Can I release cash from construction retentions held back by main contractors?
Sometimes, but it is harder than funding ordinary invoices. Retention money is a percentage of each payment that the main contractor holds back until practical completion and the end of the defects period, and it can be cut by defect claims, so most standard invoice finance facilities exclude it. Some construction finance providers and specialist lenders will consider advancing against retentions case by case, at a lower advance and a higher cost than invoice finance. Nobody publishes a standard rate, so get quotes.
What this means for your business
Start by listing every retention you are owed: the contract, the amount, the practical completion date and when the defects period ends. A funder will want to see that the work is finished, that the main contractor is solvent and that there are no open disputes on the job.
Retentions from a financially strong main contractor on completed work are the easiest to fund. If no one will fund them, the next best step is to chase release on time, since retentions are often paid late, and to negotiate lower or capped retentions on future contracts.
Founder & Managing Director, Muswell Rose, founder and PSC of Best Business Loans Ltd
Adam was managing director of Penny, a UK invoice finance business, from July 2020 to November 2023. His career runs through insurance, mortgages, commercial finance and fintech lending. He writes the Market Invoice library. Career record.
Last updated: