Why does winning a big job create a cash problem?
Because costs arrive before revenue. Materials need buying, subcontractors want paying fortnightly, extra staff need wages from week one — and the client pays at the end of the month following your invoice, or at the next milestone. The bigger the job relative to your usual work, the deeper that dip.
This is sometimes called “growing broke”: a business with more work than ever runs out of cash because it can’t fund the gap. It’s avoidable with a little planning and the right funding in place before you start.
How do I work out the funding I need?
Grab the contract and a spreadsheet — or the back of an envelope — and map it out:
- List every cost the job creates: materials, hire, labour, subcontractors, travel, insurance.
- Put each cost in the week it will actually be paid.
- Put each client payment in the week you’ll realistically receive it — allow for invoice approval time and any retentions.
- Add your normal business costs so the job isn’t funded by starving everything else.
- Find the biggest cumulative shortfall. That’s your number, plus a buffer.
Size the loan to the dip, not the dream. Borrowing the whole contract value means paying for money you’ll never need.
Should I negotiate the contract before borrowing?
Yes, if you can. Often the cheapest funding is in the contract itself:
- A deposit to cover materials.
- Progress payments at clear milestones rather than one payment at the end.
- Shorter payment terms, especially for a big client with plenty of cash.
- Clear variation rules, so extra work gets paid for.
In New Zealand construction, check how the Construction Contracts Act payment claim process applies to your work and make sure your invoices are set up correctly. A lawyer or experienced quantity surveyor can review a big contract for a fraction of what a bad clause could cost.
What funding options fit contract work?
| Situation | Often suits |
|---|---|
| One large contract, you own property | Property-secured loan from $20,000 up to $1m, as a first or second mortgage |
| Short job, steady trading history | Unsecured business loan based on turnover |
| Regular contract work with repeat gaps | Line of credit you draw on per job |
| Newer business with property behind it | Property-secured loan — no financials needed for the initial assessment |
Every loan is priced on the individual situation. We’ll find the sharpest option available for yours and explain exactly how the repayments line up with your payment schedule.
What do lenders like to see for contract funding?
A signed contract or purchase order, a sense of who the client is and how reliably they pay, and a simple cash flow plan that shows the loan being repaid from the job. You don’t need a glossy business plan. You need to show you’ve thought it through — the kind of thinking you’d share with a friend over a coffee.
How LendFriend helps
Tell us about the job, the payment schedule and what you need up front. We’ll look at your situation, match you with a lender from our panel that understands contract work, and make sure the repayment timing makes sense. Then you decide.
Congratulations on the win. Let’s make sure it pays off — start your enquiry.
The honest bit
A big contract can sink a small business as easily as it can make it. If one client would become most of your revenue, or the payment terms are long and vague, negotiate before you borrow. A deposit or progress payments written into the contract are worth more than any loan.