How to Qualify for a Merchant Cash Advance in the Construction Industry?

Construction companies have special financial challenges. You can get a huge contract in March and not be paid until June. You must buy your materials in advance, pay your labor every week, and keep the equipment operating while you wait 30, 60, or even 90 days for clients to pay invoices. It's a cash flow nightmare.

Traditional bank loans are little help. They take months to approve, require perfect credit, and want collateral you may not have. But there's another option: Merchant Cash Advances. They're fast, flexible, and based on your business revenue rather than your credit history.

Here's the catch, though: construction companies are a little different from retail stores or restaurants. You may not process credit cards every day. Your revenue comes in chunks, not steady streams. So how do you actually qualify for an MCA when your business model doesn't fit the typical mold?

Let's break down precisely what you need to know.

Understanding the Construction MCA Challenge

• Traditional MCAs take a daily percentage of your credit card sales. If your restaurant processes $5,000 a day in card transactions, it can surely afford a 15% holdback. But construction companies? Many of your clients are paying by check or ACH transfer weeks after the project is completed.
• This doesn't disqualify you. It does mean, however, you must approach MCAs differently, and understand what the providers are specifically looking for when it comes to construction businesses.

The Basic Qualification Requirements

Most MCA providers that deal with construction companies require:

• Time in business: at least 6-12 months. Construction startups face steeper hurdles because of the industry's project-based nature, with providers wanting to see evidence you've completed multiple projects and established a track record.
• Monthly revenue: usually $10,000-$15,000 minimum. The nature of construction work is capital-intensive, so providers expect higher revenue thresholds than retail businesses.
• Some credit card or ACH processing: $3,000-$5,000 monthly minimum. You don't need massive card volume, but providers need some electronic payment processing to facilitate repayment.
• Credit score: Typically 550+. Construction industry MCAs are slightly more lenient on credit, as providers realize how capital-intensive the work is.

Active contracts or steady pipeline of projects. Indication of the continuity of work and future income is important.

The Key: Showing Consistent Cash Flow

The biggest challenge for construction companies is proving consistent cash flow despite the project-based business model. Here's how you strengthen your case:

• Show your contract pipeline. Make a list of current contracts, projects in the hopper, and repeat business. Even if the money comes in chunks, a robust pipeline shows predictable income in the future.
• Highlight recurring clients. If you do regular work for property management companies, general contractors, or commercial clients, highlight those relationships. Recurring business suggests stability.
• Document your payment schedules. If you've signed contracts that indicate payment milestones, include these. They prove money is coming in, even if timing is irregular.
• Keep proper financial records. Professional bookkeeping showing regular deposits-though the amount may vary-demonstrates that you are running a legitimate operation and have consistent work.

Boost Your Credit Card Processing

Even if most your customers pay by check, increasing your card processing percentage enhances your MCA prospects dramatically:

• Offer card payment options to all clients. Many commercial clients happily pay by card if you accept it. The 2-3% processing fee is usually well worth the improved cash flow and MCA eligibility.
• Utilize invoicing software with integrated card payment. Such services as QuickBooks or FreshBooks allow your clients to pay invoices by card with just one click.
• Consider ACH debit arrangements. Some MCA providers accept ACH volume in addition to card sales. Setting up ACH payments with regular clients may count toward your processing volume.
• Accept card deposits. Even if final payment comes via check, accepting deposits for projects via credit card increases your processing numbers.

Leverage Your Business Assets

Construction companies often have advantages other businesses do not:

• Equipment and tools are tangible assets. Although MCAs do not collateralize, mentioning specific equipment owned (trucks, excavators, specialty tools) shows substance in the business.
• Licensing and bonding show legitimacy and professionalism. Current contractor licenses, insurance, and bonding separate you from fly-by-night operators.
• Building long-term relationships with vendors of lumber yards, suppliers, and equipment rental companies shows you're entrenched in the business.

Prepare the Right Documentation

• Have these documents organized and ready:
• Business bank statements (6 months)
• Credit card processing statements (6 months, even if volume is modest)
• Contractor licenses and insurance certificates
• Current client contracts or letters of intent
• Business formation documents
• Tax ID documentation
• Personal identification

Professional and organized documentation signals competence and tends to make approval more likely.

Alternative MCA Structures for Construction

Some providers offer construction-specific MCA structures:

• Invoice financing MCAs advance money against outstanding invoices, with repayment coming when clients pay.
• ACH-based MCAs pull payments from your business bank account rather than relying solely on card sales.
• Longer repayment terms to allow for project-based payment cycles, common in construction.

Ask bidders if they provide construction-friendly structures instead of conventional daily card holdbacks.

What Kills Construction MCA Applications?

Avoid these common mistakes:

• Inconsistent banking activity: long periods of no deposits, then huge chunks raise concerns about business viability.
• Poor credit across the board. Although MCAs are flexible, scores below 500 combined with business issues create too much risk.
• No active projects. Providers need confidence you have lined up work, not just hope you'll land something.
• Already having too much debt. If you're clearly over-leveraged with many loans outstanding, another funding source becomes a problem.

The Bottom Line

Construction companies can definitely qualify for MCAs, but success involves adapting to what providers need. Zero in on demonstrating a steady work pipeline, increase electronic payment processing where possible, maintain professional financial records, and apply with providers who understand construction business models.

The unique challenges of your industry do not disqualify you. They just require smarter positioning. With appropriate preparation, MCAs can give the quick capital injection construction businesses must have to take on bigger projects, purchase materials, and smooth over those inevitable cash flow gaps.

It means showing the providers that, despite the lumpy payment schedule, you're running a stable, professional operation with consistent work and reliable revenue. Do that, and funding approval becomes far more achievable.