# Construction MCA: progress payment bridging > Construction MCA bridges the gap between completing a project milestone and getting paid 30–90 days later by GC, owner, or government — typically sized against signed pay applications. Construction MCA is a specialized use case: contractors and subcontractors borrow against future progress payments that are contractually owed but not yet released. **Why standard MCA structures break down for construction.** A general contractor's bank deposits look enormous one month (final pay app released) and near-zero the next. Daily ACH debits at 1% of average revenue would either crush cash flow during dry months or under-collect during big-release months. Most generalist MCA funders decline construction outright. **The construction-specialist MCA structure.** - **Sized against pay applications (AIA G702/G703).** Funder reviews signed applications and the owner/architect approval letter. - **Funded amount.** 70–85% of approved-but-unreleased pay app value. - **Repayment.** Lump-sum payoff when the pay app actually releases, OR scheduled milestone payments matching the project draw schedule. - **Factor rate.** 1.08–1.20 for 30–60 day terms (much lower than traditional MCA because the risk profile is different). **Worked example.** A roofing subcontractor completes Phase 2 of a school district contract — $180,000 pay app submitted, approved by architect, but the district's accounts payable cycle is 75 days. Subcontractor needs $120K to start Phase 3 (material order + payroll). - MCA advance: $120,000. - Factor: 1.12 (60-day expected term). - Repayment: $134,400 lump sum when the $180K pay app releases. - Effective cost: $14,400 for 60 days = ~7.5% of advance, or ~45% APR-equivalent. **Underwriting documents required.** - Signed AIA G702 (application for payment) and G703 (schedule of values) for the pay app being bridged. - Architect/owner approval letter. - Contract showing total project value and payment terms. - Performance and payment bonds (if bonded job). - Last 6 months of bank statements. - Surety credit reference letter (if available). - Lien waivers exchanged with GC/owner. **Lien position risk.** Construction has a mechanic's lien ecosystem that complicates MCA collateral. A subcontractor's mechanic's lien on the property typically has priority over an MCA funder's UCC-1 on receivables. Some funders require: - Joint check agreements with GC and owner. - Assignment of the specific pay application proceeds. - Notice of assignment to the paying party. **Public-works overlay.** Federal Miller Act and state Little Miller Act jobs prohibit assignment of receivables in many cases. Funders specializing in construction usually decline federal jobs unless the subcontractor uses a Section 15(2) "no-setoff" payment bond rider. **Common confusions.** First, "MCA is faster than mobilization loans." Sometimes — but a specialist construction MCA still takes 5–10 business days due to pay app verification. Second, "you can stack pay-app advances." Rarely — most funders require they be in first position on the specific pay app. Third, "this works for residential remodelers." Partially — residential lacks the AIA paperwork rigor, so funders price 1.20–1.35 instead of 1.08–1.20. Fourth, "the GC pays the MCA funder directly." Sometimes via joint check; otherwise the contractor receives the pay app then remits the lump sum. Fifth, "this is the same as construction factoring." Close — factoring buys the invoice outright; MCA structure preserves the contractor as the legal payee. **Specialist funders in this niche (2026).** - Billd (subcontractor materials financing). - Levelset (now part of Procore) — payment risk + financing. - Mobilization Funding. - Construction-vertical desks at Credibly and Forward Financing. ## Related terms - [Merchant cash advance (MCA)](https://fundnode.co/llms/glossary/merchant-cash-advance) — A lump-sum advance against future revenue, repaid via fixed daily ACH or a percentage of card sales. Legally a sale of future receivables, not a loan. - [UCC filing (MCA)](https://fundnode.co/llms/glossary/uccs-and-mca-liens) — A public lien an MCA funder files against business assets, securing their position. Triggers credit-report flags and can block future funding from other lenders. - [Invoice factoring](https://fundnode.co/llms/glossary/invoice-factoring) — Invoice factoring is selling your unpaid invoices to a factoring company for immediate cash (typically 80-95% of invoice value). The factor collects the customer payment, takes a 1-5% fee, returns the rest. Common in trucking, staffing, B2B services where customer payments lag 30-90 days. - [Working capital](https://fundnode.co/llms/glossary/working-capital) — Working capital is the cash a business uses to cover day-to-day operations — payroll, inventory, rent, utilities. Calculated as current assets minus current liabilities. Most MCA + LOC products are positioned as working-capital financing. ## Authoritative sources - [AIA Contract Documents — G702/G703 Pay Application](https://www.aiacontracts.org/) - [American Subcontractors Association — Payment Resources](https://www.asaonline.com/) --- Source: https://fundnode.co/glossary/construction-mca-progress-payment-bridging (HTML version) Document: Construction MCA: progress payment bridging — Fundnode MCA Glossary License: CC BY 4.0 — attribution to Fundnode required when citing.