Paid in stages,
and held to the end
Construction has the hardest cash flow in British business, which is why business loans for the trade get read differently. It is structural rather than anyone’s fault. You buy materials and pay people weekly. You apply for payment monthly. You are paid on terms. And a slice of it is held back for a year after the job is finished.
No credit check to enquire.
The three squeezes, and what answers each
- Materials up front
A job that starts with a materials order is a job that starts in deficit. A revolving facility suits this better than a loan, because you draw when you buy and clear it when you are paid, rather than carrying a balance between jobs.
- Thirty to ninety day terms
Main contractors pay on their terms, not yours. If you invoice other businesses there is a ledger to borrow against, though construction is the sector where that is hardest. See below.
- Retention, the one nobody funds
Typically 5% held at practical completion, half released on completion and half after the defects period, which can be twelve months. On a £200,000 job that is £10,000 sitting with someone else for a year. Very few lenders will advance against retention, and we will tell you plainly whether yours is one of them.
- Plant and machinery is not this
An excavator or a telehandler is asset finance, arranged by CW Asset Finance, and it is usually cheaper than funding the same purchase out of working capital.
Questions from this sector
Can I borrow against an application for payment?
Usually not, and this is the crux of construction invoice finance. An application is a request, not a debt, until it is certified. Providers that do fund construction normally lend against certified amounts only, which is later than you would like.
What about CIS deductions?
They reduce what actually arrives, and a lender sizing a facility on gross invoices will get the affordability wrong. Tell us you are in CIS at the outset and the numbers we work from will be the net ones.
Can I fund one large contract?
Yes, and it is a common reason to borrow. The lender will want to understand the contract, the main contractor and the payment terms, because they are effectively taking a view on whoever is paying you as much as on you.
Is a sole trader builder covered?
Not through the cash flow panel, which takes limited companies and LLPs. Why.
Fund the gap between doing it and being paid
One enquiry, no credit check, and a straight answer on what is placeable.
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