Construction contractors face a unique cashflow problem: you bid jobs, pay materials + labor for 30-90 days, then wait 60-180 days to be paid by the GC or owner. Bridging that gap is the entire challenge. Three financing structures specifically address it: invoice factoring, mobilization advances, and construction line of credit.
Sell unpaid invoices to a factor for 85-95% of face value immediately. Factor charges 2-5% per 30 days. Used during the 60-180 day wait.
Some lenders (Liberty Construction, Cline Financial) advance 30-50% upfront against signed contracts. Repaid as progress invoices are paid.
Specialized line of credit secured by receivables + work-in-progress. Prime + 2-4%. Best long-term solution for established contractors.