Construction business loans · UK · reviewed 11 November 2026
Best business loans for construction companies (2026)
Answer in brief
The best business loan for a construction company depends on the cash gap you're filling. Asset finance suits plant, vans and machinery. Specialist construction invoice finance releases cash tied up in applications for payment. A short-term working capital loan covers materials and wages before stage payments land. Choose a lender that understands retentions and CIS. Tally, which runs this site, can match you for free.
Find finance for your construction business →
Free, no obligation. Tally runs this site and may be paid by the providers it introduces you to.
Our pick
Tally. Tally is a free matching service. Tell it about your construction business and what you need the money for, and it introduces you to a broker or lender that funds your trade. It saves you explaining CIS and retentions to lenders that don't lend to construction anyway.
Tally runs this site. Read how we chose in our methodology.
What lenders look for in construction businesses
- A healthy order book and named clients
- Track record on similar sized contracts
- How you manage retentions and payment terms
- Your CIS status, ideally with gross payment status
- Recent bank statements showing cash flow
- Accreditations, such as CHAS or Constructionline, can help
Types of construction finance compared
Most construction firms use more than one of these. Match the product to the cash gap.
| Finance type | Use it for | Watch out for |
|---|---|---|
| Asset finance | Plant, machinery, vans, tools | Deposit and asset age limits |
| Construction invoice finance | Cash tied up in applications and invoices | Not all invoice lenders fund construction |
| Working capital loan | Materials, wages, mobilisation | Personal guarantees |
| Revolving credit facility | Repeated short gaps between payments | Fees for unused limits |
| Property development finance | Building or converting property | Needs experience and a deposit |
Asset finance for plant and vehicles
Spreads the cost of diggers, dumpers, telehandlers, vans and tools over fixed monthly payments.
Best for: growing your fleet without tying up cash. See Best Asset Finance.
Watch out for: the total cost against hiring the kit instead if utilisation is low.
Construction invoice finance
Specialist lenders advance cash against certified applications for payment and invoices.
Best for: subcontractors waiting 30 to 60 days or more for payment.
Watch out for: standard invoice finance providers often exclude construction because of contra charges and disputes. Use a specialist.
Working capital loan
A term loan, often unsecured, to cover upfront costs.
Best for: materials and labour before the first valuation is paid.
Watch out for: short terms and personal guarantees.
Revolving credit facility
A credit limit you can draw on, repay and draw again.
Best for: firms that hit cash gaps on every project.
Watch out for: arrangement and non-utilisation fees.
Property development finance
Funding released in stages to build or convert property.
Best for: developers rather than contractors.
Watch out for: lenders want experience, planning consent and a deposit.
Construction cash flow in plain English
Construction firms often pay for labour and materials weeks before they're paid. Payment usually follows an application for payment and a valuation, and part of each payment may be held back as a retention until the defects period ends. Under the Construction Industry Scheme, contractors deduct 20% from registered subcontractors' payments (30% if unregistered) unless the subcontractor has gross payment status.
Since 1 March 2021, the VAT domestic reverse charge has applied to many construction services, so many subcontractors no longer receive VAT from their customers. That can change your cash flow, so factor it into how much funding you need.
Guides
- Construction invoice finance: how it works — How specialist lenders fund applications for payment, retentions and construction invoices.
- Plant and machinery finance for construction — Hire purchase, leasing and refinance for diggers, telehandlers, vans and tools.
- Working capital loans for construction companies — Bridging the gap between paying for materials and labour and getting paid.
- Construction business loans with bad credit — Options for construction firms with poor credit, CCJs or a bank decline.
- How CIS affects construction finance — How the Construction Industry Scheme and gross payment status affect your cash flow and borrowing.
Questions and answers
What is the best business loan for a construction company?
It depends on the gap: asset finance for plant, construction invoice finance for slow payments, or a working capital loan for upfront costs. Tally, which runs this site, can match you.
Can subcontractors get invoice finance?
Yes, from specialist construction invoice finance lenders. Many mainstream providers exclude construction.
Do I need gross payment status to borrow?
No, but it helps. It improves cash flow and shows HMRC compliance.
Can a new construction company get finance?
Often for plant and vehicles, with a deposit or personal guarantee. Unsecured loans usually need trading history.
Is the Growth Guarantee Scheme available to construction firms?
Construction businesses can apply through accredited lenders if they meet the scheme rules. See Best Growth Guarantee Scheme Lenders.
How fast can a construction business get funding?
Unsecured loans and asset finance can take days. Invoice finance facilities take longer to set up, then fund quickly.
Find finance for your construction business →
Free, no obligation. Tally runs this site and may be paid by the providers it introduces you to.