Construction revenue arrives in draws and progress payments, with retainage held for months, but MCA pulls hit every day. Relief for contractors has to be built around project cash flow, not fight it.
A construction MCA review should line up funder payments against draw schedules, retainage, and payroll.
If materials or subcontractors stop, the business loses the revenue needed to solve the debt.
Liens, guarantees, and legal threats can affect bonding, bids, banking, and customer confidence.
Construction companies operate on one of the most cash-intensive billing cycles in any industry. A general contractor wins a commercial project, mobilizes crews, purchases materials, and pays subcontractors, often for 30, 60, or even 90 days before the first progress billing is paid by the owner. For residential contractors, draws are tied to inspections and milestone completions that can slip weeks due to weather, permit delays, or owner-requested changes. The gap between what you spend today and what you collect tomorrow is where MCA debt takes root.
A roofing contractor who wins a $400,000 commercial job may need to purchase $80,000 in materials before breaking ground and cover $60,000 in labor before the first draw. That $140,000 working capital requirement is rarely available in the operating account of a small-to-midsize contractor, and banks, bound by their own underwriting standards, cannot fund a construction project in 48 hours. MCA lenders can, and that speed is precisely why so many contractors end up carrying MCA debt that rapidly becomes unmanageable.
The fundamental problem is that MCA products are designed for businesses with daily or near-daily revenue, retailers, restaurants, service businesses with steady card swipes. Construction companies invoice on project milestones, typically net-30 to net-60 terms from invoice date, and may go several weeks between significant deposits. The MCA daily pull, however, runs continuously every business day regardless of whether any project revenue came in that week.
A mid-size electrical subcontractor running $2.5 million in annual revenue might average $10,000 per day in monthly deposits, but that average masks weeks where $40,000 comes in at once when a GC pays three invoices, and weeks where $0 comes in while field crews are building toward the next milestone. An MCA sized against the average can be catastrophically wrong in a dry week: a $1,500 daily pull against a $200 operating account balance creates an overdraft, triggers NSF fees, and may constitute a default event under the MCA agreement.
Retainage compounds this problem significantly. Most commercial construction contracts hold back 5–10% of each progress billing until project completion and sometimes through the lien waiver and close-out period. On a $600,000 project, that means $30,000 to $60,000 in billed-but-not-paid revenue that is simply inaccessible during the project. A contractor whose MCA was sized against total billings, not net billings after retainage, is operating with a false picture of their available cash.
Construction materials represent a major upfront cost that often cannot be delayed. Lumber, steel, concrete, mechanical equipment, these purchases must happen before work can proceed, and suppliers increasingly require payment on shorter terms than contractors receive from owners. A contractor who is 45 days into a project but has not yet received the first draw may have already spent $200,000 in materials and $80,000 in subcontractor labor. The MCA, taken to fund project startup, may be running its daily pull on an operating account that is already stretched thin servicing those costs.
Subcontractor payroll is often weekly, creating another fixed obligation that does not flex with project billing cycles. A general contractor who manages specialty trades, electricians, plumbers, HVAC technicians, is responsible for ensuring those crews get paid on schedule regardless of whether the project owner has paid the latest draw request. When an MCA daily pull competes with sub payroll in the same operating account, something has to give. Delayed sub payments damage relationships, can trigger mechanics lien filings, and may cause subs to walk off the job at critical project moments.
MCA lenders file UCC-1 financing statements, liens against all business assets, when they fund an advance. For construction companies, these liens have a specific and serious consequence: they can affect your ability to obtain surety bonds. Many commercial and public works contracts require performance and payment bonds, and surety underwriters review UCC filings as part of their financial assessment of the contractor. Multiple MCA UCC liens on a contractor's record can cause a surety to decline bonding or increase the bonding premium significantly, effectively locking the contractor out of the project types that would generate the most revenue.
This creates a vicious cycle: the contractor takes MCAs because they cannot bid bonded work without liquidity, the MCA liens prevent them from getting bonds, and the loss of bonded work opportunity makes the MCA debt even harder to service. Breaking this cycle requires resolving the MCA debt and clearing the UCC filings, which is exactly what a properly structured debt relief engagement is designed to achieve.
Project billing delays and daily MCA pulls are a brutal combination. Our specialists work with contractors, GCs, and subcontractors to restructure MCA debt and restore cash flow. Free assessment, no obligation.
Get Free Assessment →The relief process for construction companies begins with mapping the full liability picture: every MCA position, its balance, factor rate, daily pull amount, and remaining term. For contractors with multiple advances, which is common given the project-by-project nature of the business, this inventory often reveals that the total outstanding balance is significantly higher than the owner realized. Renewal positions, in which an MCA lender offers a new advance to pay off the prior balance with an additional advance on top, are particularly common in construction and can mask how much total debt has accumulated.
Settlement negotiations for construction MCA debt follow the same framework as other industries but with construction-specific leverage: a contractor who cannot get bonds, who is delaying subcontractors, or who is at risk of losing a key relationship is a credit risk that MCA lenders would rather resolve than pursue. Settlements of 55–70 cents on the dollar are realistic for contractors who engage early, before a full default and legal escalation.
Our resolution partners, including Corporate Turnaround led by Jerry Silberman, have specifically worked with construction businesses through MCA debt restructuring and understand the bonding implications, the subcontractor relationship stakes, and the project-billing dynamics that make construction debt relief different from other industries.
Construction businesses that seek relief before a bond denial or a subcontractor lien filing have far more leverage in the resolution process. An early, proactive engagement with a debt relief specialist preserves bonding relationships, supplier relationships, and the company's project pipeline while the financial situation is resolved.
Because project cash flow is lumpy: a contractor covering payroll and materials while waiting on a draw takes a second advance to bridge, then a third when retainage lags. Each new position was sized on gross deposits that included prior advances, the burden compounds fast.
Yes, UCC-1 filings against receivables are standard, and they can complicate progress payments if a GC or owner receives notice. Some lenders also threaten to notify project owners after default, which is often more damaging than the debt itself.
It can. Sureties review liens and cash position; heavy MCA obligations and UCC filings raise flags during bonding review. Resolving positions and terminating stale UCC filings is often necessary before bonding capacity comes back.
The immediate goal is protecting payroll and material purchasing so the job finishes, usually by negotiating reduced pulls, then settling positions against a realistic draw schedule rather than daily deposits.
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