Best Business Finance for Construction Firms

The best business finance for a UK construction firm depends on what you are funding and what you can secure it against. Property-backed term loans and commercial mortgages suit long-term investment, bridging finance suits short deadlines and site purchases, and asset finance suits plant and machinery. This guide explains the main options, compares five well-known lenders fairly, and sets out the questions to ask before you commit.

Greenwood Capital is a Manchester-based whole-of-market finance broker. We are not a lender and this page is educational only, not financial advice. Figures and criteria change often, so always confirm current terms directly with any lender before you decide.

What is a secured business loan, and which types suit construction?

A secured business loan is borrowing that is backed by an asset, most commonly property, which the lender can recover if the loan is not repaid. Because the lender takes security, secured loans often allow larger amounts and longer terms than unsecured borrowing, though the trade-off is the risk to the asset.

Construction firms tend to use a handful of finance types, and the right one depends on the job.

• Property-backed term loans are a lump sum repaid over a set period (often several years), secured against commercial or residential property you own. They suit predictable investment such as expanding capacity or consolidating existing debt.
• Commercial mortgages are longer-term loans to buy or refinance premises such as a yard, workshop or offices. Terms can run for many years, and the property being purchased usually provides the security.
• Bridging finance is short-term borrowing, typically from a few months up to around two years, used to move quickly on a site purchase, an auction lot or a refurbishment before a longer-term exit (such as a sale or refinance) is in place. It is faster but usually costs more per month than term borrowing.
• Asset finance (hire purchase or leasing) spreads the cost of plant, vehicles and machinery, with the equipment itself acting as the security. It protects working capital and matches the cost of a machine to the period you use it.

Many construction businesses also use development finance for ground-up build projects, and invoice finance to release cash tied up in unpaid applications for payment. Both can sit alongside the secured options above.

How we chose the lenders on this list

We selected lenders that are active in the UK secured and asset finance market, work with construction sector borrowers, and are well established. As a whole-of-market broker we do not favour any single lender, and inclusion here is not a recommendation for your situation.

Construction is treated with care by lenders because income can be lumpy, contracts vary and the sector is sensitive to economic cycles. When comparing options for a client we weigh criteria that matter in this sector: appetite for construction and contractor risk, the type of security accepted, speed of decision, flexibility on non-standard property or self-employed income, and how transparent the lender is about costs. The shortlist below reflects a spread of those strengths rather than a ranking from best to worst.

Shortlist: five lenders construction firms often consider

Close Brothers, best for asset finance on plant and machinery

Close Brothers is a long-established UK merchant banking group with a substantial asset finance division that funds vehicles, plant and equipment across sectors including construction. It suits firms buying diggers, telehandlers, tippers or specialist kit who want to spread the cost through hire purchase or leasing rather than paying upfront.

The business is known for sector specialists who understand construction assets and residual values, which can help when funding used or specialist machinery. Watch-outs: asset finance is tied to specific equipment, so it is not a general cash injection, and pricing depends on the asset, term and your profile. Confirm the current rate, any deposit or documentation fees, and end-of-term options before you sign.

Aldermore, best for commercial mortgages and property-backed lending

Aldermore is a specialist UK bank that offers commercial mortgages, buy-to-let and asset finance, and it is used to lending to trading businesses and self-employed borrowers. It suits construction firms buying a yard, unit or premises, or refinancing property they already own to raise capital.

Aldermore is often considered where a mainstream high-street bank has declined on grounds such as fluctuating income or a less conventional case. Watch-outs: specialist lending can price higher than a standard high-street mortgage, and criteria on property type, deposit and trading history apply. Ask about the maximum loan to value, term length and any early repayment charges.

Together, best for non-standard property and flexible cases

Together is a Cheshire-based specialist lender that provides secured loans, commercial mortgages and bridging finance, with a reputation for considering cases that do not fit a standard template. It suits construction borrowers with unusual property, mixed-use security, or a case that needs a common-sense underwriting approach.

Its bridging products can help firms move quickly on a purchase before arranging longer-term finance. Watch-outs: flexibility and speed typically come at a higher cost than mainstream term lending, and bridging is short term by design, so you need a clear, realistic exit. Always confirm the monthly rate, arrangement fee, and what happens if your exit is delayed.

