6 Best Construction Factoring Companies
Tom has 15 years of experience helping small businesses evaluate financing and banking options. He shares this expertise in Fit Small Business’s financing and banking content.
This article is part of a larger series on Business Financing.
Construction factoring is a financing option for businesses in the construction industry. Instead of delaying work because of slow-paying clients, invoice factoring allows your business to forge ahead and take on more projects by financing invoices to receive working capital. We examined several construction invoice factoring companies and compiled our list of the six best for small business owners based on advance rate, amounts the providers will finance, and how fast funding will occur.
CapitalPlus: Best Overall Rates, Terms, and Features
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Maximum Funding | $10 million | Advance Rate | Up to 80% |
Discount rate | Starts at 2% per 30 days | Minimum Annual Revenue | None |
Expected APR | 24% to 40% | Funding Speed | 24 hours after approval |
Additional Fees | $25 for wire transfer | Performance Bonds | Accepted |
Progress Billing | Accepted | Pay-When-Paid Clauses | Accepted |
Why We Recommend CapitalPlus: CapitalPlus is the best overall construction invoice factoring provider for small businesses because of its combination of competitive rates, ability to finance large amounts of invoices, and customer service. CapitalPlus will finance up to $10 million of invoices at rates that start at 2% per 30 days and will work with construction companies with progress billing and performance bonds. It’s highly regarded by developers, construction company owners, and subcontractors and has a quick online application with funding as soon as the next day.
Factor Funding Company: Best for Month-to-Month Contracts
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Maximum Funding | $10 million | Advance Rate | Up to 80% |
Discount rate | 3% for first 30 days—1% every 10 days thereafter | Minimum Annual Revenue | None |
Expected APR | 40% to 65% | Funding Speed | Seven days |
Additional Fees | $400 for origination $25 for wire transfer | Performance Bonds | Not accepted |
Progress Billing | Accepted | Pay-When-Paid Clauses | Accepted |
Why We Recommend Factor Funding Company: Factor Funding considers projects with progress billings, similar to CapitalPlus, and pay-when-paid clauses. Factor Funding also has no limit on its factoring facility, and its rates are fair, at 3% for the first month and 1% every 10 days after that. Factor Funding requires a minimum amount of just $10,000 per factor, which is very competitive for smaller construction companies. Factor Funding Company only offers recourse financing agreements, meaning that if your debtors’ default, you’ll repay the financing. Like other lenders on our list, it requires a first lien position and a personal guarantee. However, its speed of funding is slower than several of those surveyed, taking up to one week to fund your first invoice.
nFusion: Best for No Monthly Minimums
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Maximum Funding | $5 million | Advance Rate | Up to 80% |
Discount Rate | Starting at 1.5% per 30 days | Minimum Annual Revenue | None |
Expected APR | 18% to 48% | Funding Speed | As soon as 24 hours after approval |
Additional Fees | Fees for ACH and wire transfer | Performance Bonds | Accepted |
Progress Billing | Accepted | Pay-When-Paid Clauses | Accepted |
Why We Recommend nFusion: nFusion doesn’t require you to factor a minimum amount each month; however, you’re asked to commit to at least a one-year contract. nFusion’s rates and terms are competitive and work for both smaller subcontractors and larger construction companies alike. Funding is available as quickly as 24 hours after your invoices are accepted, and management of invoice submission is entirely online.
FundThrough: Best for Companies with Completed Projects
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Maximum Funding | $5 million | Advance Rate | Up to 80% |
Discount Rate | Starts at 2.5% per 30 days | Minimum Annual Revenue | None |
Expected APR | 30% to 60% | Funding Speed | 24 hours after approval |
Additional Fees | Origination (varies) | ||
Why We Like FundThrough: FundThrough offers up to $5 million but only approves completed construction projects, making it ideal for small business owners who have already finished large construction projects. Rates are charged at 2.5% per 30 days. FundThrough works with the vast majority of construction-related industries, along with general contractors and subcontractors. However, FundThrough is best suited for companies with completed projects and outstanding invoices. FundThrough will fund invoices within 24 hours of approval.
Construction Finance: Best for Newer Businesses
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Maximum Funding | $500,000 | Advance Rate | Up to 80% |
Discount Rate | Starting at 1.5% per 15 days | Minimum Annual Revenue | $120,000 |
Expected APR | 36% to 64% | Funding Speed | Three to five days |
Additional Fees | $25 for wire transfer | Performance Bonds | Not accepted |
Progress Billing | Accepted | Pay-When-Paid Clauses | Accepted |
Why We Recommend Construction Finance: Construction Finance offers construction invoice factoring of up to $500,000 at any time. While this is less than other lenders, Construction Finance has low minimum requirements and competitive rates for newer businesses. Construction Finance is also flexible and charges its fees on a 15-day cycle, with most rates ranging from 1.5% to 2% and funding available within three to five days.
TCI Business Capital: Best for Larger Volumes
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Maximum Funding | $20 million | Advance Rate | Up to 90% |
Discount Rate | 1% to 5% per month | Minimum Annual Revenue | $600,000 |
Expected APR | 12% to 60% | Funding Speed | Up to three days |
Additional Fees | Wire transfer | ||
Why we like TCI Business Capital: TCI Business Capital offers the flexibility of a month-to-month contract and will fund up to $20 million in invoices. TCI also re-evaluates the discount rate it charges a business every month to see if it can be reduced. If factoring volume increases or customers pay their invoices quicker, the discount rate may decrease. The maximum advance that TCI will provide is among the highest with factoring companies; however, they also have the highest minimum annual revenue of the companies we surveyed. TCI is best suited for heavy construction companies and larger contractors that can justify the larger volumes TCI can factor.
How We Evaluated the Best Construction Invoice Factoring Companies
When evaluating the best construction invoice factoring companies, we prioritized the overall costs of factoring invoices through each provider, along with several other considerations. The criteria we used to evaluate the best construction factoring companies include:
- Overall costs: The overall cost of factoring depends on the discount rate charged by the lender and the amount of time the factored invoice is outstanding.
- Factoring amount: This is the maximum amount of working capital that each construction factoring company can provide for your business, and the smallest amount it’ll consider for funding.
- Advance rate: This is the portion of your invoice that an invoice factoring company is willing to advance.
- Qualification requirements: This includes whether a construction factoring company will fund businesses with pay-when-paid and progress billing clauses, as well as annual revenue requirements.
- Application process: Although some lenders offer an online application, most will require additional documentation, such as contracts and bank statements, after you apply.
- Speed of funding: We looked at how quickly an invoice factoring company can provide initial funding.
Bottom Line
Construction factoring is a good financing choice for construction businesses in need of working capital to grow or sustain their company. Rather than waiting up to 90 days to get paid, as is the case with many types of small business loans, factoring gives businesses a hassle-free way to get financing much more quickly. Our recommendations will help construction companies of various sizes and needs.
