Construction business loans UK 2026
UK construction firms run on lumpy, stage-payment-led cashflow with retentions trapping capital long after contract completion. The right finance product depends on which gap you are closing: plant capex, working capital across CIS cycles, or a commercial mortgage on an owned yard. This guide covers the lenders that understand construction underwriting, and how to avoid the over-decline trap that catches most generalist lenders.
The cashflow shape lenders need to understand
Construction cashflow is structurally awkward:
- Stage payments typically run 30 to 90 days behind cost, especially for subcontractors waiting on main-contractor cycles.
- CIS retentions hold 5% to 10% of contract value for 6 to 12 months after completion.
- Plant and labour costs are concentrated up-front, before revenue.
- Pipeline visibility is contract-led, often with concentration on a single main contractor (subcontractors) or end-client (specialists).
Generalist lenders read net turnover without netting off retentions and decline applications that a construction-savvy lender would underwrite. Specialist construction lenders and the major asset-finance houses get this right.
Products that fit construction
- Asset finance for plant. Excavators, dumpers, telehandlers, formwork, scaffolding, vans. Hire purchase or finance lease, the asset is the security.
- Invoice finance. Advance against unpaid main-contractor invoices. Fits the recurring cashflow gap better than term debt. See MarketInvoice.
- Working-capital flexi-loan. Bridges shorter cashflow gaps between stage payments. iwoca, Just Cashflow, Fleximize.
- Commercial mortgage. Owned yards, offices, depot premises. Allica, Shawbrook, Hampshire Trust Bank.
- Bonds and guarantees. Performance, advance-payment and retention bonds via specialist surety providers.
Six UK lenders for construction finance in 2026
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SME term loan + commercial mortgage · £150k to £5m · founded 2019 · CRN 11470391
PRA-regulated bank for asset finance and commercial mortgages on yards and offices. Strong on £150k to £5m construction deals.
Typical rate: From 7.99% APR. Decision: 5 to 10 business days.
Read full Allica Bank review → -
Asset finance, invoice finance, commercial mortgages · £25k to £5m · founded 2009 · CRN 00947662
Specialist construction asset finance for plant, machinery and yellow goods. Refinance and sale-and-leaseback supported.
Typical rate: From 7.5% APR equivalent. Decision: 5 to 10 business days.
Read full Aldermore review → -
Flexi-loan / line of credit · £1k to £500k · founded 2011 · CRN 07798925
Flexi-loan for working capital across CIS retentions and stage payments. Fastest mainstream decision time.
Typical rate: From 2% per month. Decision: Same day to 24 hours.
Read full iwoca review → -
Term loan · £10k to £500k · founded 2010 · CRN 07123069
Term loans £10k to £500k for construction Ltd companies with 2+ years filed accounts.
Typical rate: 6.9% to 26.9% APR. Decision: 1 to 3 business days.
Read full Funding Circle review → -
Asset finance, invoice finance, commercial loans · £25k to £25m+ · founded 1878 · CRN 00195626
Long-established asset finance specialist with strong construction plant and yellow goods book.
Typical rate: Bespoke, quoted at offer. Decision: 5 to 14 business days.
Read full Close Brothers review → -
Term loans, asset finance, commercial property · £25k to £25m · founded 2011
Term loans, asset finance and commercial property for established construction firms. Bespoke deals to £25m.
Typical rate: Bespoke. Decision: 7 to 14 business days.
Read full Shawbrook Bank review →
Eligibility and underwriting
- 2+ years of filed accounts for unsecured term lending; 12 months for flexi-loans.
- £100k+ annualised turnover for fintech term lenders.
- Director credit profile clean of recent unsatisfied CCJs (specialist construction lenders engage where mainstream declines).
- For asset finance, vendor invoice or proforma plus deposit (typically 10% to 30%).
- For commercial mortgages, valuation report and 25%+ equity contribution.
- Pipeline of contracts with main contractor or end-client quality evidence.
Cost in 2026
- Asset finance for new plant: 7% to 12% APR equivalent.
- Asset finance for used plant: 10% to 18% APR equivalent.
- Working-capital flexi-loan: 1.5% to 3% per month on drawn balance.
- Unsecured term loan: 7% to 26% APR depending on profile.
- Commercial mortgage: from 6.5% APR equivalent for owner-occupier.
- Invoice finance: service fee 0.5% to 3% plus discount margin 2% to 4% over base.
Frequently asked questions
What is the best business loan for a UK construction company?
For plant and equipment, asset finance from Allica, Aldermore or Close Brothers. For working capital across CIS retentions and stage-payment cycles, an iwoca flexi-loan or invoice finance against quality main-contractor invoices. For owned yards and offices, an Allica or Shawbrook commercial mortgage. The right pick depends on which gap you are closing.
How do CIS retentions affect UK construction lending?
CIS retentions (typically 5% of contract value held against defects, sometimes 10%) lock cash for 6 to 12 months after contract completion. Lenders that understand construction underwrite on net-of-retention turnover, which gives you the realistic working-capital headroom. Generalist lenders often miss this and over-decline.
Can UK subcontractors with stage-payment cycles get finance?
Yes, but invoice finance fits better than term debt for the working-capital piece. iwoca flexi-loan covers shorter gaps. Term debt suits asset purchases and one-off investments, not the recurring stage-payment cash trap. Bibby, Aldermore and other invoice-finance specialists run construction-focused books.
What is the typical asset finance rate for UK construction plant in 2026?
Hire purchase on plant typically prices at 7% to 12% APR equivalent depending on age of asset, deposit and credit profile. Used plant prices higher than new. Established Ltd contractors with clean credit reach the cleaner end. Yellow goods (excavators, dumpers, telehandlers) are well-financed because residual-value markets are deep.
Do main contractors and subcontractors face different lending criteria?
Yes. Main contractors are underwritten on contract pipeline, end-client quality and balance-sheet capacity. Subcontractors are underwritten on main-contractor concentration risk; high reliance on one main is itself a decline reason at some lenders. Specialist construction lenders price both more fairly than generalists.
Are bond and guarantee facilities available for UK contractors?
Yes, from specialist surety providers and some commercial banks. Performance bonds, advance-payment bonds and retention bonds are sized to contract value, with the surety paid a fee. Available to established contractors with strong balance sheets and pipeline visibility. Less accessible for sub-£1m turnover operators.
If you are declined for construction finance
- CIS retention not netted off in turnover: route to construction-savvy lender (Aldermore, Allica, specialist asset financers).
- Single-main-contractor concentration: provide pipeline diversification evidence, route to invoice finance against the quality counterparty.
- Aged plant: Haydock Finance, Time Finance and specialist asset lenders engage where mainstream declines.
- CCJs from supplier disputes: Capify, JPM Capital, Bizcap or Bolton Finance.
See the full after-a-decline guide for routing.
Where to read next
- Business loans UK 2026 overview
- Asset finance UK guide
- UK business loans for construction directory page
- Best business loans for construction ranked listicle
- Cashflow loans UK
Reviewed by Oliver Mackman, Director, Best Business Loans Ltd (16833937). Last reviewed: 2026-05-10.