Construction factoring is a way for contractors to get paid for their work faster. Instead of waiting for customers to pay, your businesses can get a cash advance right away by selling unpaid invoices to a construction factoring company.

The primary advantage of construction factoring is that it is a quick and easy way to get financing. Unlike traditional loans, which can take weeks or months to be approved, you can get funding within 24 hours with factoring. This is because receivables are easy to verify and the funding process does not require a lot of paperwork.

We interviewed dozens of construction factoring companies to find the best factoring rates. Then, we evaluated the top companies based on market share, advance rate, funding speed, and customer service reputation.

Best Construction Factoring Companies

Construction Factoring CompanyWhat We Like
SMB CompassIndustry expertise & flexibility
eCapitalQuickest funding
Riviera FinanceTop rated customer service & true non-recourse
FundThroughHigh advance rate & QuickBooks integration
Factor Funding Co.Great for minority-owned businesses
CapitalPlusWorks with progress billing & performance bonds

1. SMB Compass

SMB Compass has the perfect solution for small general contractors who are looking to finance their business and expand their operations. Their construction factoring financing program provides affordable cash advances you can use to make payments to subcontractors, suppliers, and vendors, making it easier to manage your business and keep your operations running smoothly.

The SMB Compass team has construction industry expertise and understands progress billing, lien rights, and all aspects of construction.

Larger general contractors can use SMB Compass’ construction factoring program as an alternative to bonding. That way you can use the subs you choose, regardless of their ability to secure a bond and their creditworthiness.

SMB Compass pays vendors and suppliers within 1 to 2 days of receiving an approved pay application. Their program offers top-to-bottom cash management, funds control, and risk mitigation solutions for the commercial construction industry.

SMB Compass Construction Factoring Services

  • Payroll Funding
  • Lien Waiver Collection
  • Vendor, Supplier, and Subcontractor Payments
  • Credit Monitoring of Subcontractors
  • Union Dues
  • Insurance Premium Payments
Advance RateUp to 97%
Discount RateStarting at 1%
Recourse or Non-RecourseNon-Recourse and Recourse Available
Speed of FundingSame Day
Revenue Requirements$10,000 per month

2.

eCapital offers the quickest funding of all the construction factoring providers we reviewed. They offer immediate funding on new invoices and a revolving line of credit through their partnership with Visa — allowing for instant access to funds.

eCapital’s database contains information on over 40,000 companies. It’s a great way to check out clients beforehand and mitigate risk.

eCapital works when you do and their back office support is available even on weekends. They also have an onboarding process to walk new clients through their platform.

To make your choice easier, they currently offer a 90 day trial period.

Advance RateUp to 100%, one of the highest in the industry
Discount RateBetween 1% and 5%
Recourse or Non-RecourseNon-recourse factoring is available
Speed of FundingImmediate funding and revolving line of credit
Revenue RequirementsRates and fees may be determined based on income

3. Riviera Finance

Riviera Finance is a top pick because of their excellent customer service. Customers report their staff is very professional and goes the extra mile to show they care. Considering the scary negative reviews many other factoring companies have, it’s a relief to know Riviera wants to make sure you have the greatest customer service & client experience possible.

Given all this, it’s not surprising Riviera Finance has an excellent 4.8 out of 5 star rating on Google with over 450 reviews.

Riviera Finance works with many types of contractors, including security system installers, aggregate haulers, concrete, construction waste disposal, underground cabling, commercial wind/solar installation, and rental rehab companies. Riviera Finance also maintains over 25 offices throughout the US and Canada. They have been helping businesses with cash flow issues since 1969.

Riviera Finance Invoice Factoring
Advance RateBetween 90% to 95%
Discount RateStarts at 2%
Recourse or Non-RecourseRiviera Finance offers both recourse and non-recourse factoring
Speed of Funding24-hour funding is guaranteed
Revenue RequirementsUp to $2 million in monthly sales, no minimum business age

4.

