I run a construction business
Ways to deal with slow payments, retentions and the cost of plant and vehicles, cheapest first.
Construction businesses often wait a long time to be paid, have part of each payment held back as a retention, and need plant and vans before the work starts.
Under the Construction Industry Scheme, contractors deduct money from subcontractors' payments, at a higher rate if the subcontractor is not registered. The deductions count as advance payments towards the subcontractor's tax and National Insurance, but they still leave less cash in the bank each month.
A government bill, the Commercial Payments Bill, would ban withholding retention payments under construction contracts and cap payment terms for large firms paying smaller suppliers at 60 days. It is not law yet. Until it is, the current rules, including statutory interest on late payments, apply.
19 routes to look at, cheapest first
Compare the first 4 side by side- L0
Free or nearly free
Little or no cash cost, though most take time and admin. Some bring money in, and a few have small fees.- Own cash and no-cost
Customer prepayments, deposits and pre-sales
Ask customers to pay some or all of the price before you deliver. The cash arrives before your costs, so you borrow less, but you owe customers the goods or a refund until you deliver.
Days - Own cash and no-cost
Statutory late-payment interest and compensation
If another business pays you late, the law lets you add interest and a fixed compensation sum to the debt. It costs nothing to claim and can speed up payment.
Days - Own cash and no-cost
Supplier trade credit (negotiated payment terms)
Agree with your suppliers to pay them some time after they deliver. It works like a short, interest-free loan, but suppliers set the limits and may want a track record first.
Weeks
- Own cash and no-cost
- L1
Very cheap or subsidised
Borrowing on better terms than the market, usually because a public body, community lender or large buyer is involved.- Own cash and no-cost
HMRC payment plan (Time to Pay)
If you cannot pay a tax bill on time, HMRC may agree a payment plan so you can pay it off in monthly instalments instead of all at once.
DaysNot a raise - Government-backed and community lending
Community development finance (CDFI) loans
Loans from Community Development Finance Institutions, lenders that exist to support small businesses, start-ups and sole traders that mainstream banks often overlook.
DaysPersonal guarantee likely - Government-backed and community lending
Growth Guarantee Scheme
A British Business Bank scheme that gives accredited lenders a 70% government guarantee, so they can offer loans, overdrafts, asset finance and invoice finance to smaller businesses they might otherwise turn down.
Weeks£1k to £2mPersonal guarantee likely - Supplier and buyer-led finance
Supply-chain finance (reverse factoring)
A large customer sets up a scheme so its suppliers can be paid early by a finance company, at a cost based on the customer's credit rating rather than the supplier's.
Weeks
- Own cash and no-cost
- L2
Mainstream secured debt
Standard borrowing from banks and mainstream lenders, often secured on assets or backed by a personal guarantee.- Bank and mainstream debt
Asset finance (hire purchase and leasing)
Spread the cost of equipment, vehicles or machinery over time through hire purchase or leasing, instead of paying for it all up front.
Weeks - Bank and mainstream debt
Asset refinance and sale and leaseback
Raise cash against equipment, vehicles or property the business already owns, and keep using them. The lender takes ownership until you have paid it back, and can take the asset if you do not.
Weeks - Bank and mainstream debt
Bank term loan
A fixed amount borrowed from a bank or other mainstream lender and repaid in regular instalments over an agreed term, with interest.
WeeksPersonal guarantee likely - Bank and mainstream debt
Business credit card
A credit card in the business's name, with a spending limit and often a short interest-free period. Handy for everyday costs and small purchases, but expensive if you carry a balance.
DaysPersonal guarantee likely - Bank and mainstream debt
Business overdraft
A borrowing limit on your business bank account. You pay interest only on what you use, but the bank can usually ask for it back at any time.
DaysPersonal guarantee likely - Bank and mainstream debt
Revolving credit facility
A credit limit you can draw on, repay and draw again, paying interest only on what you use. It is quick and flexible for short-term needs, but usually costs more than a term loan.
DaysPersonal guarantee likely
- Bank and mainstream debt
- L3
Specialist secured debt
Borrowing secured on specific assets such as invoices or stock, with more fees and conditions than mainstream debt.- Asset-based and specialist lending
Invoice discounting
Borrow against your unpaid invoices while you keep collecting payments from customers yourself, usually without them knowing you use finance.
WeeksPersonal guarantee likely - Asset-based and specialist lending
Invoice factoring
A finance company pays you most of the value of your unpaid invoices straight away, then collects payment from your customers and pays you the rest, minus its fees.
DaysPersonal guarantee likely - Asset-based and specialist lending
Selective and spot invoice finance
Get paid early on just the invoices or customers you choose, instead of your whole sales ledger. Useful for occasional cash gaps and smaller businesses, but each invoice costs more than a full facility.
Days - Alternative and fast debt
Peer-to-peer business lending
Borrow from many individual and institutional investors through an online lending platform regulated by the FCA, instead of from a single bank.
DaysPersonal guarantee likely
- Asset-based and specialist lending
- L4
Expensive or fast
Quick to arrange, often unsecured, and usually the most expensive way to borrow.- Alternative and fast debt
Bridging loan
A short-term loan, usually secured on property, that "bridges" a gap until longer-term money arrives, such as a mortgage or a sale.
Days - Alternative and fast debt
Short-term unsecured business loans
Fast loans from online and specialist lenders, repaid over one to 12 months, with no assets needed as security. Quick to arrange, but interest and fees are high and owners usually have to give a personal guarantee.
DaysPersonal guarantee likely
- Alternative and fast debt
Worth knowing
- Register for the Construction Industry Scheme if you are a subcontractor, so less is deducted from each payment.
- Check what your contract says about retentions and when they are released, and chase them on time.
- Ask invoice finance providers whether they take work billed in stages or with retentions before you apply.
Sources
- GOV.UK: What is the Construction Industry Scheme · checked 10 October 2026
- GOV.UK: Largest crackdown on late payments in over 25 years as landmark Bill enters Parliament (19 May 2026) · checked 10 October 2026
Facts about each route are sourced on its own page.