Led by John Morrison, head of southern operations for LDF Group, LDF’s Southampton office has considerable construction finance experience. The construction industry is the UK’s third largest sector, accounting for 18 per cent of all businesses, with construction firms being among the most likely small and medium-sized enterprises to embrace and understand business finance, according to a recent survey by LDF.
How many construction businesses do you assist with finance each year?
In our southern office, we assist 150 construction businesses out of a total customer base of over 300. Our colleagues in Scotland have similar levels and last year our Ewloe office in Wales assisted 327 construction firms with over £12m of business funding. So, for the Group, we will be close to £40-£50m into the sector with some 600 customers supported each year. This figure has significantly increased since our acquisitions of FIF and ACF in the last few years.
Have you noticed any specific trends within the construction industry in the past few months?
Construction orders hit a high in November 2016, which seems to be reflected in a record January for the LDF Group. Short-term optimism remains high in the sector, primarily due to the huge pipeline of projects that bottlenecked during and immediately after the recession. Longer-term there is no doubt Brexit has created a shadow of uncertainty, but we all hope once we get down to the real detail of the UK’s exit that uncertainty will be removed and the construction industry will be business as usual.
Do you find construction businesses apply for finance at any specific time of the year?
Plant hire companies tend to buy more in the winter to prepare for the spring build-up of work. They have time to assess their fleet, how the previous year’s utilisation occurred, and they simply have the time to take delivery and prepare new machines. The larger civil engineering companies will be more driven by the projects they take, rather than the time of year.
What’s the most popular reason for construction businesses to apply for finance?
Asset finance by a mile. Using unsecured loans to cover costs such as tax is relatively new to the construction industry. Construction companies and plant hire especially have a significant need for updating equipment and so need the finance.
Most find that their banks tend to be restrictive in what they offer, and so alternative funders like LDF can offer not only our own funding lines, but a panel of other competitive funders, allowing us to accept more customers.
What are the benefits to construction businesses specifically when it comes to applying for finance?
Finance through a partner like LDF, who knows your business well, leaves you to focus on running your day-today business. As the largest independent provider of finance to UK small businesses we have the time, the expertise and the understanding to deliver what our customers need. Finance shouldn’t need to be a chore; it’s a simple tool to help you run a successful business.
In addition to our traditional asset finance offering, our unsecured loans give us the ability to meet your finance needs. From business development/growth, to financing VAT and Corporation Tax bills, our finance is all aimed at smoothing cash flow. Cash flow is probably the single biggest inhibitor to small business growth in the UK, and LDF can help bridge that gap.