Second Position Merchant Cash Advance for Construction Companies
A construction company with one advance can often get a second, sized around the existing payment and the draws it expects on current jobs. Because deposits come in big, irregular lumps, the second funder wants to see that both payments still clear during the gaps between draws. The second advance costs more and runs shorter than the first.
What changes with two advances on a contractor
The gap between draws gets longer in effect
A contractor carrying one debit plans around the two or three weeks between draws. A second debit doubles what has to come out during those weeks, which is where most contractors get into trouble with stacked advances.
The second funder looks hard at backlog
It isn't enough that last quarter was strong. The funder wants to know which signed jobs will generate draws over the life of the new advance, and whether any big project is ending without a replacement lined up.
What two advances take in January
A first advance costs this construction company $18,000 a month on $200,000 of deposits. A $80,000 second at 1.4, 5 months, stacks $22,400 on top.
| Month | Deposits | First advance only | Both advances |
|---|---|---|---|
| An average month | $200,000 | 9.0% | 20.2% |
| January, the slowest | $190,200 | 9.5% | 21.2% |
| August, the busiest | $205,200 | 8.8% | 19.7% |
Combined, 21.2% of deposits leave in January. Why January? Federal QCEW data puts construction (NAICS 23) payrolls at 95.1 then (100 = average) and 102.6 in August.
Check two documents first
Your first advance contract often limits new financing. Your bonding company, if you're bonded, also watches your debt and cash position, and a surety that sees stacked advances can tighten your bonding line. That can cost you the next bid, which costs more than any advance.
When a second advance fits a contractor
- A specific job that needs materials or labor up front, with a draw schedule that repays it.
- A first advance that's past the halfway point.
- A backlog that covers the months the second advance runs.
When it's the wrong tool
If the second advance is covering losses on a job that's gone over budget, adding payments rarely fixes it. A consolidation or a talk with the project owner about change orders comes first.
Quick answers
Can a contractor take a second merchant cash advance?
Yes, if the numbers support it. The second funder reads your deposits, the balance on your first advance and your backlog of signed jobs. Check your first contract for limits on new financing, and if you're bonded, consider how your surety reads additional debt before you sign.
How does a second advance affect a contractor's bonding?
Sureties review your financial position, and stacked advances with daily debits can make a contractor look stretched. That can shrink your bonding line or raise its cost. Talk with your bonding agent before adding a second position if bonded public or commercial work is a big part of your pipeline.
What should a contractor use a second position advance for?
A specific, short need that a draw schedule repays: materials for a job starting now, mobilization costs or payroll until the first draw lands. Using it to cover losses on an over-budget job usually makes things worse. A second advance works best when you can point to the deposit that pays it off.
More for construction companies
- Same-day merchant cash advance for construction companies
- MCA consolidation for construction companies
- Revenue-based financing for construction companies
- Business line of credit for construction companies
- How funders read construction companies
- Second position MCA: how it works
Run your own numbers with the stacked payment calculator.
Want to see what fits a construction company like yours?
Tell us your slow months and your open advances, and we'll shop the file with funders whose programs fit. Call 877-FUND-654 with any question. We call you back, usually the same business day, and we always talk with you before we shop your file.