Quick answer: Is a revolving credit facility available for stage payments & retentions?

Short answer: often yes — but with caveats. Lenders and brokers commonly provide revolving working capital facilities to contractors, subcontractors and building services firms to smooth cash flow between stage payments, and some will offer finance against retentions once there is evidence the retention will be released (certificates, completion milestones or a retention bond).

Here’s how it usually works — and what lenders will ask for:

• They prefer lending against certified stage payments or invoices rather than uncertified work.
• For retentions, lenders usually want evidence of likely release (e.g. practical completion certificate, positive client solvency evidence or a retention bond).
• Security, guarantees and the client’s creditworthiness critically affect how much and how cheaply you can borrow.

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What is a revolving credit facility (in a construction / building services context)?

A revolving credit facility is a flexible business credit line that lets you draw, repay and redraw up to an agreed limit during the facility term. For building services businesses it functions like a targeted working-capital facility to match cash flow to project payments.

Key features:

• Credit limit: an agreed maximum you can draw against.
• Revolving access: repay and re-borrow during the term within the limit.
• Interest and fees: charged on amounts drawn; may include commitment or unused fees.
• Security: frequently a debenture, charge over assets, or guarantees tied to directors or the business.
• Monitoring: lenders may require management accounts, project reports or stage certificates.

How it differs from other products:

• Overdraft — similar but often on shorter terms and tied to bank current accounts.
• Invoice finance — uses invoices as security and is usually quicker for certified invoices.
• Project bridging loans — one-off advances for a single project rather than an ongoing facility.

How revolving facilities can be used to bridge stage payments and retentions

Revolving facilities are commonly used to pay suppliers and labour while waiting for stage payments from a main contractor or client. They are particularly helpful where payment cycles and retention clauses create timing gaps.

Stage payments

Lenders will usually finance up to an agreed percentage of certified stage payments once you can show a valid stage certificate, an approved application for payment and evidence the payer (main contractor or client) is creditworthy.

Retentions

Retentions are more complex. Because retentions are withheld until completion or defects rectified, lenders are cautious. Typical approaches include:

• Advancing a proportion of retention where there is a retention bond or guarantee.
• Financing retention once practical completion is certified or snagging is minimal and an independent certifier confirms release timing.
• Requiring additional security or a higher price (interest/fees) for lending against retentions compared with certified stage invoices.

Short case example

Example: a building services subcontractor has a £150k contract with staged payments and 5% retention. The subcontractor draws on a £100k revolving facility to meet wages and materials for the third stage. After practical completion, the lender agrees to advance 70% of the £7.5k retention once the client issues a release certificate or provides a retention bond.

Bottom line: revolving facilities are very useful but lenders prefer clear certification and evidence of release for retentions.

Typical eligibility criteria and lender requirements

Each lender has its own appetite, but common requirements include:

• Minimum facility size — typically from around £10,000 upwards.
• Turnover and contract size — lenders assess whether contracts and pipeline support the facility size.
• Quality of payer — public sector, main contractors with strong payment records and large clients are more attractive.
• Contract documentation — signed contracts, stage payment schedules and retention clauses.
• Financial history — management accounts, recent statutory accounts and business bank statements.
• Security — company debenture, charges on business assets or personal guarantees where required.
• Sector experience — lenders prefer firms experienced in delivering similar contracts.

Documents to prepare

• Signed contract(s) and specification.
• Stage payment certificates and recent invoices.
• Management accounts (last 12 months) and cashflow forecasts.
• Company accounts (latest two years where available).
• Evidence of client/main contractor credit quality (references or published accounts).

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Costs, fees and commercial terms to expect

Costs vary widely by lender, security, client quality and your credit profile. Typical cost elements include:

• Interest: quoted as a margin over base (or bank base rate / SONIA) — calculated on drawn balances.
• Arrangement fee: one-off fee to set up the facility (often a percentage of the limit).
• Commitment or unused facility fee: charged on the undrawn portion to hold the limit open.
• Monitoring fees: periodic administration or reporting fees.
• Early repayment or exit fees: applicable if facility terms are broken or refinanced early.

Retentions typically attract higher cost or lower advance rates because of delayed release risk. Invoice-backed lending against certified stages will generally be cheaper than lending against uncertified retentions.

Figures are indicative only — lenders will provide specific pricing once they review your documentation.

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Alternatives if you can’t get a revolving credit facility

If a traditional revolving facility isn’t available or is uneconomic, consider:

• Invoice finance (factoring or discounting) — good for certified stage invoices and rapid cash release.
• Retention bonds or guarantees — reduce funding risk by providing a third‑party guarantee that retention will be released.
• Project-specific bridging loans — short-term loans tied to a single project or milestone.
• Supplier negotiation — negotiate staged invoicing, early payment discounts, or phased deliveries to reduce cash strain.
• Joint-venture or client escrow arrangements — where practical, work with the client to agree escrow releases on certification.

How UK Business Loans can help

We introduce building services businesses to lenders and brokers who specialise in construction and retention finance. Our process is quick and free to your business:

1. Complete our short enquiry (takes ~2 minutes).
2. We match you with partners who understand building services cashflow and retentions.
3. Suitable lenders/brokers contact you with tailored, no‑obligation quotes.

We only share your information with relevant, trusted partners and the enquiry is not an application — it’s information to help match you to the right providers. Start here: Free Eligibility Check — Get Quote Now.

For sector-specific help and broader options, see our page on building services business loans.

Practical checklist: getting ready to apply

• Signed contracts and stage payment schedule (with dates and certification process).
• Retention clauses and any existing retention bonds.
• Latest management accounts and cashflow forecast.
• Copies of recent stage certificates or payment applications.
• Company bank statements (3–6 months).
• Details of major clients / main contractors and their contact details for credit checks.

Having these ready shortens time to quote and decision — some lenders provide an initial response within 24–72 hours after receiving documents.

Frequently asked questions

Can I obtain a revolving credit facility to bridge stage payments?

Yes — many lenders will provide a revolving working capital facility against certified stage payments. Lenders want to see the certificate, proof the payer will settle, and supporting management accounts.

Is a revolving credit facility available to bridge retentions?

Sometimes — retentions are higher risk because release is delayed. Lenders may finance a portion of retention where there is evidence of likely release (practical completion certificate, retention bond) or they may offer a higher-cost advance against retention. Each case is assessed individually.

Can I secure a revolving facility to cover both stage payments and retentions?

Yes — a blended facility is common: lenders finance stage payments more fully while allowing lower advance rates for retentions until release events occur. Expect different advance rates and fees for each element.

How quickly can I get funding?

Initial matches and indicative quotes can arrive within hours. Once documents are reviewed and security/credit checks completed, a formal offer typically takes days to a couple of weeks depending on complexity.

Will enquiring affect my credit score?

No — submitting our enquiry is not a lender application and does not affect your credit file. Lenders or brokers may perform credit checks only if you choose to proceed with them.

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Important notes and disclaimers

UK Business Loans is an introducer — we do not lend or provide regulated financial advice. Completing our enquiry form is not an application; it gives us information to match you with suitable lenders or brokers. We typically handle enquiries for facilities from around £10,000 upwards. We do not guarantee offers or terms; individual lenders will decide based on their credit assessment. Enquiry will not affect your credit score; lenders may carry out checks if you progress. Always read lender terms carefully and speak to the broker or lender about any regulatory or contract questions.

Financial promotions should be clear, fair and not misleading. For information on FCA guidance on promotions see: https://www.fca.org.uk/consumers/financial-promotions