A contractor's working capital need is the cash required to cover payroll, materials and overhead between paying for work and being paid for it, plus any retainage held back. Starway Business Loans, a small-business funding broker in Valdosta, GA, shows how to measure that gap with a simple method and Lowndes County construction data, and when a line of credit suits better.
The Lowndes County, GA building picture
Lowndes County had 227 construction employer establishments in 2023, more than half with fewer than five employees (U.S. Census Bureau, County Business Patterns 2023). Most were specialty trade contractors (138), the electricians, plumbers, framers, roofers and finishers who work under a builder or general contractor. Another 871 construction businesses ran without any paid employees in 2024 (U.S. Census Bureau, Nonemployer Statistics 2024).
The work behind them has been steady. Building permits in the county authorized 863 new housing units in 2023, 899 in 2024 and 804 in 2025, and 800 of the 2025 units were single-family homes (U.S. Census Bureau, Building Permits Survey). Single-family work means many separate jobs, each with its own draw schedule and its own wait for payment.
Where the gap comes from
- Billing cycles. You bill monthly or at milestones; the builder pays when its own lender releases a draw.
- Retainage. A share of each payment may be held back until the job is accepted, sometimes months later.
- Weekly payroll. Crews are paid every week whether or not a draw has cleared.
- Materials up front. Suppliers may want payment before you have billed for the work they supply.
- Overlap. Starting a second job before the first one pays doubles the gap for a while.
A simple way to measure it
- Add up the cash that leaves each week: payroll, materials, equipment payments, insurance and overhead.
- Count the weeks between paying for work and getting paid for it, from your last few jobs.
- Multiply the weekly cash out by the number of weeks.
- Add any retainage you expect to have outstanding at the same time.
- Add a cushion for a slow payer or a delay you cannot schedule around.
The result is the most cash you would need to carry at once. It is a planning figure, not a borrowing target; money already in the bank comes off it.
A hypothetical worked example
These numbers are invented to show the method and describe no real business or offer. A finishing contractor spends $10,000 a week on payroll, materials and overhead, and its builders pay about five weeks after each week's work. That is $50,000 out before money comes back. Add $8,000 of retainage expected to be outstanding and a $5,000 cushion, and the peak need is $63,000. If the company keeps $25,000 in the bank, the gap to finance is about $38,000.
Run it again for your busiest stretch and for your least busy one, using your own job history. The difference between the two tells you whether the gap is a one-off or something that comes back.
Lump sum or credit line?
If the gap is tied to one big job with a clear end, a working capital loan with a fixed schedule can match it. If the gap opens and closes with every job, a revolving line of credit usually fits better: draw when payroll is due, repay when the draw clears, and pay interest only on what is outstanding.
A warning sign is a balance that never falls. If the line is fully drawn month after month, the business may be underpricing jobs or carrying too much overhead, and more funding will not fix that.
What to have ready
- Business bank statements covering the past few months.
- A list of current jobs, contract values, amounts billed and amounts received.
- Retainage outstanding, by job.
- Your weekly payroll and supplier commitments.
For how other trades and sectors fund their cycles, see the sector pages, and for county figures, Lowndes County business counts. Other worked examples sit on the Starway blog.
Lending partners decide every request and set the terms; this post is planning arithmetic, not an offer.
By Starway Business Loans · Updated
