Cliffport Business Capital, a small-business funding service in Galveston, TX, explains funding for contractors and builders: covering materials and payroll between draws, living with retainage, financing machinery, and choosing between a credit line and working capital, with Galveston County, TX construction counts.
| Construction employers, county (2023) | 546 |
|---|---|
| Employees | 6,672 |
| Under five employees | 60.4% |
| Construction firms with no payroll (2024) | 3,765 |
| Homes permitted in the county, 2025 | 2,525 |
The Contractor Cash Cycle
One way a job can run: the contractor buys materials on delivery or 30-day supplier terms, pays a crew every week, bills on a draw schedule, waits for the draw to be approved, and then sees a percentage withheld until completion. Each step pushes cash out before it comes back.
How to improve cash flow in a construction business starts with that sequence: negotiate deposits, bill promptly at each milestone, and keep a funding line sized to the longest gap between paying out and getting paid.
Retainage: Earned Money Someone Else Is Holding
Retainage is a percentage of each progress payment the project owner holds back until the work is accepted. It protects the owner; for the contractor it is earned money sitting in someone else's account, sometimes for months after the crew has moved on.
An illustrative example
On a $200,000 commercial job with 10 percent retainage, $20,000 stays withheld until closeout. If the contractor's margin on the job is $24,000, most of the profit is tied up in retainage while the next job needs materials. That is the kind of gap a working capital loan or credit line can cover.
Construction Company Working Capital
Working capital covers a single gap with a known end, such as mobilizing a new contract. When jobs overlap and gaps repeat, a line of credit may fit: draw for materials, repay when the draw clears, draw again, and compare the total dollar cost with a new loan each time.
Contractor Loans Versus Construction Loans
A contractor's business loan funds the business: payroll, materials, equipment. A construction loan in the banking sense funds a building project and is secured by the property, with draws inspected against progress. If you are building or buying property, that is real-estate lending, which this site does not cover.
This page covers the first kind.
Construction Equipment Financing
Excavators, skid steers, dump trailers and work trucks are financed against the machine itself. Partners care about hours, condition and resale value, and match the term to the equipment's working life. See equipment financing and leasing.
Leasing can make sense for equipment needed for a single long contract.
Construction in Galveston County, TX: The Numbers
The county had 546 construction employer establishments in 2023, employing 6,672 people with $491.7 million in payroll; 60.4% had fewer than five employees (County Business Patterns 2023). Separately, 3,765 construction firms operated without payroll in 2024 (Nonemployer Statistics 2024), a separate count.
| Business type | Employer establishments, county (CBP 2023) | Employees | Under five employees | ZIP 77550 establishments (ZBP 2023) | Nonemployer firms, county (NES 2024) |
|---|---|---|---|---|---|
| Residential building construction (NAICS 2361) | 136 | 585 | 78.7% | 13 | 1,023 (NAICS 2361) |
| Nonresidential building construction (NAICS 2362) | 42 | 386 | 47.6% | not published | 181 (NAICS 2362) |
| Plumbing, heating and AC contractors (NAICS 238220) | 82 | 779 | 48.8% | 6 | 262 (NAICS 23822) |
| Electrical contractors (NAICS 238210) | 63 | 1,885 | 52.4% | 3 | 267 (NAICS 23821) |
| Roofing contractors (NAICS 238160) | 21 | 229 | 71.4% | not published | 471 (NAICS 2381) |
Sources: U.S. Census Bureau, County Business Patterns 2023 and ZIP Code Business Patterns 2023 (employer establishments, NAICS 2017); Nonemployer Statistics 2024 (firms without paid employees, NAICS 2022). The programs cover different businesses and years and are not added together. Employment figures carry Census noise.
Residential permits give one more view of activity: 2,525 new housing units were authorized in the county in 2025, after 2,689 in 2023 and 3,148 in 2024 (Building Permits Survey).
What Partners Review From a Contractor
- Bank statements showing draw and payroll timing
- A list of current contracts and their schedules
- Accounts receivable, including retainage
- Equipment list and any existing equipment debt
- Any bonding or insurance documents the partner asks about
Bidding a Job You Can Afford to Carry
Before bidding, a contractor can estimate the peak cash the job will absorb: materials and labor paid out before the first draw clears, plus retainage held to the end. If that peak exceeds the cash on hand plus an available credit line, the job is too large to carry without new funding, however profitable it looks on paper.
A partner can use this arithmetic to see the timing as well as the margin. A short schedule of expected draws, dates and amounts gives a partner more to review than a single total.
Related Pages
Compare all options on the funding options page. Other trades are listed under funding by industry; county figures are on the Galveston, TX data page.
By Cliffport Business Capital · Updated