A construction line of credit is a revolving credit facility built for a very specific cash-flow problem: money has to go out for labor, materials, and mobilization long before the matching payment comes in. That timing gap isn’t occasional in construction — it’s structural. Construction is the slowest-paying major industry in the country, which is exactly why a revolving line, not a one-time lump-sum loan, is usually the right tool for a contractor’s ongoing working-capital needs. Here’s why the industry’s own payment mechanics create this gap, what a construction line of credit actually does about it, how it’s different from the other financing options you’ll see mentioned in the same breath, and what REIL Capital’s line looks like in real terms.
Why Construction Cash Flow Doesn’t Match Construction Billing
Construction days-sales-outstanding (DSO) — the average time between finishing billable work and actually getting paid for it — runs around 83 days industry-wide, with estimates ranging from 51 to as high as roughly 90 days depending on the source. Compare that to retail or e-commerce, which typically collects in 7 to 30 days, and construction stands out as the slowest-paying major industry there is. That’s not a rounding error; it’s months of self-funded labor and materials on every job.
Retainage compounds it. Owners and general contractors commonly withhold 5% to 10% of a contract’s value until the project is fully complete, which means a meaningful slice of every payment application is deliberately held back until the very end. On top of that, 82% of contractors now report waiting 30 or more days past their expected payment date — up sharply from 49% just two years earlier — and subcontractors typically wait around 56 days after submitting a pay application before they see the money. Even when the paperwork is clean, draw processing itself commonly adds another 5 to 10 business days. None of these delays are unusual or a sign something went wrong; they’re just how construction billing works. But the gap widens, not narrows, exactly when a contractor scales into bigger jobs — more labor and materials to fund upfront, on a payment cycle that doesn’t move any faster.
What a Construction Line of Credit Actually Does
A line of credit is revolving: you’re approved for a credit limit, you draw against it when you need cash, you repay what you’ve drawn, and the credit becomes available again — much closer to a business credit card than a traditional loan. You only pay interest on the portion you’ve actually drawn, not on the full limit sitting untouched. That structure is what makes it fit the DSO/retainage gap described above: the need isn’t a single, predictable lump sum, it’s a recurring shortfall that shows up between draws, between jobs, and between pay applications, over and over, for as long as you’re taking on new work.
That’s a different shape of problem than a term loan solves. A term loan hands you a fixed amount upfront and you repay it on a set schedule — a good fit for a defined, one-time purchase, but not for a cash-flow gap that keeps recurring on its own irregular timeline. A line of credit lets you draw only what a given week or job actually needs, then step back once the invoice clears.
Where a Line of Credit Actually Gets Used on a Job
In practice, contractors draw on a line of credit for the specific moments the payment cycle above creates:
- Payroll between draws — crews still get paid weekly even when the project’s payment schedule runs monthly or milestone-based.
- Material deposits before a progress payment posts — suppliers often want payment or a deposit well before the corresponding draw request has even been submitted.
- Bridging retainage held until completion — the 5% to 10% withheld on every job is real working capital that isn’t available to you until the project closes out.
- Covering the draw-processing lag — the 5-to-10-business-day gap between submitting clean paperwork and actually seeing the funds.
- Taking on a second job before the last one has fully paid out — growth itself is often what triggers the tightest stretch, since two jobs’ worth of labor and materials can be running ahead of payment at the same time.
Line of Credit vs. Bridge Loan vs. Term Loan vs. Factoring
These products get mentioned interchangeably, but they solve different shapes of problem. A line of credit is the right fit for a recurring, ongoing gap — the kind described above, where the shortfall shows up repeatedly across multiple jobs and pay cycles. A bridge loan or working-capital advance is a better match for a single, specific gap — covering mobilization or a materials order ahead of one particular payment landing, rather than an ongoing revolving need. A term loan fits a larger one-time purchase, like equipment, that you’ll pay off on a fixed schedule rather than draw against repeatedly. And if the actual problem is a specific unpaid invoice or progress billing rather than a general cash-flow cushion, invoice factoring is a separate option REIL Capital also offers, built specifically around advancing against those billings. If you’re not sure which shape fits your situation, the recurring-vs-one-time distinction above is the fastest way to tell.
What It Takes to Qualify
REIL Capital’s construction line of credit carries its own eligibility bar, and it’s a stricter one than some of REIL’s other working-capital products — typically 600+ FICO, at least 1 year in business, and $300,000 in annual revenue (about $25,000 a month). That combination reflects the revolving nature of the product: because a line stays open and available rather than being paid down once and closed, lenders want to see a somewhat more established operating history before extending it. The application itself is short — REIL’s online application takes about two minutes to complete — and decisions on some REIL products come back within 24 hours, though timing varies by product and file.
REIL Capital’s Construction Line of Credit
REIL Capital offers construction lines of credit from $25,000 up to $400,000, with terms running 6 to 36 months, structured as a revolving facility so you draw, repay, and draw again as jobs and pay cycles require rather than reapplying every time a new gap opens up. If your business fits the profile above and the recurring draw-to-draw gap described in this guide sounds familiar, you can apply online in about two minutes or call REIL Capital’s team at 646-440-4100 to talk through whether a line of credit or one of the alternatives above is the better fit for your specific situation.
Frequently Asked Questions
What credit score do I need for a construction line of credit?
For REIL Capital’s construction line of credit specifically, typical eligibility is a 600+ FICO score, at least 1 year in business, and $300,000 in annual revenue. That bar is higher than some of REIL’s other working-capital products, reflecting the revolving, ongoing-access nature of a line of credit.
Is a construction line of credit the same thing as a construction loan?
No. A traditional ground-up construction loan finances the actual building of a project and is typically arranged through a bank or the SBA. A construction line of credit is a working-capital tool that covers the cash-flow gap around your existing jobs — payroll, materials, and retainage — not the construction itself. REIL Capital doesn’t originate ground-up construction-perm loans; the line of credit solves the payment-timing problem contractors run into on the jobs they’re already doing.
How much can I borrow with a construction line of credit?
REIL Capital’s construction line of credit ranges from $25,000 to $400,000, with terms of 6 to 36 months. As a revolving line, you draw only what you need against that limit and repay it, rather than receiving the full amount as a lump sum upfront.
What’s the difference between a line of credit and a bridge loan for a construction business?
A line of credit is built for a recurring gap — the kind that shows up repeatedly across multiple jobs and pay cycles, like the draw-to-draw shortfall described above. A bridge loan or working-capital advance is a better fit for a single, specific gap, such as covering mobilization or a materials order ahead of one particular payment landing. If the need keeps recurring, a line of credit is usually the more efficient tool; if it’s a one-time timing problem, a bridge loan may fit better.