Shawbrook, best for larger property-backed and refurbishment cases

Shawbrook is a specialist UK bank offering commercial term loans, bridging and development finance, often for more substantial or complex property-backed transactions. It suits construction firms with sizeable projects, portfolio landlords, and businesses combining a purchase with refurbishment works.

Shawbrook is frequently used where a case needs experienced underwriting on the property and the project as well as the borrower. Watch-outs: complex cases can involve valuations, legals and other professional costs, so factor in the full picture rather than the headline rate alone. Check the fee structure and the drawdown process for any staged funding.

Paragon Bank, best for asset finance and structured business lending

Paragon Bank is a specialist UK bank with asset finance and commercial lending arms that fund equipment and property-backed borrowing for SMEs. It suits construction firms looking to finance machinery, commercial vehicles or premises with a lender used to trading business cases.

Paragon’s asset finance can be useful for building a fleet or replacing ageing kit while preserving working capital. Watch-outs: as with any asset finance, the funding is secured on the equipment and terms depend on the asset and your accounts. Confirm the total cost of the agreement, not just the monthly payment, and clarify any balloon or final payment.

Comparison table

The table summarises where each lender tends to be a strong fit. Product ranges and criteria change, so treat this as a starting point and confirm details with the lender or through a broker.

Worked scenario: buying a yard versus funding new plant

Imagine a groundworks contractor with a strong order book that wants to both buy its own yard and replace two ageing excavators. The firm cannot sensibly fund everything from cash, so it weighs two very different routes.

For the yard, a commercial mortgage from a lender such as Aldermore could spread the purchase over a long term, keeping monthly costs manageable and building an asset the business owns. The trade-off is a deposit requirement, a valuation, and a longer arrangement process, so it is not the fastest option.

For the excavators, asset finance from a lender such as Close Brothers or Paragon Bank would let the firm match repayments to the working life of each machine, protect cash for wages and materials, and keep the yard purchase separate. If the yard came up at auction with a short completion deadline, the firm might instead use bridging finance from a lender like Together to secure it quickly, then refinance onto a commercial mortgage once the dust settles.

The point is that these are not competing choices so much as different tools. A whole-of-market broker can help you structure the mix rather than forcing one product to do a job it was not designed for.

How to choose the right finance for your situation

The right choice comes down to matching the loan to the purpose, the security you can offer, and the speed you need. Work through the key questions below before you compare lenders.

• What am I funding? A one-off machine points to asset finance, premises point to a commercial mortgage, and a time-sensitive purchase points to bridging.
• What can I secure it against? Property you already own opens up term loans and refinancing, while the asset itself secures asset finance.
• How quickly do I need it? Bridging and asset finance can be faster to arrange than a full commercial mortgage.
• What is my exit or repayment plan? Short-term borrowing needs a credible way out, whether a sale, a refinance or contract income.
• How lumpy is my income? Some specialist lenders are more comfortable with the fluctuating, contract-based income common in construction.
• What total cost can the job carry? Look at the whole cost over the term, including fees, not just the monthly figure or headline rate.

What to check before you commit

Before signing any facility, confirm the full cost and the small print in writing, because construction cash flow leaves little room for surprises. The details below are the ones that most often catch borrowers out.

• The total cost over the term, including the interest rate, arrangement fee, valuation, legal and any broker fees. Ask for the full figure, not just the monthly payment.
• Early repayment charges, which matter if you plan to refinance or clear the loan early once a project pays out.
• The security and any personal guarantee, so you know exactly what is at risk and who is on the hook.
• Loan to value and deposit, which affect how much cash you need upfront on property deals.
• The exit terms on bridging, including what happens, and what extra it costs, if your exit is delayed.
• Drawdown and staged funding on development or refurbishment cases, so cash arrives when the works need it.
• Whether the rate is fixed or variable, and how a change would affect your repayments.

Rates and fees vary widely by lender, by your firm’s profile and by the security offered, so always confirm current figures directly with the lender before you commit.

Let us compare the market for you

Every construction case is different, and the right structure often combines more than one type of finance. As a Manchester-based whole-of-market broker, Greenwood Capital can compare lenders across the market and help match your situation to suitable options, from asset finance for plant to property-backed loans and bridging.

Tell us what you are funding, what you can secure it against and your timescale, and we will do the legwork of comparing options. This is general help, not financial advice, and we are not a lender. Get in touch to start a no-obligation conversation about your next project.