Contractor financing in NYC: getting paid late, bonding, and loans that fit

By Solomon Wiesen, editor. Updated October 2026. Editorial standards | How this site is funded

On a private New York job of $150,000 or more, the owner gets 12 business days to approve your invoice and 30 more days to pay it, and can hold back 5% until the end. City work is slower: 69% of the construction contracts New York City registered in fiscal 2025 were registered after their start date. Your crew and your supply house want money every week, so the question is how to carry the gap cheaply. This is general information and not legal advice.

Private jobs: what Article 35-E gets you

New York’s prompt payment law for private construction, General Business Law Article 35-E, applies when the whole project costs $150,000 or more. Section 756 leaves out public work and a job on an individual one-, two- or three-family house. Inside those limits the default billing cycle is the calendar month. The owner has 12 business days to approve an invoice or object in writing, and payment is due 30 days after approval.

Labor you paid on the first goes on an invoice at month’s end, gets approved about 16 calendar days later and comes due 30 days after that: roughly 75 days, on a job where nobody is late.

A 2023 amendment, Chapter 657, covers contracts signed on or after November 17, 2023. It caps retainage at 5%, requires release within 30 days of final approval with 1% a month if the owner drags, and lets you send the final invoice at substantial completion. A clause demanding more than 5%, or moving disputes to another state, is void under section 757. If undisputed invoices sit unpaid, section 756-b lets you stop work after 10 calendar days’ written notice without being in breach.

City and state jobs

The Procurement Policy Board rules give a City agency 30 days to pay a construction requisition, counted from the day the field engineer certifies the work as accepted, and 60 days for change orders and for substantial completion or final payments. Late payments earn interest at a rate the Comptroller and OMB set every six months. The latest rate posted as of October 2026 is 4.625%, for July through December 2025; a late private owner owes you 1% a month. State agencies have 30 calendar days from a proper invoice under State Finance Law 179-f. On public work a prime has seven calendar days to pay subs after being paid.

The Comptroller’s fiscal 2025 contracts report found 68.65% of City construction contracts registered late, and 16% more than 180 days late. The cheapest way to carry a City job is the City’s own Contract Financing Loan Fund: up to $1,000,000 at a fixed annual rate of up to 3%, closing fees of up to 3%, repayment timed to the project’s payment schedule. Primes and subs working or bidding on a contract with a City agency or City-funded entity can apply. If you qualify, I’d apply there before anywhere else.

City M/WBE certification lets an agency award you a contract of up to $1.5 million without competition, the same report notes. The state runs its own MWBE certification, and only state-certified firms qualify for Empire State Development’s Bridge to Success loans of $75,000 to $200,000 for up to 24 months, with Carver Federal Savings Bank listed for New York City. ESD last updated that page in March 2023, so call the lender before counting on it.

Liens

On a private job you file a mechanic’s lien with the county clerk where the property sits within eight months of your last work, or four months on a single-family dwelling. Under section 11, serve the owner no later than 30 days after filing and file proof of service within 35 days, or the lien lapses. Under section 17 it lasts one year and can be extended once; on a single-family dwelling the extension takes a court order. On a public job, subs and suppliers have 30 days after completion and acceptance under section 12.

Bonds, licenses and insurance: cash out before the first requisition

The SBA guarantees bonds on contracts up to $9 million ($14 million federal) and charges 0.6% of the contract price on performance and payment bonds. SBS runs a 12-session Bond Readiness program for City-certified M/WBE construction firms; the 2026-27 cohort starts October 27, 2026.

Home improvement work on residential property needs a DCWP license. The fee is $200 for a full two-year term and drops with the application date, because every license expires on February 28 of an odd-numbered year. Through February 2027 you choose $50 for a license ending February 28, 2027 or $250 for one running to 2029. Add $200 for the Home Improvement Business Trust Fund or post a $20,000 surety bond. Building one- to three-family homes takes a DOB general contractor registration, and DOB wants three straight bank statements ending at $25,000 or more. Plumbing and electrical work require separate DOB licenses, the master plumber and master electrician, each with $1,115 in exam fees.

The Workers’ Compensation Board says virtually all employers must carry workers’ comp, and in construction an injured worker is presumed to be your employee unless you pass a strict independent contractor test. Going without costs up to $2,000 per 10 days. DOB requires disability coverage for a permit.

Get your general liability quote before you price a job. Labor Law section 240 makes contractors and owners responsible for scaffolding and ladders that give workers proper protection, exempting only one- and two-family homeowners who don’t direct the work. The findings in Assembly bill A9128, referred to the Labor Committee in January 2026, say the statute has led to “inflated insurance costs.” That is the sponsors’ wording, and without an official premium figure to cite, none appears here.

Matching the money to the gap

Banks lend to city contractors in small amounts. In our analysis of SBA loan data (7(a) approvals in the five boroughs from October 2019 through June 2026, cancelled loans excluded), 811 loans went to construction businesses, about 11% of the city’s total, for $265 million. The median was $120,000 and 62% were for $150,000 or less. SBA Express, mostly lines of credit and small loans, made up 77%. Brooklyn had 311, Queens 280, Manhattan 83, Staten Island 75 and the Bronx 62. Residential remodelers took 200, plumbing and HVAC contractors 118, commercial building contractors 95 and electrical contractors 80. TD Bank made 304 of them, JPMorgan Chase 137 and M&T Bank 89. The median initial rate was 10.5%. Of the 219 loans approved in fiscal 2020 through 2022, 27 (12.3%) had been charged off by June 2026.

For the stretch between payroll and payment, a revolving line fits: draw on Friday, repay when the requisition clears. SBA Express lines go to $500,000 and can revolve for up to 10 years, and the SBA’s Contract CAPLine finances the costs of specific contracts. Start with the local lender list, or set the SBA lender finder to construction to see which banks made these loans in your borough. Trucks and tools belong on an equipment loan secured by the equipment. Expect a line-of-credit lender to file a UCC lien on your receivables.

Factoring sells an approved invoice for cash now. One online factor, FundThrough, publishes fees of 1.9% to 2.9% per 30 days, about 23% to 35% annualized. New York requires a factor to hand you a disclosure with an estimated APR under Financial Services Law section 806.

A merchant cash advance is the worst fit. A $50,000 advance at a 1.40 factor rate, repaid by debits every business day, costs about 71% APR over twelve months and 142% over six, and the debits run daily while your money arrives in a few large checks weeks apart. Under Lien Law section 70, what you’re paid on a job is a trust asset for that job’s subs and suppliers, and section 72 treats spending it elsewhere before they’re paid as a diversion. If you already have more than one advance, the stacking calculator shows the combined daily draw. For a quote on a line or an equipment loan, use the financing request form.