Office Administrator filing construction payment paperwork | Top factoring companies for construction contractors

For cash-strapped contractors, invoice factoring may be one option to help solve cash flow problems. However, not every factoring company is willing to put their money in the construction industry. Some factoring companies are reluctant to purchase construction invoices because they think it’s too risky, or because they don’t understand the industry.

Invoice factoring is pretty unregulated, and there are so many companies out there. How do contractors know which ones can help? We couldn’t tell. So we called a bunch of invoice factoring companies to find the best options for construction businesses. Here are five of the top construction factoring companies in the U.S., including their rates, application processes, and factoring insight directly from company executives.

Learn more about invoice factoring in construction:

CapitalPlus Construction Services website | construction factoringTop construction factoring companies

CapitalPlus Construction Services

  • Advance Rate: 65 – 85%
  • Factoring Rate: 2 – 4% per 30 days
  • Minimum invoice amount: $10,000

With CapitalPlus Construction Services, the application process takes between 48 hours and 72 hours for both spot and contract factoring. According to Executive Vice President Brent Chambers, any invoice under $500K is not subject to an application fee. When invoices are above half a million dollars, there’s a fee scale that depends on the size of the facility. CapitalPlus does charge a $25 wire transfer fee on all transactions. Other than that, CapitalPlus has no fees, which means there are no early termination charges.

CapitalPlus encourages subs to communicate openly with the GC, and to factor invoices only for work that has already been completed. “A [sub’s] customer has to approve that the invoice is valid,” Chambers told Levelset. “They need to be upfront with the GC before factoring the invoice.”

Chambers also notes that CapitalPlus has a range of funding options, with invoices being factored for as low as $10K and as high as $10M.

“We will work with banks and other creditors through intercreditor agreements to make sure [subs] can get funded,” said Chambers.

Capstone Capital Group website | construction factoringCapstone Capital Group

  • Advance Rate: 70 – 80%
  • Factoring Rate: 2 – 3% per 30 days
  • Minimum invoice amount: No minimum

For subs that are interested in spot factoring their invoices, Capstone Capital Group can help when contractors need quick cash. Their application process takes about a week, depending on processing time for the Secretary of State where the business is incorporated.

Capstone Capital Group has a $400 due diligence application fee, and they include a varying credit check fee on the onset of the transaction. As for fees that are separate from the factoring rate, Capstone Capital Group has a standard wire transaction fee of $30.

“When subcontractors work with us and help us communicate with the debtor what we’re trying to accomplish, it significantly speeds up the process,” said Thomas Ingrassia, Capstone Capital Group’s Vice President of Due Diligence and Underwriting. “Capstone offers a single invoice factoring program to subcontractors wherein they don’t have to send us receivables under a multi-year contract with minimums. We can factor invoices as they want to factor or have cash flow needs.”

ConstructionFinance website | construction factoringConstruction Finance

  • Advance Rate: 80%
  • Factoring Rate: 1.5% – 2% per 15 days
  • Minimum invoice amount: No minimum

Contractors can apply to factor an invoice with Construction Finance on their company website. The entire application process takes as little as five minutes, according to Tara Coker, the VP of Business Development.

Construction Finance has no application or underwriting fees. They also allow subs to borrow up to $500,000 at any time. The company includes a two-year contract requirement term, but a sub could end the contract earlier if there’s no outstanding balances.

“We stand apart from our competitors in that we specialize in construction factoring, and we have real-world construction experience,” Coker told me via email. “Our team includes lawyers, engineers, construction firm CPAs, and former project managers. In addition to the financial accommodations, clients are gaining a back office that knows the ins and outs of the industry.

According to Coker, they don’t charge  setup, underwriting, or other hidden fees. And it’s not an all-or-nothing proposition; CF allow clients to pick and choose which invoices they want to factor.

Factor Funding Co website | construction factoringFactor Funding Co.

  • Advance Rate: 70 – 80%
  • Factoring Rate: 1 – 3% per 30 days
  • Minimum invoice amount: $6,000

The application process with Factor Funding all depends on the GC’s current outstanding payables, including lien filings against them. The President of Factor Funding, Daniel Eke, explained that contractors can get their money within a week of submitting the application.

“We understand small business,” said Eke. “There’s no one size fits all with us. Rates depend on each specific business. We also don’t have a voicemail maze when [subs] try and call us. We return calls. We value relationships and have personable service. We listen to clients. We’re here to solve problems. That’s the reason contractors come to us.”

Factor Funding also has no application fees, no facility fees, and no monthly fees. Factor Funding offers month-to-month contracts. This allows a sub to cancel their order in any month, but in a month that a sub factors, all of their invoices must be factored. Factor Funding has no maximum invoice amount, but they do require the invoice to be at least $6,000.

Working Capital of America website | construction factoringWorking Capital of America

  • Advance Rate: 75 – 80%
  • Factoring Rate: 2 – 3% per 30 days
  • Minimum invoice amount: $10,000

Working Capital of America (WCA) knows construction. “Our niche is construction,” says Daniel Galvan, VP of Business Development. “We mainly deal with construction companies and progress billing. We also have 13 years of construction factoring experience.”

WCA has an application process that takes about three days. From there, funding will be submitted between three and four business days.

Working Capital doesn’t charge an application fee, according to Galvan. However, subs will need to pay an additional origination fee of 0.5% of the funding amount. Administrative fees vary depending on the project size. Galvan estimated that a smaller-sized facility would have a setup fee of roughly $1,000. Working Capital has a minimum funding amount of $10K and a maximum of $5M.

How to get paid faster

If you’re frustrated with how fast payments happen on construction projects, you’re not alone. In a 2019 survey about construction payments, 98% of construction businesses said they have had to threaten a lien filing in order to get paid. Factoring your invoices may help speed up cash flow, but it comes at a cost. Fortunately, there are some other steps you can take to get paid faster on every project – and it doesn’t cost a thing.

  1. Make yourself visible. The first step is sending preliminary notice at the start of every single job. It lets the GC and property owner know you’re there, and sets an early, professional expectation.
  2. Send the right paperwork at the right time. Take the time to understand what the GC or owner expects with your payment application, and overdeliver. Use a pay application checklist to make sure you’re as thorough as possible. Before your payment is due, send a friendly invoice reminder.
  3. Communicate clearly and often. The parties at the top of a project want to make sure you’re paid on time – they have a vested interest in avoiding mechanics lien claims. When asked how subs can get invoices approved quicker, Daniel Galvan, VP of Working Capital of America, agreed. “It’s all about good communication with the GC,” he said.