Smaller businesses working in the cash-strapped construction sector look set to receive a boost with the launch of Construction Finance – a dedicated cashflow funding product from Nucleus Commercial Finance.
Working directly in partnership with a team of experienced Quantity Surveyors who understand the intricacies of construction contracts, and using a fixed rather than variable fee model, Nucleus has removed the uncertainty for construction businesses associated with the costs of ‘traditional’ lending products which is their principal downfall.
In its place it has created a product that directly addresses the industry’s specific needs, according to Managing Director Chirag Shah: “One of the biggest challenges faced by the construction industry is cashflow,” he says, “but the nature of the business presents a seemingly impossible challenge for traditional lenders which has given rise to alternative lenders with alternative thinking.
“With Construction Finance we believe we have created an innovative funding solution that is both practical and sustainable,” he continues. “It provides pre-payments against applications, stage payments and milestones for sub-contractors in construction or other industries where contracts with their customers have been a barrier to finance from traditional lenders.”
The new product is based on a traditional factoring approach but with the Nucleus’ Fixed Fee model to ensure transparency on costs. Cash is advanced at an agreed percentage of the outstanding invoice / application value, taking into account the longer contract terms typical within the construction sector.
Chirag says that with recent reports suggesting that growth in the construction sector is at best ‘static’, there has never been a greater need for effective funding: “We want small firms to be able to maximise the finance available to support their growth ambitions,” he concludes, “and we believe that Construction Finance is the way forward.”
