Funding for builders and tradies when the job starts before the money

Construction and trades run on a cash flow pattern that’s hard on the business: pay for everything up front, invoice at the end of the month, wait for the client or head contractor to pay, and then wait again for retentions. Win a big job, and the cash squeeze gets bigger, not smaller.

Where tradies feel the pinch

• Materials. Timber, steel, cabling, pipes and fixtures paid for on order or on 20th-of-the-month terms.
• Labour. Staff and subcontractors paid weekly or fortnightly.
• Plant and vehicles. A new ute, trailer, excavator or scaffolding to take on more work.
• Progress claims. Paid 20 working days or more after submission, sometimes longer when disputes arise.
• Retentions. A percentage of each payment held back until practical completion and the defects period end.
• Tax. GST on invoices issued, sometimes before the client has paid.

Matching the funding to the gap

For a contract that’s starting now

A short-term unsecured loan funds materials and labour until the first progress payment. Lenders look for steady bank statements and a signed contract. Same-day funding is possible for smaller unsecured amounts.

For slow-paying progress claims

Invoice finance advances most of each claim once it’s issued, so you’re not waiting a month or more. It suits contractors working for councils, government agencies and large head contractors.

For plant and vehicles

Equipment and vehicle finance uses the asset as security and spreads the cost over its working life, keeping cash free for the job.

For larger projects and developments

When the numbers are bigger, a no-term loan or second mortgage secured over property can fund the build, repaid when the project completes or sells.

What makes a construction application strong

1. Signed contracts with clear payment terms and milestones.
2. A track record of completed jobs, ideally similar in size.
3. Clean bank statements with regular progress payments coming in.
4. Up-to-date GST and PAYE, or a clear arrangement with IRD.
5. A realistic budget that shows when money goes out and comes in.

Lenders are wary of contractors taking on a job much larger than anything they’ve done before. If that’s your situation, show how you’ll manage it: experienced site manager, staged materials, client deposit.

Retentions: plan around them

Under the Construction Contracts Act, retention money must be held on trust for the subcontractor. That protects you if the head contractor fails, but it doesn’t put the money in your account sooner. Track retentions owed to you, when they’re due, and follow up promptly at practical completion and the end of the defects period.

An illustrative example

A Nelson plumbing and drainage company wins a $480,000 subcontract on a retirement village build. Progress claims are monthly, paid 20 working days after submission, and 5 percent is retained. In the first two months the company will spend about $150,000 on pipe, fittings, labour and a second excavator before receiving anything.

The company finances the excavator through equipment finance from a dealer invoice. For the materials and wages, it takes a four-month short-term loan, then sets up invoice finance on the head contractor’s claims from month two onward. By month four, progress payments are flowing on time through the facility and the short-term loan is cleared.

Get the paperwork together

Have the contract, your latest bank statements, a list of current jobs and any equipment invoices ready for the first call. The funding speed finder can show which route fits your deadline.

Payment claims and getting paid on time

The Construction Contracts Act gives you a clear process for claiming payment. A valid payment claim must meet the requirements of the Act, and if the payer doesn’t respond with a payment schedule in time, they can become liable for the full amount claimed. Making sure every claim is properly prepared and submitted on time is one of the cheapest ways to improve cash flow, and it makes invoice finance easier because lenders can see the claims are valid.

Keep a simple register of every claim, when it was submitted, when payment is due and what has been received. That register is exactly the kind of evidence that speeds up a funding application.

Variations and disputes

Variations that aren’t agreed in writing are a common cause of slow payment. Get each variation priced and signed off before the work starts, so it can be claimed without argument and funded like any other claim.

Talk to someone who gets it

Asking what’s possible doesn’t touch your credit file, and we don’t spray your enquiry across a list of lenders. A real person reads it, understands how construction cash flow works, and calls you with a plan. Start your enquiry.