Construction firms increase demand for funding
Proof of an increasingly buoyant construction industry is evidenced in new figures from an independent commercial finance provider that shows that the number of deals has almost doubled in the last 12 months as smaller businesses look to find additional means of investment and funding cashflow.
Data from Nucleus Commercial Finance, which specialises in finance for the construction industry, suggests demand is increasing across all areas of the construction supply chain, and especially in pure construction – namely scaffolders, groundworks providers, plasterers, brick makers etc.
More than 60% of deals referred to the firm over the last 12 months have been construction related, of which 27% were pure construction, 15% were environmental services businesses, and 12% were for firms who specialised in refurbishment. A further 10% of deals related to M&E contractors.
Of the 274 deals that Nucleus has seen over the last 24 months, almost all (92%) have been for firms with turnovers of £10 million or less seeking a total between them of more than £217 million in cashflow funding.
Chirag Shah, chief executive of Nucleus Commercial Finance, believes that the reasons for the demand are threefold. He said: “Looked at positively, the increase in demand could be explained by a resurgence in the construction sector prompted in part by the Government’s focus on building new homes, and the success of alternative lenders in convincing firms that there is a viable alternative to the high street.
“Looked at from a different angle, it might also suggest the continued failure of the major banks that appear not to understand the specific needs of what can be a very complicated industry and prefer, instead, to target other sectors with less risk.”
Nucleus provides funding against applications for a range of construction businesses throughout the supply chain. It works closely with a team of quantity surveyors to ensure informed funding decisions are made within 24 hours of receiving the applications.