MCA Debt Relief for Construction Companies: When Progress Payments Can't Keep Up With Daily Debits
By Century Debt Relief ·
Contractors use merchant cash advances for good reasons: to make payroll before a draw clears, buy materials for a new job, or keep a crew working while a general contractor sits on an invoice. The money arrives in days.
The problem is the mismatch. Construction revenue arrives in lumps, often weeks or months after the work is done. MCA payments usually come out every business day. This guide explains why that combination is so hard on contractors, and the options when the debits get ahead of the draws.
Why MCAs hit construction businesses hard
- Progress billing. You bill as work is completed and wait for approval and payment. Debits do not wait.
- Retainage. Owners and general contractors commonly hold back a percentage of each payment — often 5% to 10% — until the job is finished. That is money you earned but cannot use to cover daily payments.
- Slow and pay-when-paid terms. Subcontractors may wait until the GC gets paid. Thirty, sixty or ninety days between invoice and cash is common.
- Weather and seasonality. Winter slowdowns and weather delays cut revenue, but a fixed debit stays the same.
- Stacking to bridge the gap. One advance covers the gap until the next draw. When the draw is late, a second advance covers the first.
What to check in your MCA agreements
- Reconciliation. If your agreement purchases a percentage of your receivables, a reconciliation clause may let you ask for the debit to be adjusted to what you actually collected. For a contractor between draws, that can be significant. See MCA relief options.
- How "receivables" are defined. Some agreements claim all of your receivables, including payments due on contracts. A funder's UCC lien on receivables can complicate other financing, and some funders send notices directly to the customers who owe you money after a default.
- Anti-stacking and default triggers. Taking a new advance, changing bank accounts or a drop in deposits can each be a default under some agreements.
- Personal guarantees. Nearly universal in MCAs, and important if the company is winding down. See MCA settlement and your personal guarantee.
Bonding and other financing
If you work on bonded jobs, talk with your surety or broker early. Judgments, liens and defaults can affect bonding capacity and other financing, so it is usually better to resolve MCA debt on your own terms than after a funder has sued.
Relief options for contractors
- Request reconciliation when collections have fallen behind your debits.
- Restructure payments to match your draw schedule — weekly or monthly payments instead of daily. See business debt restructuring.
- Settle when the combined balance is more than the business can repay from future jobs. See how business debt settlement works.
- Use the right tool for receivables. If the core problem is waiting on approved invoices, compare the true cost of options designed for that, rather than another daily-debit advance.
How Century Debt Relief helps contractors
We look at every advance alongside your job pipeline, draw schedule and retainage, then work with funders on terms that match when you actually get paid. Get a free review of your MCA debt.
Frequently asked questions
Can an MCA funder contact my general contractor or customers?
Some MCA agreements allow a funder to notify the parties who owe you money after a default and ask that payments be sent to the funder. Check your agreement, and get advice before a default if possible.
Does retainage count toward my MCA reconciliation?
Reconciliation is usually based on receipts you actually collected. Retainage that is withheld and not yet paid typically would not be counted as received, which can support a lower adjusted payment. Your agreement's definitions control.
Can MCA payments be changed to match my draw schedule?
Often, yes. Funders may agree to weekly or monthly payments as part of a negotiated restructuring, particularly when the alternative is a default.
Will MCA debt affect my bonding?
It can. Judgments, liens and defaults may affect bonding capacity and other financing, so it helps to talk with your surety and address MCA debt before it reaches litigation.