Funding issues force builders to turn down projects
76% of construction projects lose a week due to late payments
Large construction companies and some of their underfinanced subcontractors are turning down work as they both struggle with securing capital and restrictive payment terms.
Fifty-one percent of construction professionals cited high upfront costs and 38% cited waiting for payments as major challenges, with 56% saying they have turned down projects due to cash flow or payment risks. These issues are contributing to project delays, according to Mobilization Funding’s 2025 Construction Delays and Payment Timing Report this month.
The report contains two national surveys conducted in August: one of 600 U.S. adults about their experiences with construction delays, and another of 400 construction professionals.
Many construction projects start with skeleton crews because subcontractors lack upfront financing, causing delays until enough cash begins flowing from the project, Scott Peper, chief executive of Mobilization Funding, told Equipment Finance News.
“Banks and traditional sources of capital just are not providing money to your construction subcontractors … unless they’re a very large, well-established business in construction,” he said. “It’s extremely hard for the subcontractors to get any type of capital to get these projects going.”
Consequences of delays
Due to payment delays and lack of money, 76% of construction projects lose at least one week, with 38% facing delays of longer than three weeks, according to the report.
The construction industry faces chronic cash-flow strain as underfinanced subcontractors must cover heavy equipment, labor and material costs long before they can bill, while restrictive invoicing and payment terms widen the funding gap, Peper said.
“Of course, the cash flow is going to have an impact because how many industries really have to float 60 to 70 days’ worth of cost before they’re even paid once,” he said. “Those are projects that we know need work but haven’t even been able to get started yet.”
As a result of increases in delayed payments in many industries due to tariffs, the ability of lenders to increase availability and extend flexibility in borrowing helps, as some customers look to stretch payment terms into the 60- or 75-day range, Mike Semanco, president and chief operating officer of the business finance division at Mitsubishi HC Capital America, told EFN.
“It allows [subcontractors] to borrow and then pay their suppliers faster, so that they cannot get behind, and they can buy more product faster in the market and take advantage of discounts that they’re being offered by their suppliers,” he said.
Check out our exclusive industry data here.
