How to apply for Construction Finance

4th January 2019

To thrive in the construction industry, having access to sufficient levels of cash and specialist equipment is a crucial component for your business. In order for your clients to trust you with key building contracts, showing that you’re prepared and are able to see each project through to the end is essential. However, that can be a challenge for even the most established construction firm, which is why applying for Construction Finance can be intrinsic to success. Construction Finance offers your business a much-needed pillar of support, granting you the ability to do everything from releasing working capital to purchasing equipment and supplies. But in order to qualify for Construction Finance your business must comply with the necessary criteria, depending on the product, and may involve:

  • Presenting collateral via your assets
  • Presenting your Credit Profile
  • Personal guarantee

Do I need to present assets as security?

Construction Finance contains a wide variety of business finance products which can be described as either Secured or Unsecured solutions. With Secured products, such as Secured Business Loans, Hire Purchase and Asset Refinance, presenting assets such as equipment, machinery, vehicles or property as security is a base requirement. This reassures business lenders and gives them more confidence, especially when discussing large sums. This is because, should your business fall behind in making repayments or cease trading, the lender can seize assets to recoup the money owed to them.

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Although classed as secured products, Invoice Factoring and Invoice Discounting employ a slightly different take on providing security. Rather than relying on physical assets, these products use the money owed to your business in outstanding business-to-business invoices worth over £5,000 as security. Should the customer responsible for the debt fail to pay you back, your business will be expected to repay the lender in their stead. As such, some lenders may ask for a Personal Guarantee.

Meanwhile, with Unsecured products, such as an Unsecured Business Loan or Revenue Advance, providing security is not required. However, this can make unsecured finance more difficult to acquire, especially if your business has a weak credit score. But to improve your chances of getting accepted, you could offer potential lenders a Personal Guarantee.

Will I be required to present my credit profile?

Yes, but bear in mind that not all Construction Finance products rely on your business possessing a perfect credit score. That said, a weak credit score can make it harder to acquire unsecured products. Lenders typically have a range of interest rates on offer, and your credit score helps them determine which rate to offer your business. So if your business possesses a weak credit score you’ll be required to pay more interest, and vice versa.

If you feel that your credit profile may be an issue, driving up the cost of finance, it is possible to improve your score. Taking steps such as settling an outstanding CCJ, paying off overdue utility bills and meeting tax demands can give your credit profile a boost, making your application much more attractive to lenders. In addition, offering a Personal Guarantee may pave the way forward.

Can I offer a Personal Guarantee?

Providing a Personal Guarantee isn’t always obligatory, but it’s possible that lenders may ask for one. A Personal Guarantee is either a verbal or written guarantee expressing your commitment to repaying a product on time. This gives lenders greater confidence in your business’ ability to afford finance, presenting you as less of a risk and usually making it possible to receive larger lump sums. However, you need to bear in mind that some lenders may choose to include clauses that make it possible for them to pursue you, and any associated directors, through the County Courts if your business fails to fully repay the product. Nevertheless, it is a useful option that helps you borrow the funds your business needs.

Applying for Construction Finance?

Acquiring the funds your business needs to move forward can be frustrating if you don’t know how. To ensure your business can carry out the building contracts in the pipeline, having fast access to cash, equipment and supplies is necessary. So if you’re in need of some extra help and support to get the job done, applying for Construction Finance could be the answer. Providing access to a wide array of specialised business finance products, getting the resources you need isn’t as complicated as you may have once thought. So if you’re in need of some more cash or are looking to purchase more building equipment apply for Construction Finance today, or find out more with Rangewell.


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David Harrison

David Harrison

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