Quick answer
You rarely need to borrow the full contract value. You need enough to cover the deepest point of the cash gap, between paying for materials, staff and any bank guarantee and receiving the first progress payments. Map the job month by month to find that peak. Then fund it with a bank facility, progress payment or invoice finance, trade finance for supplies, or a secured line of credit, depending on the contract and your security.
Key points
- The amount to fund is the peak of the month-by-month cash curve, often a quarter or less of the contract value
- Lenders want the signed contract, the payment terms and comfort about who the customer is
- Retentions, bank guarantees and mobilisation costs all eat cash before the first claim is paid
- Check the contract for restrictions on assigning payments before you plan around invoice finance
- Ask for a deposit or mobilisation payment: it's the cheapest funding there is
Congratulations. Landing the largest job your business has ever taken on is a genuine milestone, and it usually follows months of quoting, pitching and waiting. Then the practical question lands: how do you pay for materials, extra staff and insurance for weeks or months before the customer pays a cent?
You’re not alone in this. Plenty of sound businesses win work that’s larger than their bank balance. The trick is working out exactly how much cash the job needs, and when, so you borrow the right amount the right way.
Where does the cash gap on a big job come from?
Large jobs front-load the spending. Before your first invoice is even due, you may have to:
- buy materials or stock in bulk, often on cash terms from a new supplier
- hire or subcontract extra labour, with wages and super paid weekly or fortnightly
- provide a bank guarantee or performance security, which can lock up cash
- buy or hire equipment and cover mobilisation costs
- take out the insurance the contract requires.
Then the payments arrive in instalments, often a month or more apart, and the customer may hold back a retention from each one until the job is finished or the defects period ends. In construction, each state’s security of payment laws give you the right to claim progress payments. In NSW, for example, a head contractor must pay a subcontractor on non-residential work within 20 business days of a claim unless the contract says sooner. That’s still around four weeks of funding per claim.
How much do you actually need?
Less than the contract value, almost always. The figure that matters is how far below zero your account would dip if the job ran with no extra funding at all. Find it by mapping costs and receipts month by month.
Here is an illustrative example. A Newcastle commercial joinery business wins a $1.4m subcontract to fit out a new school building over six months. It claims monthly, gets paid about four weeks later, and the builder holds 5% of each claim as retention.
| Month | Costs paid out | Payments received | Running position |
|---|---|---|---|
| 1 | $310k | nil | −$310k |
| 2 | $220k | $171k | −$359k |
| 3 | $200k | $209k | −$350k |
| 4 | $180k | $228k | −$302k |
| 5 | $150k | $257k | −$195k |
| 6 | $90k | $238k | −$47k |
The peak gap is about $360k, around a quarter of the contract value, and it hits in month two. Allowing for a delayed payment, the owner plans for $420k. The final claim and released retention later turn the job into roughly $250k of gross profit. Borrowing $1.4m would have cost far more and been harder to approve.
If you’re looking at a similar spike, we can help size it. It takes a minute to describe the contract.
What does a lender need from you?
The contract itself does a lot of the persuading. Expect to provide:
| What they ask for | Why it matters |
|---|---|
| The signed contract or purchase order | A letter of intent is weaker. Lenders want firm terms. |
| Payment terms, retentions and milestones | These set the shape and length of the gap |
| Who the customer is | A government agency or established builder is a stronger counterparty than an unknown start-up |
| A job budget and cash flow forecast | Shows you’ve costed the work and know when the peak hits |
| Recent BAS, bank statements and accounts | Proves the business can handle the extra load |
| Your track record on similar jobs | Reduces the risk that the work won’t be finished |
| Any clause limiting assignment of payments | Some contracts restrict this, which can rule out invoice finance |
Before trusting a big customer’s stated terms, search for it on the Payment Times Reports Register. The regulator’s January 2026 update reported that the slowest large-business payments were getting slower, so build a cushion into your forecast.
What are your funding options?
Your bank first. If you have a good relationship and the security fits, a bank overdraft increase, term loan or contract-specific facility is usually the cheapest money available. Banks also issue the bank guarantees many contracts require. Approach them with the contract and forecast as soon as you’ve won the work.
