Silhouette image of works on scaffolding for website J&J Commercial Finance

Construction Finance

Construction Finance is a specialist area of commercial finance designed for contractors and subcontractors who provide their services underĀ  a contract, framework agreement or Purchase order. It can help to provide a cash advance against the value of invoices raised on completion or part completion for staged contracts on working being carried out.

We know that the construction industry faces a unique set of challenges and cash flow issues due to the cost of material and extended and unpredictable payment cycles.

Construction Finance a quick overview

Timely Access to working Capital – Funding can be advanced against un-certified application for payment or staged invoices usually within 24hrs once the facility is in place.

It can help to bridge the gap and release funding into the business quicker rather than having to wait for terms of payment

Construction finance can help companies to keep building, hire equipment, pay for materials and pay wage bills

How much does Construction Finance Cost?

Lenders will look at the company and individuals to create a funding package specific to their needs. All lenders should be fully disclosing their fees for the facility upfront highlight interest rate charges, facility, arrangement and exit fees. As your broker we will work with the lender and our clients to ensure these are fully understood and also work to get the best deal possible for our clients.

There is normally a

  • Service charge – this is generally based on the turnover of the business and set as a percentage
  • Discount charge – this is similar to an interest charge for borrowing the funds between funds being drawn and the invoices being paid. This can generally be a percentage over base rate
  • Annual Fee – this is a percentage fee based on the facility level

The cost of the facility will mainly depend on the size if your business, the nature of trade and the number of invoices

Bad Debt Protection

Bad Debt protection is an insurance that be put in place to support the supply chain should a customer fail to pay an invoice or becomes insolvent. This means that the insurance policy will either aid with the credit control and collection of the debt and in the worst case scenario pay out a percentage of the invoice that can no longer be paid.

 

To find out how we can help your business with Construction Finance book your free appointment now