Retainage is a share of each progress payment withheld until a construction job is complete, and it can tie up a contractor's cash for months after the work is done. Rainhaven Business Funding, a small-business funding broker in Columbia, Tennessee, explains how Maury County contractors can plan for it; lending partners make credit decisions and set rates and terms.
Retainage and the Maury County, TN building pipeline
Of the 230 construction employer establishments counted in Maury County in 2023, 59.1 percent had a payroll of fewer than five people (U.S. Census Bureau, County Business Patterns 2023). The Census Bureau's Building Permits Survey shows 1,562 new housing units authorized in the county in 2023, 1,672 in 2024 and 1,408 in 2025. That is a lot of work for a lot of small crews, and on most of it some share of every payment is held back until closeout.
What retainage is
Retainage, sometimes called retention, is an amount the owner or general contractor withholds from each progress payment as security that the work will be finished and corrected if needed. The contract sets the percentage, when it is released and what has to happen first, such as final inspection, punch-list completion or delivery of closeout documents. Subcontractors often have retainage withheld from them in turn, so it flows down the chain.
A month-by-month example, with hypothetical numbers
Take a hypothetical specialty subcontract worth $100,000, billed in four equal monthly progress payments, with 10 percent retainage written into the contract. The figures are for arithmetic only; the contract, not this article, sets real percentages and timing.
| Month | Billed | Withheld as retainage | Paid to the contractor | Retainage held to date |
|---|---|---|---|---|
| 1 | $25,000 | $2,500 | $22,500 | $2,500 |
| 2 | $25,000 | $2,500 | $22,500 | $5,000 |
| 3 | $25,000 | $2,500 | $22,500 | $7,500 |
| 4 | $25,000 | $2,500 | $22,500 | $10,000 |
| Closeout, weeks or months later | None | Released | $10,000 | $0 |
The contractor's payroll and materials are paid in full every month, usually before the draw for that month arrives. By month four, $10,000 of earned money sits with the customer, and it stays there until closeout. If the job's margin is thin, the retained amount can be larger than the profit, which means the job has not yet paid for itself in cash.
Stacking jobs makes the gap bigger
One job's retainage is manageable. A crew running three or four jobs at once, each at a different stage, carries retainage on all of them, plus the payroll of the next job starting before the last one closes. That is the point where profitable contractors run short of cash, and where a funding conversation usually starts.
Carrying retainage with a revolving line or a working capital loan
If retained amounts and draw delays come and go all year, a business line of credit fits: draw when a job mobilizes, repay as draws and released retainage come in, draw again. If one large job creates one large gap with a clear end, working capital financing repaid from the final payments may be simpler. Either way, the repayment should be timed to when retainage is realistically released, not when the work is finished.
Ways to shorten the gap without borrowing
- Negotiate a lower retainage share, or a reduction once the job passes a milestone, before signing.
- Deliver closeout documents promptly; missing paperwork is a common reason release slips.
- Track retainage receivable job by job, with the release condition and expected date for each.
- Bill progress payments on time and completely, so the base the retainage is taken from is not delayed too.
The schedule a partner will ask a contractor for
A work-in-progress schedule listing each job, its contract value, amount billed, retainage held and expected release, plus receivables aging and bank statements. That schedule lets a partner see that the gap is timing, not loss. Contractor and construction financing covers the rest of the funding picture for the trades, and county data and local notes give the wider context. The blog has the companion articles.
By Rainhaven Business Funding ยท Updated