Use of funds: projects
The deposit is spent, the final payment is bigger than what is left to do, and you are short. Here is how to check whether funding the finish is a good trade, and how to time it against the client's payment.
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Updated October 13, 2026 · Merchant Fund Express
Funding the cost to finish a project is a sound trade when three things are true: the final payment is clearly larger than the cost to finish plus the funding cost, the client's obligation to pay is in a signed contract with no open disputes, and your regular business can carry the weekly payment until the final payment lands. If any of those is shaky, the funding does not solve the problem; it adds a cost to it.
| Situation | Fit |
|---|---|
| Final payment well above cost to finish; signed contract; client pays on time historically | Fits |
| Change orders unsigned or a dispute over scope | Fix first: get it in writing |
| Cost to finish is more than the final payment | No: the job is losing money; funding deepens the loss |
| Work is done and the invoice is issued | Invoice factoring may be cheaper; see below |
| Construction work | Construction files follow the construction rule: 5 years, $500,000+ monthly revenue, 10+ deposits a month, commercial location. We do not promise funding for residential remodeling. |
Write four numbers on one line: the final payment you will receive, the cost to finish, the funding cost, and any retainage the client will hold back. The final payment minus the cost to finish minus the funding cost is your cushion. If that cushion would not survive a 10% retainage hold or a 30-day payment delay, reduce the funding, ask the client for a milestone payment, or do not fund it.
A sign and graphics company has a $120,000 contract for a regional retailer. It received a $48,000 deposit and has spent $50,000 so far on fabrication. To finish: materials $14,000, labor $16,000, installation equipment and subcontract $6,000. The final $72,000 is due net 30 after installation. Funding is illustrated at a 1.30 factor, no fee deducted, repaid weekly over 24 weeks. Normal weekly revenue is $22,000.
| Item | Amount |
|---|---|
| Cost to finish (funding and net proceeds) | $36,000 |
| Total repayment at 1.30 | $46,800 |
| Cost of the funding | $10,800 |
| Weekly payment, 24 weeks | $1,950 (about 8.9% of weekly revenue) |
| First and last payment | Oct 26, 2026 and Apr 5, 2027 |
| Installation complete and invoiced | Fri, Nov 20, 2026 |
| Final payment expected (net 30) | Around Mon, Dec 21, 2026 |
Margin: $120,000 minus $50,000 spent minus $36,000 to finish = $34,000 on the job. After the $10,800 funding cost, $23,200. Cushion on the final payment: $72,000 minus $46,800 = $25,200, enough to survive a 10% retainage ($7,200) held for 60 days.
Timing: nine weekly payments, Oct 26 through Dec 21, total $17,550 and are paid from regular operations before the $72,000 arrives. That is the number to test against your cash calendar. If the client pays late, those payments keep running.
All figures in worked examples are illustrations of the arithmetic, not offers or quotes. Real terms depend on your file and the funder.
For contractors buying materials before a job starts, see materials before the job starts; for a gap after invoicing, see the net-60 invoice gap.
Run the margin test with your own four numbers. If the cushion holds, check the requirements and apply with the contract attached.
Revenue-based funding is underwritten mainly on your bank statements, not on the contract alone. The contract helps show what the money is for and how it is repaid.
Weekly payments continue regardless. Test whether your normal revenue can carry the payment for 30 to 60 days beyond the expected payment date.
Often, but factoring needs a completed, invoiced job. It cannot pay for the work before the invoice exists.
Do not fund the finish to get paid less than it costs. Renegotiate scope, pursue a change order, or limit losses.
Construction files must meet the construction rule: 5 years, $500,000+ monthly revenue, 10+ monthly deposits and a commercial location. Residential remodeling is not funded.
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