In construction you pay first and get paid later. Wages go out every week, suppliers want their account cleared by the 30th, and the progress claim you lodged three weeks ago still hasn’t landed. Progress payment gap finance is built for exactly that stretch, the weeks where the work is done but the money isn’t in yet.
It’s not a lifeline for a business that’s losing money. It’s a tool for a profitable business with a timing problem.
Where does the progress payment gap come from?
Most tradies and small builders can point to at least one of these:
- Claim cycles. You claim monthly, the builder or client takes 15 to 30 days to approve, then another week to pay. That’s six to eight weeks of costs carried by you.
- Retention. A slice of each claim is held back until practical completion or the end of the defects period. On a long job that adds up to real money sitting in someone else’s account.
- Disputed variations. The extra work is done, but the claim is stuck while everyone argues about scope.
- Slow or struggling payers. A head contractor under pressure pays the loudest subbies first.
- Front loaded jobs. You’ve ordered windows, trusses or steel for the next stage, and the claim for that stage can’t go in until it’s installed.
Our guide to progress payments and cash flow gaps digs deeper into how these cycles work.
Two ways to bridge the gap
No property? An unsecured cash flow loan
If your business has an ABN and has been trading for 6 months or more, an unsecured cash flow loan for tradies can bridge the gap without putting a property on the line. It’s assessed on your recent business bank statements and sized to your turnover. Some are approved and funded within hours.
This suits smaller, shorter gaps: a few weeks of wages, a supplier account, or a materials order for the next stage.
Got equity? A property secured loan
If you or a guarantor own a home, investment property, commercial property or land with equity, you can borrow against it. No financials or cash flow records are needed, bad credit is considered, and funding can happen in as little as 24 hours in some cases. Terms typically run 1 to 12 months.
This suits bigger or longer gaps, like a builder carrying several jobs at once or a subbie with a large retention balance tied up. A fast second mortgage is the most common way to do it, because it leaves your existing home loan untouched.
Will the lender take my progress claims as security?
No. We don’t lend against progress claims, invoices or the value of the job you’re working on. The loan is either unsecured and sized on your turnover, or secured against property you already own. That keeps it simple: you don’t need the builder’s sign off, and your client never needs to know you’ve arranged finance.
Example: an electrician carrying three jobs
Hypothetical example only.
An electrical contractor in Brisbane is running three residential jobs for two different builders. Between claim cycles and retention, he has a large amount owed to him, but his wages, apprentice costs and wholesaler account are due this fortnight.
His business has been trading for four years with healthy turnover. He takes an unsecured cash flow loan sized to his bank statements, pays his team and clears the wholesaler account on time, keeping his trade discount. As the claims come in over the next two months, he pays the loan down.
How to plan the repayment
Gap finance works best when you know roughly when the money will land. Before you apply:
- List every claim and invoice outstanding, with the date you realistically expect payment, not the date on the contract.
- Separate retention from normal claims, because retention often takes much longer.
- Borrow enough to cover the gap plus a buffer for one claim coming in late.
- Match the loan term to your cash flow. A short gap suits a short loan.
If a payer has stopped responding altogether, get advice early. Our guide to security of payment claims and cash flow covers what to think about, and your lawyer or accountant can advise on your specific situation.
Key facts: progress payment gap finance
- Loan size: $20,000 to $5 million (property secured loans from $20,000)
- Security: Existing property equity, or unsecured for businesses trading 6+ months with an ABN
- Speed: Some unsecured loans funded within hours; property secured loans in as little as 24 hours in some cases
- Term: Property secured loans typically 1 to 12 months
- Use: Wages, super, supplier accounts, materials for the next stage, BAS
- Suits: Builders, subbies and trade businesses with money owed to them
Common mistakes with gap finance
- Waiting until the account is on stop. Losing supplier credit or a trade discount costs more than acting early.
- Assuming the claim will be paid on time. Plan around when it usually arrives, not when it’s due.
- Funding a loss. If a job is underwater, a loan only delays the problem. Talk to your accountant first.
- Taking on another big job to fix cash flow. More work often means a bigger gap, not a smaller one.
Subbies at the bottom of the payment chain have their own set of problems. See subcontractor finance for options built around them.
Close the gap this week
You shouldn’t have to stall a job because a claim is late. Start your application in about 60 seconds, it won’t affect your credit score, and a lending specialist will call back to talk through the fastest option for your situation.
