Finance for construction companies: following one job from bid to holdback.
By Thrivewell Capital Team · Updated
A profitable contract can still drain your bank account. You pay crews and suppliers every week, bill once a month, get paid weeks later, and wait even longer for the holdback. This guide walks through one job, stage by stage, so you can see exactly where the cash runs short and which kind of financing fits each gap.
Meet the job (an illustrative example)
Every number in this section is illustrative. It is a made-up job built to show the pattern, not a real client or a quote. Picture a general contractor who wins a $180,000 commercial interior renovation. It runs about ten weeks. The contractor bills the owner once a month based on work completed, and each payment arrives roughly four weeks after the invoice goes in.
On many construction contracts, the owner keeps back a portion of every payment as a holdback. In this example it is 10%. That money is usually released only near the end of the job. Whether a holdback applies, the percentage and the release timing depend on your province and your contract, so check both.
Total costs for the job (labour, materials, subtrades, permits) come to $136,000, leaving $44,000 of profit. On paper, a good job. Now look at the bank account.
| When | What happens | Cash out | Cash in | Running position |
|---|---|---|---|---|
| Weeks 1 to 2 | Mobilization: materials deposit, permits, site setup | $22,000 | Nothing yet | $22,000 |
| Weeks 3 to 4 | Crew payroll and framing materials. Draw 1 billed: $60,000 of work, $6,000 held back | $28,000 | Nothing yet | $50,000 |
| Weeks 5 to 8 | Main build. Draw 1 paid late in week 8. Draw 2 billed: $70,000 of work, $7,000 held back | $56,000 | $54,000 | $52,000 |
| Weeks 9 to 10 | Finishing trades and cleanup. Final draw billed: $50,000 of work, $5,000 held back | $30,000 | Nothing | $82,000 (peak) |
| Weeks 11 to 14 | Draw 2 and the final draw arrive | Nothing | $63,000 then $45,000 | $19,000, then $26,000 ahead |
| Months later | Holdback released after the lien period | Nothing | $18,000 | $44,000 ahead (the profit) |
Illustrative example only. “Running position” is total cash paid out minus total cash received for this one job; a dollar figure on its own means the contractor is that far behind.
What the timeline tells you
The contractor is out of pocket for almost the entire job. The low point, $82,000 behind, comes in week 10, right when the work is nearly finished and the owner is happiest. Even after every progress draw is paid, $18,000 of the $44,000 profit is still sitting in holdback.
Three details make the gap worse than people expect:
- Billing lags work. You bill at month end for work you paid for weeks earlier, and then wait again for payment.
- Holdback is taken off every draw. On draw 1, $60,000 of work became a $54,000 invoice. That $6,000 difference does not come back until the end.
- Jobs overlap. If a second job mobilizes in week 8, its $22,000 of setup costs lands on top of the deepest point of the first one.
If you run your own numbers this way for your next two or three jobs, you will know your real peak need before you talk to anyone about financing. That one figure makes every conversation with a lender shorter.
Matching the financing to each stage
No single product is perfect for the whole job. Here is how the stages line up with common options:
Mobilization
Money goes out before any work can be billed.
A business line of credit works well here because you draw only what you need and pay it down when the first draw lands.
Waiting on progress draws
Payroll runs every two weeks, but the owner or general contractor pays weeks after you bill.
Invoice financing can advance cash against an approved progress billing to a creditworthy customer. A line of credit also fits if you already have one.
The peak gap before the last draws
Finishing trades are paid while two invoices are still outstanding.
A short term loan or revenue-based financing can bridge the deepest point if your deposits across several jobs are steady.
Holdback
Part of your profit sits with the owner until the holdback is released.
Plan for it rather than borrowing against it. If holdbacks from several jobs stack up, that is a sign your working capital needs a longer-term base, not a series of short fixes.
Buying a machine is a different problem with different options. If that is what you need, read our construction equipment financing guide instead.
Try the bank and program routes first
If you have time and current financial statements, start with your bank. Under the Canada Small Business Financing Program, banks and credit unions lend to businesses with gross revenue of $10 million or less for equipment, leasehold improvements and working capital, and the federal government shares the lender's risk. Borrowing is capped at $1.15 million per borrower, including up to $150,000 in lines of credit, and a 2% registration fee applies. BDC also offers a small business loan of up to $350,000 online for expenses, supplier payments and inventory, which covers a lot of what a contractor spends money on between draws.
The catch for many contractors is timing and paperwork. A bank line set up before the busy season is cheap and useful. Asking for one in the middle of a cash crunch, with year-end statements still at the accountant, is much harder.
When private funding makes sense
Thrivewell is a Canadian business funding marketplace, not a bank and not a government program. You apply once, our funding partners make offers, and the lender's written terms govern. Construction is one of the industries we have funded, alongside restaurants and food service, transportation, manufacturing, auto repair and others. See our construction industry page for more, and if you also haul materials, the logistics page covers fleet cash flow.
Most Canadian fundings in our records were modest: the median was $20,000, and the middle half fell between about $9,700 and $40,000. That fits the kind of mobilization or payroll gap shown above more often than a full job. Amounts depend on the business and the lender's assessment.
For 126 first-time Canadian fundings, the median time from the first record in our system to funding was 11 days, with a quarter funding within 5 days. That is a historical figure and not a promise; timing depends on your documents and the funding partner.
Know your peak gap? Check your options.
Tell us about the job and the shortfall. We review against at least 6 months in business and about $10,000 in monthly revenue. Those are review criteria, not an approval guarantee.
What to have ready
- Recent business bank statements showing deposits from past jobs.
- The signed contract or purchase order for the current job.
- Your latest progress billing and any approval from the owner or general contractor.
- A simple list of outstanding draws and holdbacks, with expected dates.
- Details of any existing loans, advances or equipment payments.
Construction finance FAQ
Can I borrow against my holdback?
Some funders will consider it, but holdback can be delayed by deficiencies or disputes, so it is a weak thing to rely on. It is usually safer to plan the holdback as money you will see later.
I'm a subcontractor. Does this apply to me?
Yes, often more so. Subcontractors usually wait for the general contractor to be paid first, and holdback is commonly applied at every tier of the contract chain.
Should I finance a whole job or just the gap?
Just the gap. Borrowing the full contract value means paying for money you do not need. Use the timeline method above to size it.
Sources
This guide is general information, not financial or legal advice. Thrivewell Capital is a private business funding marketplace. It is not a bank and it does not run or represent any government program. Minimum time in business and revenue figures are review criteria, not approval guarantees. Approval, amount, cost, payment schedule and timing depend on your business and the funding partner's assessment, and the actual lender written terms govern. Thrivewell figures are historical, from our own records as of September 22, 2026, and are not a promise of any result. Government program details change, so confirm them at the official source.