The importance of finance in the construction industry within the UK economy cannot be overstated.
In fact, it’s one of the largest business sectors in the country, contributing 6.7% of the economy or a staggering £90 billion, and embracing more than 280,000 businesses. The industry generates well over two million jobs, or some 6.5% of the total, though there has been a significant decline due to the lack of financial lending since the peak of 2007.
However, this is only part of the picture: the construction industry significantly affects many other sectors of the economy. As the UK’s population continues to grow, the construction of new homes, leisure facilities, retail parks and industrial premises will become ever more important to driving economic growth.
As a result, lenders ignore construction finance at their peril.
Businesses within the industry face some unique challenges and often require construction finance to help their high operating costs. First and foremost, raw materials – steel, iron, cement, glass and concrete – are notoriously expensive, as is plant such as cranes and concrete mixers.
To minimise materials cost per unit, it is necessary to buy in bulk, which naturally places considerable strain on the cash flow.
Similarly, skilled labour is particularly expensive, and represents the highest cost in the industry. Any large project will require significant quantities of skilled, semi-skilled and unskilled labour, all of whom have to be paid on time if the project is to progress.
Meanwhile, the future of the construction sector appears uncertain. Globalisation and demographic changes will affect the industry significantly. Demand for green and sustainable construction is likely to continue to grow rapidly; hence, the need for construction finance to bridge the gap of requiring a skilled workforce and sourcing alternative materials.
At the same time, new technology and new emerging markets will reshape the way business is done, with China and Brazil likely to become dominant players.
Evidence shows the UK construction industry is responding well to its challenges, but may not be fully exploiting the potential of emerging market opportunities due to lack of finance. In particular, the industry should be exporting more, focusing on developing a more flexible and skilled workforce, and championing innovation in the supply chain and project funding.
Considering all these factors, it is hardly surprising that construction businesses often face cash flow crises that are not fully understood by traditional lenders. Indeed, many banks are reluctant to lend in the construction sector due to this sector being particularly hard-hit by the recession.
Thankfully, if your business has a sturdy background, Cashsolv is on hand with extensive construction finance experience and a range of innovative alternative lending solutions that can meet your needs at competitive rates.
We can assist you with project funding, the ability to invest in plant, machinery, materials, skilled training, to be able to market your exports, or simply free up some much needed cash.
Should you find yourself facing a sudden cash flow shortfall, our emergency business loans can deliver finance inside 24 hours. How can we act so quickly? Simply because we provide the construction finance ourselves, so there’s no need to secure agreement from external lenders or undertake exhaustive background checks.
For longer-term requirements, you should consider asset-based construction finance, which lends against your existing business plant and equipment. For this type of loan, we use a panel of lenders, enabling us to secure the most competitive interest rates.
This also means that should one lender be cautious about the construction industry, we can find another that has no such reservations.
Whatever your needs, Cashsolv is on hand to help with different opportunities in construction finance. We understand the construction sector in depth and we have the financial solutions you need to grow your business.
Find out how much construction finance can cost your business and apply online now.
For further information Download our Guidance Paper on 'How short term business loans can help your business finance problems'.