How does a construction subcontractor finance payroll between draws?
Figures verified 2026-09-21
A line of credit is the right instrument for a draw gap: you borrow only for the weeks you are waiting and repay when the draw lands. $10,000–$350,000, from 1% a month, $10,000 minimum draw, 2.49% draw fee — it needs 3 years and $300,000 a year. Below that, revenue-based financing covers the gap at 600 FICO, 6 months and $60,000 a year.
Why a line of credit beats a term loan on a draw gap
A draw gap is temporary, so paying interest on a lump sum for 12 to 18 months is the wrong shape. A line lets you draw the payroll you actually need, repay on the draw, and leave the rest untouched. One warning worth reading twice: taking additional financing while a line of credit is open freezes that line. You keep the balance and the payment and lose access to the undrawn portion — the cheapest money on the table is the money you just lost.
What you need to qualify
| Program | Min FICO | Min time in business | Min revenue | Positions allowed |
|---|---|---|---|---|
| Revenue-based financing | 600 | 6 months | $60,000/yr | Up to 2 |
| Bank-style line of credit | 650 | 3 years | $300,000/yr | Up to 2 |
| Bank-style term loan | 650 | 3 years | $300,000/yr | First position only |
| Renewal of an existing advance | 550 | 2 years | Set by the original | No add-on if another position exists |
How much, and on what terms
| Product | Amount | Term | Cost and conditions |
|---|---|---|---|
| Line of credit | $10,000 – $350,000 | 12–36 months | From 1%/mo, 2.49% draw fee, $10,000 minimum draw |
| Term loan | $10,000 – $250,000 | 12–18 months | 0% origination; capped at 15% of annual revenue |
| Revenue-based financing | Set by monthly deposits | Varies | Repaid as a share of receipts |
What your bank statements have to show
| Measure | Threshold | Applies to |
|---|---|---|
| Minimum average daily balance | $800 | revenue-based |
| Minimum average balance | $5,000 or 10% of monthly revenue, whichever is greater | bank-style |
| Deposits per month | 8 or more | bank-style |
| NSFs per month | 6 maximum (24 per rolling 6 months) | bank-style |
| NSFs + negative days per month | 5 maximum combined | revenue-based |
| Negative days per month | 3 maximum (9 per rolling 6 months) | bank-style |
Common questions
Can I finance payroll if my customer has not paid yet?
How fast can a subcontractor get funded before a payroll run?
Does retainage count against me?
Can I get a line of credit with an advance already open?
Why we publish our numbers
Most pages answering this question give you a range and tell you to call. These are the actual thresholds an application is measured against, so you can tell before you apply whether you clear them. They are reviewed and updated here when they change.