If the bank won’t stretch that far or can’t move quickly enough, consider:
- Progress payment finance. Built for jobs paid by stages. Funds are drawn against certified claims or milestones.
- Invoice finance. Once you’re invoicing, you can draw a large share of each unpaid invoice. Watch for the concentration limit: when a single customer makes up most of your debtor book, some providers cap how much they’ll advance against it. Many are also cautious about construction progress claims, so confirm before you rely on it.
- Trade finance or supply chain finance. Pays suppliers for the materials the job needs, then gives you a set period to repay as the customer pays you.
- Secured line of credit. Against home or commercial property equity, a revolving limit can cover the whole curve, including the bank guarantee, at a lower cost than most unsecured options.
- Equipment finance. For machinery the contract needs, keeping other limits free.
- A short-term business loan. Fast and simple for a smaller gap with a clear repayment date, but check how the repayments line up with when the contract pays.
The invoice finance calculator is a quick way to test how far your claims could go. For the wider picture of fast expansion, see our page on rapid growth.
A step-by-step plan from award to first payment
- Ask for a deposit or mobilisation payment. Customers say yes more often than owners expect, especially for custom materials.
- Negotiate supplier terms. Show suppliers the contract. Thirty or sixty days of trade credit shrinks the peak.
- Build the month-by-month table. Include GST, super, insurance and the retention.
- Find the peak and add a buffer for one late payment.
- Talk to your bank with the contract in hand. Ask about both funding and any bank guarantee.
- Line up a non-bank option in parallel if the start date is close.
- Invoice promptly and accurately every claim period. Errors delay payment more than anything else.
Mistakes that turn a good contract into a hard one
- Signing before you’ve costed the cash flow. The profit may be there, but so is the gap.
- Starting work on a letter of intent. If the contract changes or falls through, you carry the costs.
- Funding a six-month gap with a loan that has daily repayments. It drains the cash the job needs.
- Forgetting the retention. It can be held for months after completion.
- Letting existing customers suffer. Keep enough capacity and cash to look after the work that got you here.
Ready to fund the contract you’ve won?
The hard part was winning the work. Getting the money right should be the easy part, and owners in this exact position contact us most weeks: firm contract, good customer, cash needed before the first payment lands.
Describing the job to us is roughly a one-minute task, and no credit check happens when you do, so your file stays clean. Nothing you tell us gets broadcast to dozens of lenders. A specialist goes over the contract personally, then calls to talk about timing and security. Get three things exact: what the job is worth, when the customer pays, and when work starts. Accurate answers there mean our first suggestion should already fit.
Frequently asked questions
Can I get a loan using a signed contract as security?
Not on its own, usually, but a signed contract with a creditworthy customer makes most applications much stronger. Progress payment and invoice finance lend against the payments the contract will produce, while trade finance can pay suppliers for the goods you need. Banks still look at your trading history and security.
How quickly do I need to arrange finance after winning a contract?
Before you sign, ideally, or as soon as the award is confirmed. Bank approvals can take weeks, and some contracts require a bank guarantee or insurance before work starts. Non-bank lenders can move faster, but every lender works better with a clear cash flow forecast and the contract in hand.
What if the customer is a large company that pays slowly?
Read the payment terms closely and build them into your forecast. The Payment Times Reports Register lets you check how a large business has reported paying its small business suppliers, and the regulator publishes a list of fast payers. Invoice finance can bridge the wait once invoices are issued.
Do government contracts pay faster?
Commonwealth agencies operate under a pay-on-time policy with short maximum terms for eligible invoices, and the Department of Finance has announced shorter terms from 1 January 2027. State and local government terms vary, so check the contract itself.
Will a bank guarantee for the contract tie up my cash?
Often, yes. Banks usually want the guarantee secured, sometimes by a cash deposit equal to its value, which reduces the money you have to start the job. Ask whether property security can back it instead, or whether the customer will accept an insurance bond.
Should I use my home to fund the contract?
Property security can bring the cost down and the limit up, but it puts the home at risk if the job goes wrong. Keep the secured amount close to the forecast peak and plan how it will be repaid from the contract payments.