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Funding in the construction industry

Capitalise Apr 26, 2022

While the pandemic saw some small businesses struggle, construction has continued to be one of the fastest growing industries in the UK. So, if this is the busy industry that your business operates in, you’ve most likely been juggling an increased demand.

You’re also no stranger to the fact that the costs of goods and services have gone up. You may find yourself at a crossroads of eagerly diving straight into new projects following the industry's boom in demand. And being worried about taking on more work without the right financial resources and backing. 

With new projects in the pipeline, rising costs and day-to-day overheads to manage, you may need a little cash injection. Keep reading to find out what options are out there and what kind of funding could be a good fit to bridge cashflow caps and keep up with demand.

What are the best funding options for construction businesses?   

 

1. Asset Finance 

There’s nothing more important than the equipment that keeps your site running. But investing in lots of equipment can be hefty on your cashflow. Whether it’s diggers or drills you need, spread the cost of expensive construction equipment and machinery with Asset Finance. 

Asset Finance is when a lender will purchase an asset on your behalf and allow you to pay them back in affordable monthly instalments. Or simply to lease the equipment to you for as long as you need it. 

Investing in new equipment using Asset Finance is an effective way to fund your purchases as well as reduce the risk that can come with ownership. 

 

2. Invoice Finance 

Construction News partnered with Oracle Construction and Engineering to survey construction businesses about their payment practices. They found 72% of businesses are waiting more than 40 days for payment. With nearly a third saying it takes more than 60 days.  

If you rely on customers’ payments to maintain your cashflow, Invoice Financing could help you feel more at ease.

Invoice Finance is a funding solution that helps you release cash from your outstanding invoices. That way, you can ensure you have enough money in the business to pay your suppliers and cover your project costs. A lender will pay a percentage of the invoice total to you upfront, so you don’t have to wait for your customer to pay.This can be useful if you have customers with long payment terms. 

There are two types of invoice finance: Invoice Factoring and Invoice Discounting. The difference between the two is mainly in the method of the payment chasing. Get in touch today to learn more.

 

3. Working Capital Loan 

Even the most successful business may not always have enough working capital – ready available cash – to keep up with everyday expenses. A working capital loan is a kind of short-term funding that releases funds very quickly to give you some breathing space.

These loans are designed to cover daily operational costs such as paying staff wages, paying utility bills or rent. They’re different from long-term loans which are intended to help  with larger purchases. 

If you have a cashflow shortfall, seasonal fluctuations or are experiencing growth spurts,  working capital loans can be a flexible and fuss-free solution.

 

Need a hand finding the best funding for your business?

If the options seem overwhelming, we’re on hand to help you find funding that fits your business. Whether it’s simply to keep cash flowing day-to-day, to pay suppliers or even even to hire extra staff to take on new projects. At Capitalise, we have a panel of over 100 lenders, we can guide you through the different funding options and how to apply. Helping you work towards healthy business growth. 

 

Find funding for your business

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