while fast payoffs never stop. Our loan payment calculator shows what a steadier term looks like.
- Short money for long equipment. A machine you'll run for years shouldn't be paid off in months.
- A stale WIP schedule. Lenders and sureties both read it. An outdated one slows every decision.
Construction & Contractors: common questions
Does retainage count when a lender looks at my receivables?
Usually only partly, if at all, because it isn't due until closeout. That's one reason equipment is often the stronger collateral.
Will new equipment debt hurt my bonding capacity?
It can, depending on how your surety views working capital and leverage. Talk to your surety before you sign, and we can structure the financing with that in mind.
Can I pull cash out of dozers and trucks I already own?
Yes, through a sale-leaseback or equipment cash-out, as long as the equipment has solid resale value. Service companies in the energy patch use the same tool, as our oilfield services page explains.
Can I finance an excavator or loader without sending financial statements?
Often, on an application-only program, if the machine and the amount fit that program's limits. Bigger packages and the best terms usually call for a full documentation file. Our team will tell you which path your deal needs.
Last updated . General guidance, not a commitment to lend; every lender in our network reviews each deal on its own.
