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How AL Elite works for construction invoice factoring
- Tell us about it. Your trade, where you operate, roughly how many jobs a month you quote, and whether you need capital, a customer-financing program or both. No credit pull.
- We match you. Your request goes to lenders in our network who work with contractors in your trade and state. For customer financing, we set up a program; for capital, we match you with business lenders.
- You choose and apply with the lender. Rates, terms and the decision come from the lender. For customer-financing programs, there's no cost to join and no obligation to use it on every job.
How construction factoring actually works
- You complete the work and invoice the GC or owner.
- The factor verifies the invoice (and, in construction, often the pay application and lien position).
- The factor advances most of the invoice value, usually within days.
- The GC pays the factor on the original terms.
- The factor pays you the remainder, less its fee.
The fee depends on how long the invoice takes to be paid. The slower your customer, the more factoring costs.
Why construction factoring is its own specialty
Generic factors avoid construction because of pay-when-paid clauses (the GC pays you when the owner pays them), retainage (a percentage held back until project completion) and lien rights. Construction-specialist factors understand all three and price accordingly. Using a generalist usually means a decline or a bad rate. Our network includes construction specialists.
Recourse vs non-recourse
With recourse factoring, you buy the invoice back if the customer doesn't pay. With non-recourse, the factor absorbs the credit loss (usually only for insolvency, not disputes), at a higher fee. Most construction factoring is recourse. Know which you're signing.
What lenders look for
Every lender sets its own criteria. The things that come up most often:
- Time in business. Many business lenders want at least one to two years of operating history; some products accept less.
- Revenue. Annual revenue thresholds vary by lender and product. Bank statements are the usual proof.
- Business and personal credit. Smaller contractors are often underwritten partly on the owner's personal credit.
- Licensing and insurance. A current contractor's license (where required) and general liability insurance.
- State. Lender availability and product rules vary by state. We match you with lenders who serve your location.
- Creditworthy customers. The GC or owner's payment history matters more than your own credit.
- Clean invoices. Approved pay applications, no disputes, clear lien position.
Frequently asked questions
What is construction invoice factoring?
Selling an unpaid construction invoice to a factoring company for an immediate advance, with the balance (less a fee) paid when the GC or owner pays. Approval depends mainly on the customer's credit.
How much does construction factoring cost?
Fees vary with invoice size, customer credit and how long the invoice takes to pay. Ask for the fee structure in writing, including what happens if the invoice goes past the expected date, and compare the effective annual cost.
Can a subcontractor factor invoices to a general contractor?
Yes; that's the most common use. The factor will verify the pay application and may want to understand retainage and lien position on the project.
Is AL Elite a lender for construction invoice factoring?
No. AL Elite is a matching service. We route your request to business lenders in our network who fund construction invoice factoring, and they set the terms and make the decision. Lenders pay us for introductions; you don't.
Does requesting options affect my business or personal credit?
Submitting a request to AL Elite does not pull credit. Business lenders typically run a soft inquiry to pre-qualify and a hard inquiry at formal application. We tell you each lender's approach before you proceed.