FundThrough calls their service Velocity Invoice Factoring. It is a fast and easy solution to get you funding as soon as the next business day, upon approval.

You have the option to upload invoices into their system, or you can connect directly to QuickBooks and automatically sync them. We love it when companies use technology to make things easier.

FundThrough deposits funds at no cost using next-day Electronic Funds Transfer (ACH). You can also request wires for same-day payments, which will incur a service charge. There is no charge to have a FundThrough account and pricing is very transparent.

Unlike other factoring companies that accept progress billing, FundThrough only approves completed construction projects.

Advance RateUp to 100%
Discount RateStarting at 2.5% to 5% per 30 days
Recourse or Non-RecourseFundThrough is a recourse factor
Speed of Funding24 hours after approval
Revenue RequirementsNone

5. factor funding

Factor Funding Co. is a leader in providing cash flow solutions to small and medium-size businesses nationwide. Customer reviews from roofers and contractors highlight speed and efficiency in solving cash flow issues.

Factor Funding has been factoring construction invoices since 1996. Nobody enjoys being locked down, so with Factor Funding month-to-month contracts are standard. Their philosophy is to help companies get more money so they can thrive and grow.

Factor Funding accepts progress billing, but they do not accept performance bonds.

Advance RateBetween 70% and 95%
Discount Rate0.5% to 3%
Recourse or Non-RecourseNon-recourse factoring is available
Speed of FundingInitial funding can take up to a week, and once your contract is established 24 to 48 hours is usual
Revenue RequirementsNo minimum requirement

6. CapitalPlus Construction Factoring

CapitalPlus specializes in factoring construction invoices and stands out for being very flexible. Notably, they will work with both progress billing and performance bonds.

CapitalPlus has been providing construction factoring for over two decades. They are accredited by the Better Business Bureau with a current A+ rating and no negative reviews or complaints.

If you work with CapitalPlus, you can choose which invoices to sell, and you won’t have to worry about extra fees or a long-term contract.

Advance RateUp to 90%
Discount RateStarting at 2%
Recourse or Non-RecourseCapitalPlus is a recourse factor
Speed of FundingSame Day
Revenue Requirements$6,500

Construction Factoring Rates

There are two main things construction factoring companies use to determine the fees you pay:

  1. How much you plan to factor
  2. How long your customers take to pay

Factoring larger amounts and getting customers to pay faster usually leads to lower rates. Factoring companies also consider things like how many years you have been in business, the number of active projects, the diversity of your customer base, and customer credit quality.

Related: Invoice Factoring Rates, Fees & Costs

Pros of Construction Factoring

Quick turnaround time: Construction factoring companies can provide funding for your business within 24 hours. This means you won’t have to wait weeks or months for funding.

No collateral: Construction factoring companies don’t require collateral. This means you won’t have to put your home or other assets at risk to get funding.

No credit check: Construction factoring companies don’t require a credit check. This means you can get funding even if you have bad credit.

No upfront fees: Construction factoring companies don’t charge upfront fees. This means you won’t have to pay anything to get funding.

Cons of Construction Factoring

High interest rates: Construction factoring companies charge high interest rates. This means you may end up paying more in interest than you would with a bank loan. Annual percentage rates (APR) can range from 12% to 65% or more.

Limited funding: Construction factoring companies may only provide a limited amount of funding. This means you may not be able to get the full amount of funding you need.

Recourse factoring: Some construction factoring companies require recourse factoring. This means you may be responsible for repaying the factoring company if your customer goes bankrupt.

Related: Understanding Factoring Agreements & Contracts

Wrapping Up Construction Factoring

Construction factoring is a type of financing in which businesses sell their receivables, or invoices, to a third-party company at a discount. The funding company then collects payment on the invoices from the businesses’ customers, minus a small fee. Factoring can be a great solution for contractors that need working capital to sustain or grow their company.

If you’re a construction business in need of working capital, construction factoring may be a good financing choice for you. It is a quick and easy way to get funding, and it is flexible and accessible to businesses with poor credit scores.

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