Finance Options for Construction Businesses
Working Capital and Cash Flow Finance
Construction contracts create a structural cash flow problem. The JCT standard payment terms allow clients up to 30 days to certify and a further 14 days to pay - and in practice, certified amounts are often disputed or delayed. An invoice finance or revolving credit facility allows you to draw against certified valuations as soon as they are raised, rather than waiting for the payment cycle to complete. For larger main contractors with a significant subcontractor supply chain, confidential invoice discounting means your clients never know the facility exists.
Asset Finance for Plant and Machinery
Construction equipment - excavators, dumpers, concrete mixers, scaffolding, access platforms, telehandlers - represents a major capital commitment. Purchasing outright drains working capital that is more productively deployed on site. Hire purchase or finance lease allows you to spread the cost of plant across the productive life of the asset, with monthly payments aligned to the revenue it generates. We arrange asset finance from £25,000 for a single machine up to £10m+ for fleet-scale procurement, with same-day decisions on most applications.
Bridging Finance for Land and Development
For construction businesses that also develop - buying land, building out, and selling - bridging finance bridges the gap between site acquisition and development finance drawdown. Regulated bridging loans are also available where directors are purchasing mixed-use properties or converting buildings for residential use. Terms from 1 to 24 months, up to 75% LTV, with retained or rolled interest to avoid monthly servicing pressure during the build phase.
Contract Finance and Bonding Support
Some public sector and infrastructure contracts require performance bonds or advance payment bonds before work can begin. Specialist trade finance and bonding facilities allow you to win and mobilise larger contracts without tying up your own capital in security deposits. We can introduce you to specialist providers where mainstream lenders are unwilling or unable to assist.
Tax and HMRC Payment Finance
Corporation tax, PAYE, and VAT bills can arrive at precisely the wrong point in a project cycle. A short-term business loan or tax finance facility allows you to meet HMRC deadlines without disrupting site cash flow. Terms from 3 to 12 months, with funds typically available within 48 hours.
What Lenders Look for in Construction Businesses
Construction lending requires lenders who understand the industry - specifically, the difference between a strong order book and the timing of cash receipts. Specialist construction lenders will assess: your current contract pipeline and stage payment schedule; your relationship with key clients and payment history; the asset base of the business (plant, vehicles, equipment); director experience and the firm's track record on comparable contracts; and your management accounts for the current and previous two years. A bank overdraft is the wrong tool for a construction business - the variable and cyclical nature of cash flow means a flexible, purpose-built facility is almost always more efficient.
Eligibility
We can typically assist construction businesses with: minimum £100,000 annual turnover (lower for asset finance only); trading for 12+ months with management accounts; directors with no undischarged bankruptcies; and a legitimate construction trade or contract in place. Adverse credit is not automatically a barrier - specialist lenders underwrite on contract quality and asset backing.