Property development finance: how development loans work
Development lenders measure the loan against both total project costs and the finished value, then lend the lower of the two limits; you fund the balance.…
Construction and property
Construction finance for contractors, trades and developers
Funding for contractors, subcontractors and developers: plant finance, loans, invoice finance that copes with retentions, and development finance for builds.
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- Amount
- From £10,000 to £10 millionLarger amounts through secured, property and asset-based finance
- Security
- Secured or unsecuredOptions compared for your case
- Suitable businesses
- Sole traders to limited companiesPartnerships and LLPs too
- Lender panel
- 300+ lendersWhole-of-market search
In short
The right construction finance depends on which part of the cash cycle is under pressure.
Plant, vans and tools usually go on hire purchase or leasing; mobilising a new contract suits an unsecured loan; waiting on main contractor payments points to specialist construction invoice finance; VAT bills can be spread with a tax loan; and land or build costs for your own projects need development or bridging finance. Construction specialists understand applications for payment and retentions better than generalist lenders.
- Whole-of-market search
- Secured and unsecured compared
- Lenders suited to your case
- Free to enquire
“He is fair and always gives advice that is in the best interest of his clients.”
About construction finance
Construction finance is funding for businesses in the building trade: main contractors, subcontractors, tradespeople, plant hire firms and developers.
It covers equipment, working capital, slow payments and the cost of building projects themselves. Smart Funding Solutions is a broker, not a lender: we search our panel of 300+ lenders, including construction specialists who understand applications for payment and retentions. This hub sits within our SME loans section and links to our guides for each part of the sector.
Specific site equipment has its own pages: crane finance, cherry picker finance, tipper truck finance and modular building and cabin finance.
Quick enquiry
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- One short conversation, no paperwork yet
- Whole-of-market search across 300+ lenders
- Or call us on 01244 267694
A transaction we arranged
£234,000
One business. Three facilities. £234K arranged.
Rather than letting one lender dictate the result, we built the funding requirement across three separate £78,000 facilities.
Read the transaction- Sector
- Property services
- Structure
- Three £78,000 facilities
- Outcome
- £444,000 across 4 facilities
Explore this section
Choose the right option
Each option suits a different need. Start with the one closest to yours; we will compare the rest for you.
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Scaffolding firms usually borrow for two reasons: to build stock and lorries before they can quote for bigger jobs, and to pay crews weekly while main…
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Most civil engineering contractors fund each part of the cash gap separately. Plant goes on hire purchase or leasing; the wait for certified…
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- JCT contract finance: funding applications, valuations and retentions
- Electrical contractor finance for installers, testers and M&E subcontractors
- Utility contractor finance for network and streetworks firms
Construction finance options
01
Asset finance for plant, machinery and vehicles
Asset finance spreads the cost of excavators, dumpers, telehandlers, mini diggers, access equipment, tools and vans over their working life. Hire purchase gives you ownership at the end; leasing lets you use equipment for a fixed period and upgrade. Existing plant you own can be refinanced to release cash. Because the equipment secures the agreement, it is often the most accessible form of construction finance.
02
Unsecured business loans
An unsecured business loan is a lump sum for mobilising a new contract, buying materials, covering payroll or expanding. Repayments are fixed over an agreed term, and directors usually give a personal guarantee.
03
Secured business loans
Secured business loans against property or other assets can provide larger sums and longer terms. Security can also widen options for businesses with past credit problems, although the asset is at risk if repayments are not met.
04
Invoice and contract finance
Invoice finance releases cash tied up in unpaid invoices. In construction, specialist lenders understand applications for payment, stage payments and retentions, which general providers may exclude. Selective invoice finance lets you fund individual invoices or contracts rather than your whole sales ledger.
05
Development and bridging finance
If you build or refurbish property to sell or let, property development finance funds land purchase and build costs, released in stages as work progresses. Bridging loans provide short-term, property-secured funding, for example to buy a site quickly or complete a project before refinancing or sale.
06
VAT and tax loans
VAT loans and other tax funding can spread an HMRC bill into monthly instalments, protecting working capital during busy periods.
Why construction businesses need finance
Construction has some of the toughest cash flow in any sector. Materials and labour are paid for weeks before you can apply for payment; applications can be disputed or paid late; retentions hold back part of what you are owed until after completion; and subcontractors registered under the Construction Industry Scheme (CIS) receive payments net of deductions. The VAT domestic reverse charge for many construction services also changes how VAT flows through the supply chain. Finance fills these gaps and funds the equipment needed to take on larger contracts.
Finance guides by trade and equipment
- Scaffolding finance: tube, fittings, system scaffold and vehicles, plus cash flow between hire periods.
- Civil engineering finance: large contracts, long payment cycles and heavy plant.
- Construction equipment finance: whether to hire, lease or buy plant.
- Excavator finance and telehandler finance: machine-specific options.
Underwriting
What lenders look at
01
Trading history, accounts and recent bank statements
02
Your order book, contracts and main contractor relationships
03
Debtor days, disputes and retention levels, for invoice finance
04
For development finance: your track record, planning, costings and the site's value on completion
05
Credit history of the business and directors
06
Equipment details and quotes, for asset finance
Lenders set their own minimum trading periods and turnover levels. We work with limited companies, LLPs, partnerships and sole traders trading in the UK.
