Unsecured Business Loans for Construction 

Within the past few years, and most prominently since the advent of Covid-19, the UK’s construction industry has faced numerous challenges, with the prices of raw materials rising as much as 60%, along with the cost of labour by as much as 30%. It has been a tough few years, though things have been recovering. The industry has returned to target form in housing production, managing to complete around 250,000 new properties during the 22-23 financial year. Along with contracts involving commercial and residential development, infrastructure projects, and industrial construction, the industry and its ability to function efficiently remains a top priority for the UK’s population to thrive, along with its GDP. 

At Nucleus we have noticed that, throughout these past challenging years, unsecured business loans have emerged as an important financial tool for SMEs across all industries to smooth over the rough and get back on track with their growth. Each has had its own unique set of issues to deal with, and construction is no exception. Every new project requires investments, from machinery and site maintenance, to the workforce and trade specialists. Looking forward to the government’s aim to achieve ‘Net Zero’ by 2050 also means many construction firms have been investing in ways to reduce their carbon footprint, adding extra financial pressure, despite the long term good such initiatives will produce. 

Strategic Uses of Unsecured Loans in Construction 

In our experience, there are a number of primary reasons why a firm might seek a facility, and while an unsecured option would likely not be appropriate for securing larger financial goals like purchasing new property or heavy machinery, there are many uses that firms seek before or during a large contract: 

• Project Financing: Helping to smooth out the upfront costs, whether it is for material purchases or initial labour expenses, is a common reason for construction firms to take out short-term loans leading up to the start of a new project. 
• Equipment Acquisition: Throughout the course of a contract many unexpected problems can arise, and the solution is not always resolved with simple labour-power. Hiring equipment or expanding inventory on short notice that might otherwise disrupt cash flow can be comfortably secured with a short term facility. 
• Workforce Management: Jobs often run over their deadline and frequently end up full of snag lists that still need completing by the end of the project. With access to an emergency source of funds via an unsecured loan, project leaders can streamline the last parts of a contract, if necessary, ensuring the timely payroll and hiring of any additional skilled labour for project specific requirements. 
• Cash Flow Management: Throughout the course of larger contracts, it is not uncommon for payment delays to occur between construction phases, as well as any number of unexpected expenses. Sometimes emergency funds might be necessary to bridge spending gaps without disrupting an ongoing project, and this is a place where short-term, unsecured loans can shine. 

Unsecured Business Loans for Emerging Construction Trends 

As well as the more practical uses that unsecured facilities can offer firms, as the industry moves towards net zero, additional finances can be utilised to streamline the transition process, providing businesses who are looking to innovate with a source of capital, without the need for collateral. Offering anywhere between £10k to £2m, and repayment terms between 3 months to 6 years, our unsecured business loans at Nucleus allow construction companies to manage cash flow effectively, invest in the necessary equipment, or bridge the gap between project initiation and client payments. 

The flexibility and quick access to funds associated with unsecured loans make them an ideal solution for construction businesses facing immediate financial needs, seeking to capitalise on new opportunities, or looking to keep their business in line with emerging sustainable construction practices without putting the stability of their current finances at risk. 

Sustainability and Green Construction Initiatives 

• Strategic Reason: Leading towards 2050, the UK government has made its plans clear that it seeks to reach ‘net zero’, and at least a 50% reduction by 2030. While firms may not actively need to start looking into investing in green technologies and materials quite yet, beginning those steps towards reaching sustainability earlier with smaller investments over a longer span of time may prove more viable than waiting for deadlines that prove problematic or unaffordable. 
• Strategic Benefit: Using an unsecured business loan for side initiatives while your business continues with regular operations can allow firms to not only begin aligning their construction practices with the UK’s sustainability agenda, but also grant themselves the opportunity to push ahead of their peers who may not be taking the transition to green seriously. 

Adapting to Technological Advancements 

• Strategic Reason:  Along with the agenda to push into green initiatives, the construction industry itself has been rapidly evolving with new technologies that are both targeted at lowering emissions and improving the abilities of operations. Innovations like ‘Building Information Modelling’ (BIM), drones for site surveillance, and sustainable construction materials will continue to see great importance in the construction industry. 
• Strategic Benefit: A short-term unsecured facility can provide the necessary funds to adopt these technologies, leading to long-term savings down the line that will naturally improve a firm’s efficiency in evaluating and completing jobs, while enhancing their competitiveness in the market, potentially increasing cash flow and bringing new opportunities for growth. 

Regulatory Compliance and Safety Upgrades 

• Strategic Reason: Keeping up with building regulations and safety standards, alongside the increased pressure on businesses to comply with evolving environmental regs mean businesses will begin to see a bigger strain put on their finances through the necessity of sourcing eco-friendly equipment upgrades and specialised staff training. 
• Strategic Benefit: The flexible financing that unsecured business loans afford businesses means they can pursue the increasing necessity of aligning their goals with the government’s net zero agenda, while maintaining their regular training. By proactively adapting to these standards, construction businesses can enhance their market reputation as environmentally responsible and safety-conscious organisations, potentially attracting more clients and projects that align with sustainability goals. 

Expanding Business Reach 

• Strategic Reason: As sustainability efforts continue, the construction industry has seen a larger focus on markets such as solar panels, EV chargers, and renewable energy systems for new property developments. Since 2021 in particular, new builds have required the installation of renewable energy sources on the premises. It is a good time to invest in training for staff who want to familiarise themselves with these developments in an effort to get ahead of competitors. 
• Strategic Benefit: A well utilised unsecured business loan can help firms get to grips with these technological innovations without the need of putting day to day cash flow at risk. Pushing forward as a recognised embracer of the green agenda will doubtlessly help willing firms enter new markets, increasing revenue streams, and resulting in lucrative payoffs in the future. 

Considerations for Construction Businesses 

As technology and regulations continue to innovate and change, the construction industry will see more numerous and unique challenges arise on top of the currently stale economic climate. While it continues to be crucial for firms to consider important metrics like project timelines and cash flow forecasts, opportunities for training and the acquisition of new, sustainable machinery should also be considered. Unsecured business loans can give SMEs the opportunity to pursue the industry’s innovations while maintaining smooth daily operations, though any firm looking to access funding should speak to their own financial advisors to assess the return on investment of a potential facility, as well as their capacity to comfortably repay it. Understanding the terms of a loan, and its impact on the company’s financial health should be a top priority before moving forward with any financial decisions. 

Applying for a Nucleus Business Loan 

At Nucleus, our loan application process is streamlined and seamlessly connected to open banking for swift and precise evaluations. It’s important to mention that we will not only evaluate a firm’s creditworthiness, but also its overall financial standing. As collateral is not necessary for this type of loan, we instead analyse factors such as projected cash flow and the enterprise’s performance in the construction industry. 

Whether you are a well established construction firm or a rapidly growing SME seeking to expand and achieve greater success, our unsecured business loans could provide the ideal facility for your short to medium term objectives. With the help of our open banking integrations, applying for a loan takes just minutes, allowing you to easily determine if our flexible and budget friendly funding options, ranging from £10k to £2m with repayment terms between 3 months and 6 years, align with your requirements. For a more personalised approach, feel free to contact us at 020 7839 1980 to speak with one of our friendly financial experts about your choices.