The success of the construction industry is critical to the UK economy. Having predictably suffered during the economic downturn in 2008, the sector has been recovering slowly over the last four years. Sector experts say that evidence shows that the UK construction industry has responded well to many of its challenges.
Access to funding for the construction industry
One of the key factors that will impact the construction industry’s future performance and competitiveness will be access to funding. Therefore when Cashsolv was approached by the directors of a relatively newly formed construction company seeking a solution to its cash flow problems, we were able to assist.
The company was working on a prestigious hotel development in central London, but was facing a significant cash flow gap due to the disparity in the timing of subcontractor payments falling due and the first contract payment being received. The director had already committed personal funds to meet some of the liabilities and was in the process of selling a personally owned investment property to generate working capital. However, the sale was not due to complete in time in order to meet the payment deadlines. Without urgent funding, the company risked jeopardising the whole project which in turn would likely have resulted in the insolvency of the company.
Immediate short term finance was required
Immediate access to short term bridging finance was therefore required to plug the gap. The company had already sought alternative finance solutions but had been turned down by traditional lenders, due to the absence of credit history and a recent insolvency being registered against the directors’ names.
Having visited the Cashsolv website and identified the amount and length of time the business loan was required for using the loan calculator, the directors considered that a Cashsolv loan was the ideal solution. The company needed £80k for one month which would be repaid from either the proceeds of the property sale or the first payment application, whichever became available first.
With the help of personal guarantees the loan was approved
We reviewed the documentation surrounding the contract payment application and the property sale. The directors agreed to provide personal guarantees, backed by a charge over the investment property being sold to release the funds. We were able to work quickly and provided the funds within a few days of the directors’ first contact with us. The company was able to use the funds to meet the payment demands from the sub-contractors and the on-going trading costs. This allowed the company to continue operating and it is now working on the second phase of the hotel contract.
We have helped many businesses in various different sectors by providing short term cash flow solutions. The flexibility of our approach together with the other tools and expertise at our disposal enable us to take a fresh approach to each situation. We are not restricted by rigid approval processes like banks and other finance houses and are therefore able to tailor our solutions to the client’s needs.