Checklist
Documents to have ready
- Latest filed accounts and up-to-date management figures
- Recent business bank statements
- An aged debtor list, with retentions shown separately
- Copies of key contracts or a summary of the order book
- Equipment quotes or invoices, for asset finance
- For development: site details, planning, build costings and a schedule of works
Side by side
Compare your options
How the main business finance structures work. Lenders set their own terms, so treat this as a guide to the questions to ask.
| Option | How you repay | Security | Often used for |
|---|---|---|---|
| Unsecured business loan | Fixed instalments, usually monthly | No charge over assets; a personal guarantee is usually required | Growth, stock, tax bills and cash flow |
| Secured business loan | Fixed instalments, often over a longer term | A charge over property or other assets | Larger sums, property and refinancing |
| Revolving credit facility | Interest on what you draw; repay and redraw | Varies by lender and case | Recurring or uneven cash flow gaps |
| Merchant cash advance | A share of future card takings | No charge over assets | Card-taking businesses with uneven months |
| Asset finance | Regular payments over the life of the asset | The asset being financed | Equipment, vehicles and machinery |
| Invoice finance | Settled as customers pay their invoices | Your unpaid invoices | Businesses waiting on customer payment |
General information only. Every lender has its own criteria, and all finance is subject to status.
Which construction finance suits which need?
| Need | Typical solution |
|---|---|
| New or used plant, vans, tools | Hire purchase or leasing |
| Cash to start a new contract | Unsecured loan or contract finance |
| Waiting on main contractor payments | Invoice or selective invoice finance |
| Buying land or funding a build | Development finance or bridging |
| HMRC bills | VAT or tax loan |
The broker’s view
How we help construction businesses
Tell us what you need to fund and share your recent figures. We work out which product fits, approach suitable lenders on our panel, explain the options with total costs and any security required, and manage the application. The lender makes the final decision; decisions can come within a few working days once a lender has everything it needs, although development finance takes longer because of valuations and legal work. It is free to enquire; any broker fee is disclosed separately before you proceed. You can discuss your requirement online.
FAQs
Questions clients ask
Is construction finance the same as development finance?
Not exactly. Construction finance is a broad term for funding construction businesses, such as equipment, working capital and invoice finance. Development finance is a specific property-secured loan that funds land purchase and build costs for a development project, released in stages as work is completed and repaid from sale or refinance.
Can a subcontractor get construction finance?
Yes, subcontractors can get construction finance, including asset finance for tools and plant, unsecured loans to mobilise a package and specialist invoice finance for applications to main contractors. Lenders look at your trading history, who you work for, how reliably you are paid and how retentions and CIS deductions affect your cash flow. Our page on construction invoice finance explains how lenders fund applications for payment.
Can a sole trader builder get construction finance?
Yes, sole trader builders and tradespeople can get construction finance, most often hire purchase or leasing for vans, tools and small plant, or a business loan for materials and working capital. Lenders review bank statements, tax returns and personal credit history. Finance of £25,000 or less to sole traders and small partnerships can be regulated consumer credit, which carries extra protections. See van finance for one common starting point.
Can construction finance help with retentions?
Construction finance can help with the cash flow gap caused by retentions, although most lenders will not advance directly against retention money until it is due and undisputed. Instead, a working capital loan or revolving facility usually covers the shortfall while retentions are held back after practical completion. Lenders want to see your retention schedule, contract terms and payment history. Keeping accurate records of what is owed and when helps any application.
Do construction companies need a personal guarantee for finance?
Often, yes. Directors of construction companies are usually asked to give a personal guarantee on unsecured loans and many invoice finance facilities, because construction is seen as a higher-risk sector. Asset finance is secured on the equipment itself, so the guarantee may be lighter or not needed for established firms. Personal guarantee insurance is available to some directors. Our guide to personal guarantees explains what you are signing.
Relevant transactions
See more related deals More deals like this
Main contractors slow to pay. £150K released from selected invoices.
A specialist subcontractor wanted cash from a few large invoices without putting its whole sales ledger on a factoring facility.
Selective invoice financeRead the transaction
£249,610 drawn for a project management business.
A six-figure requirement needed a lender prepared to assess the business in detail. It went through full underwriting and drew.
Commercial loanRead the transaction
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- DiscussTell us what the funding is for.
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What our clients say
“Simon was fast, kept us updated at all stages and was a real pleasure to work with on our asset finance. I highly recommend this company: excellent service all round.”
“Spoke with Simon, who managed to get me the loan I needed promptly. The whole process was very smooth and was completed within a few days.”
“Getting a business loan can feel like a bit of a minefield, but everything was broken down for me in great detail. Will use again in the future!”
“Simon was a pleasure to deal with and helped us find a business loan that matched our growth goals and future expansion plans.”
“I couldn’t source funding for my business, but the team got in touch within an hour and had it sorted within 24 hours. Fantastic service, and I would definitely use them again.”
Why businesses choose Smart Funding Solutions
- Access to 300+ lenders
- Personal broker support
- No obligation discussion
- Free to enquire