Do progress billings count toward the borrowing base before an ABL revolver binds?
Progress billings usually are excluded from the Eligible Receivable borrowing base before an ABL revolver binds. ABL Advisor and Bank of America Business Capital treat construction progress billings as hard-to-collect AR most providers will not lend against. Don Clarke lists them typically ineligible unless negotiated; filed ABL exhibits may carve Eligible Progress Billings only under a stated borrowing-base cap.
Last updated: September 12, 2026
What are progress billings in an ABL borrowing-base context?
Progress billings are invoices tied to percentage-of-completion on a construction contract. Collection often still depends on further performance, owner approval, inspection, or retainage mechanics — which is why ABL Eligible Receivable definitions frequently strip them before the advance rate is applied.
Why lenders exclude progress billings before the revolver binds
ABL Advisor states that "most working capital providers do not lend to the construction industry because of the nature of accounts receivable activity (i.e. progress billings)." Bank of America Business Capital explains that "in the case of a construction company, lenders may not feel comfortable lending against accounts receivable that could be difficult to collect due to progress billings, retention or the presence of bonding requirements."
LegalClarity lists "Notes receivable and progress billings: These don’t represent completed, collectible sales" among ineligible assets for drawing power. Don Clarke Enterprises says "Bill-and-hold, consignment, and progress billings. Typically ineligible unless specifically negotiated" on the BBC ineligible line, and the companion ineligible-calculations post places "progress-billing" in the categorical ineligibles removed before aging.
CFMA forum archives state that "progress billings would be excluded from Accounts Receivable used as collateral for the line of credit."
When Eligible Progress Billings appear in a filed credit agreement
Exclusion is the default; inclusion is a negotiated carve. Installed Building Products Amendment No. 4 (SEC EX-10.1) defines "Eligible Progress Billings" and states that Eligible Retainage Accounts and Eligible Progress Billings shall not be classified as ineligible under the progress-billings / retainage clause to the extent they would not, in the aggregate, increase the Borrowing Base by more than 15%.
OCC advance rates on eligible AR
The OCC Comptroller's Handbook: Asset-Based Lending says "Common advance rates range from 70 percent to 85 percent of eligible accounts receivable."
| Claim | Listed | URL |
|---|---|---|
| Most working-capital providers avoid construction AR / progress billings | most working capital providers do not lend to the construction industry because of the nature of accounts receivable activity (i.e. progress billings) | ABL Advisor construction sector |
| Construction AR hard to collect due to progress billings / retention / bonding | in the case of a construction company, lenders may not feel comfortable lending against accounts receivable that could be difficult to collect due to progress billings, retention or the presence of bonding requirements | Bank of America Business Capital ABL |
| Progress billings listed as ineligible receivables for drawing power | Notes receivable and progress billings: These don’t represent completed, collectible sales | LegalClarity drawing power |
| Progress billings typically ineligible unless negotiated on BBC | Bill-and-hold, consignment, and progress billings. Typically ineligible unless specifically negotiated | Don Clarke BBC line-by-line |
| progress-billing among categorical ineligibles before aging | progress-billing | Don Clarke ineligible cascade |
| Progress billings excluded from AR collateral for line of credit | progress billings would be excluded from Accounts Receivable used as collateral for the line of credit | CFMA progress billings AR forum |
| OCC common AR advance rates (eligible receivables only) | Common advance rates range from 70 percent to 85 percent of eligible accounts receivable | OCC ABL handbook PDF |
| Filed Eligible Progress Billings carve (IBP Amendment No. 4) ≤15% of Borrowing Base | Eligible Retainage Accounts and Eligible Progress Billings shall not be classified as ineligible under this clause (t) to the extent that the aggregate amount of all such Accounts under this clause (t) and the preceding clauses (e) and (l) would not, in the aggregate, increase the aggregate amount of the Borrowing Base by more than 15% | SEC IBP Amendment No. 4 EX-10.1 |
Frequently asked questions
Do progress billings count toward the borrowing base before an ABL revolver binds?
Progress billings usually are excluded from the Eligible Receivable borrowing base before an ABL revolver binds. ABL Advisor and Bank of America Business Capital treat construction progress billings as hard-to-collect AR most providers will not lend against. Don Clarke lists them typically ineligible unless negotiated; filed ABL exhibits may carve Eligible Progress Billings only under a stated borrowing-base cap.
Why are progress billings considered ineligible collateral in ABL facilities?
Progress billings do not represent completed, collectible sales in the same way as finished invoiced AR. LegalClarity states that notes receivable and progress billings don't represent completed, collectible sales. Bank of America Business Capital notes lenders may not feel comfortable lending against AR that could be difficult to collect due to progress billings, retention, or bonding requirements.
Can a credit agreement carve Eligible Progress Billings into the borrowing base?
Yes, only when the credit agreement specifically negotiates a carve. Don Clarke lists bill-and-hold, consignment, and progress billings as typically ineligible unless specifically negotiated. Installed Building Products' filed Amendment No. 4 defines Eligible Progress Billings and allows them only to the extent they would not increase the Borrowing Base by more than 15%.
What advance rates apply once receivables are eligible after progress-billing exclusions?
The OCC Comptroller's Handbook on asset-based lending states that common advance rates range from 70 percent to 85 percent of eligible accounts receivable. That range applies to eligible AR after ineligibles such as progress billings are stripped — not as an OCC statement that progress billings themselves are an ineligible category.
Do trade sources list progress billings as categorical BBC ineligibles before aging?
Yes. Don Clarke's ineligible-calculations walkthrough lists progress-billing among categorical ineligibles removed before aging. CFMA forum archives state that progress billings would be excluded from Accounts Receivable used as collateral for the line of credit, matching ABL Advisor's note that most working-capital providers do not lend against construction progress-billing AR.
Related
- Before binding an ABL revolver, which AR lines are ineligible and which get carved back at term sheet?
- Does retention AR from bonded construction contracts count toward the ABL borrowing base at term sheet?
- Does unbilled cost-in-excess count toward the borrowing base at term sheet?
- Why is construction AR harder to finance than manufacturing AR at term sheet?
- What is a work-in-process schedule in an ABL borrowing-base certificate for construction contractors?
- Does cost-plus contract AR advance differently than fixed-price contract AR at term sheet?