Which funding products does this apply to?

Working Capital, Invoice Financing, Asset-Based Lending. Each has its own page listing the funders in this directory that offer it and what each one publishes about its terms.

Is this specific to construction?

It is written around how a construction business actually generates and collects cash, which is what makes its funding problem different. The mechanics transfer; the arithmetic may not.

The Find Me Funders research desk. Some drafting is AI-assisted, and every page that is says so at the top, including whether a person has checked its claims yet.

How do I know a figure here is right?

Where a page carries the green notice, its claims were checked against the sources listed at the end and a reviewer is named. Where it carries the amber one, nobody has verified it yet and you should confirm anything you plan to act on.

Are the examples real deals?

No. Every worked example is labelled illustrative and exists to show the arithmetic. What any particular lender charges is on that lender's page, where it publishes it.

Why do you never say what a typical rate is?

Because we cannot source it. A market average assembled from lenders who do not publish prices is a guess with a decimal point on it. Where a lender publishes a figure, we show that figure and say where it came from.

Is this financial or legal advice?

No. It is general information about how these products work. Outcomes depend on your contract and your state, and a lawyer or accountant licensed where you are is the person to ask about your situation.

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Can you finance retainage on a construction contract?

Retainage is a receivable that is not yet payable, held by someone who may still have claims against it. Some funders advance against it, most do not, and the rules differ by state and by whether the job is public.

By Find Me Funders research desk Updated 14 September 2026 1057 words 5 min read

Drafted with AI assistance. Not yet independently checked. Nobody has verified the claims on this page against a source, so treat the figures and legal points as a starting point rather than as settled, and confirm anything you are about to act on. How we check things.

Can I finance retainage on a construction contract?

Sometimes, but rarely at a useful advance rate. Retainage is an amount already earned that the owner is contractually entitled to hold until substantial or final completion, so a factor or asset-based lender treats it as ineligible or advances a much lower percentage than on progress billings. Public-works retainage is often capped or governed by state prompt-payment statutes, and federal contract claims cannot be assigned except under the Assignment of Claims Act, which changes who can be paid. The practical fix is usually to shrink the retainage in the contract, get it released in stages, or price the carry into the bid rather than borrow against it.

The money has been earned. It has been billed. It cannot be collected, and the party sitting on it may still have claims against it. That combination is what makes retainage hard to finance: a funder advancing against receivables is buying the right to be paid a fixed amount on a defined date by someone with no offsetting claim, and retainage fails every part of that description.

Illustrative only —a 1,200,000 subcontract with 10 per cent retainage, billed at 200,000 a month for six months. Each progress billing is 200,000 gross, 20,000 retained, 180,000 currently payable. A factoring facility at an 85 per cent advance rate on the payable portion funds 153,000 on each invoice. The retained 20,000 a month accumulates to 120,000 and sits until final completion, punch list sign-off and lien releases — commonly six to twelve months after your last day on site.

Now put that next to the job's economics. At a 9 per cent expected margin, the whole contract is meant to produce 108,000 of profit. The retainage is 120,000. The owner is holding more than the entire profit of the job, using your money, for a year.

Why funders treat it as ineligible

Three reasons, and they compound.

It is not due.A borrowing base counts receivables by invoice date and due date. Retainage has no due date until an event happens — substantial completion, final completion, a certificate, an inspection. An eligible receivable definition almost always excludes amounts "not currently due and payable", which excludes retainage by construction.

It is the owner's claim reserve.Retainage exists so the owner has money in hand if you fail to finish, fail to fix, or fail to clear a lien from your own supplier. The funder buying it is buying a sum subject to setoff for warranty work, backcharges, liquidated damages and unpaid lower-tier claims. That is not a receivable; it is a contingent balance.

It ages badly.Facilities use cross-aging rules that make an entire customer's balance ineligible once a set share of it passes a days-outstanding threshold. Retainage sitting at 300 days can drag currently-payable invoices from the same general contractor out of the base with it. Ask whether retainage is carved out of the cross-aging test before you sign; if it is not, your availability will collapse on a job that is going perfectly well.

Where the state line actually falls

Retainage practice is state law, and the variation is real.

Many states cap retainage on public works at a set percentage and require it to step down or be released entirely once the job reaches a completion threshold. Several cap private retainage too.
Several states require public owners to place retainage in an interest-bearing account for the contractor's benefit, or allow substitution of securities so that no cash is held at all.
Prompt-payment statutes usually set a deadline for releasing retainage after final acceptance, with interest for late release. Those deadlines are the only hard date a funder can underwrite to.
On federal prime contracts, claims against the United States cannot be assigned except as the Assignment of Claims Act permits, and then only to a financing institution with notice filed as the statute requires. See 31 U.S.C. 3727. That mechanism exists, but it is a formal process, not a notice of assignment mailed to a project manager.

None of that makes retainage financeable. It changes how confidently a funder can predict the release date, which is the only thing that would.

The structures that do exist

A retainage sublimit.Some asset-based and construction-focused factoring facilities will include retainage in the borrowing base at a reduced advance rate, capped at a dollar amount or a share of total availability. Suppose retainage is advanced at 60 per cent instead of 85: the 20,000 a month becomes 12,000 of availability, 72,000 across the six months, instead of nothing. That is real money, and it is not free — it is the same facility fee applied to a balance that turns once a year instead of monthly, which makes the effective annualised cost of that slice several times the cost of the progress-billing slice. Do the arithmetic on the retainage portion separately before you decide it helped.

A separate retainage facility or term advance.Occasionally a funder will lend a fixed amount against a schedule of retainage receivables across several completed jobs, on the theory that the release dates are now close and the punch lists are done. Underwriting looks at the general contractors, not at you.

Carrying it.Suppose you finance 120,000 of retainage for nine months at an illustrative 1.5 per cent a month. That is 16,200 — against 108,000 of job profit, a 15 per cent haircut on the job. Compare that with what the same 120,000 costs you as an equity drag if you simply fund it from your own balance sheet and bid one fewer job.

What to do instead

Negotiate the retainage down at contract, not at closeout. A step-down to 5 per cent at 50 per cent completion is a common and winnable ask on private work, and it halves the carry.
Get retainage released by phase where the contract is divisible. Your scope finishing in month four should not be hostage to a building finishing in month eighteen.
Ask about a retainage bond or securities substitution where state law or the contract allows it. You pay a premium instead of financing a receivable.
Bill retainage as a separate invoice the day the release condition is met, with the completion certificate attached. A funder cannot advance against a balance you have not invoiced, and many contractors never issue the retainage invoice at all.
Price it. If the job's retainage carry is 16,200, that number belongs in the bid. Most subcontractors who complain about retainage financing are actually complaining that they bid the job as though the money arrived on time.

Before you sign a facility, ask the funder in writing: is retainage eligible, at what advance rate, under what sublimit, and is it excluded from the cross-aging calculation. Get all four answers. A facility that funds your progress billings beautifully and then chokes your availability every time a job reaches closeout has not solved the problem you took it out for.