Quick answer

Yes — while UK Business Loans does not provide finance directly, we can introduce construction businesses to lenders and brokers who provide invoice finance for certified payment applications and, in some cases, retention funding. Submit a short enquiry for a free eligibility check and we’ll match you to specialist providers who understand construction payment cycles.

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What is invoice finance in construction?

Invoice finance is a working‑capital product that releases a proportion of the value of invoices so contractors and suppliers can access cash before their client pays. In general it includes factoring (where a provider handles credit control and collection) and invoice discounting (where you retain control of collections).

Construction is different from many sectors: payment is commonly by certified payment applications (valuations from a contract administrator), staged payments, and retained sums (retentions) withheld until defects liability periods end. These features create cashflow strain — especially on smaller contractors or those working on long projects — which is why specialist invoice finance for construction exists.

Specialist construction invoice finance recognises the certified payment process, accepts payment applications backed by contract administrators’ valuations, and sometimes advances funds against retention ledgers or retention certificates. That flexibility is crucial for keeping labour and materials suppliers paid while waiting for employer or main contractor payments.

Do we (UK Business Loans) offer invoice finance for payment applications and retentions?

We do not lend money. Instead, UK Business Loans connects you with lenders and brokers who specialise in construction invoice finance. Tell us about your contract, the certified payment application you need to fund or the retentions ledger you have, and we’ll match you with providers who are most likely to help.

Important limitations to know:

• Not every lender will fund retentions — eligibility depends on contract terms and counterparty strength.
• Many fund only once a payment application has been certified by the contract administrator or after the issue of an accepted payment notice.
• Some lenders advance against the certified value (less a reserve or holdback), while others may advance against retention certificates only when release conditions are met.

Submitting an enquiry is a quick, no‑obligation way to discover whether your payment application or retention can be funded. If matched, partners will provide full terms and costs directly. Get Quote Now — Free Eligibility Check

How invoice finance works specifically for construction payment applications and retentions

Funding certified payment applications

When a contract administrator certifies work (for example application #7 for £250,000), that certification creates a clear entitlement in the contractor’s favour. Many specialist lenders will:

1. Review the contract, the certification and the counterparty (employer or main contractor).
2. Offer an advance against the certified sum — typically a percentage called the advance rate.
3. Hold a reserve or retainer until final payment clears to cover disputes or short‑payments.

Retention finance (what is a retention and how it can be funded)

A retention is an amount withheld (often 3–5% of certified sums) to ensure defects are corrected. Typical funding approaches include:

• Advancing against retention ledgers: a lender provides cash against the ledger of retentions owing to you, subject to contract terms and client strength.
• Retention factoring or specialist retention facilities: a dedicated product where the provider advances a portion of retentions, sometimes after a retention certificate or independent verification.
• Release‑date funding: lenders may advance when contractual release conditions (e.g., end of defects period or production of release documentation) are met.

Practical mechanics and timings

Typical mechanics:

• Advance rates often range between 70–95% of the certified application value (lower where counterparty risk is higher).
• Reserves/holdbacks are common: the lender retains a small percentage until employer payment clears.
• For retentions, advances are usually lower and depend on evidence (retention certificates, release schedules).

Short case example

Contractor A has a certified application for £250,000 and a retention ledger of £15,000. A specialist lender agrees a 90% advance on the certified application (£225,000) and a 70% advance on eligible retentions when a release certificate is available. Fees and reserves reduce the immediate net cash slightly, but Contractor A can pay subcontractors and buy materials without waiting 30–60 days for employer payment.

What lenders look for (eligibility & documentation)

Providers will typically ask for:

• Signed contract and contract terms (JCT, NEC, bespoke, etc.).
• Certified payment application or payment notice and evidence of certification/valuation.
• Employer / main contractor details and credit information.
• Retention ledger and any retention certificates.
• Company accounts, management accounts, recent bank statements and debtor ledgers.
• Evidence of work completed (photos, site diaries) and references if needed.

Other considerations: lender acceptance of public sector vs private sector counterparties, size and duration of contracts, and any historic disputes or adjudications.

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Costs, structure and risks (what to expect)

Invoice finance pricing has several elements:

• Advance fee / discount (a percentage of the invoice value or retentions advanced).
• Facility and administration fees (monthly or per‑invoice).
• Interest on advances in some products and costs for additional services (e.g., credit control).

Headline guidance: rates vary widely by counterparty strength, product type and risk. Typical fees can range from low single digits up to mid‑teens percentage points depending on circumstances. Providers will give a full cost breakdown once they assess your case.

Key risks to consider:

• Recourse vs non‑recourse arrangements — who bears non‑payment risk if the employer defaults?
• Charge on company assets — some facilities require security.
• Disputed applications — lenders usually retain reserves against potential disputes.

We will help you understand these trade‑offs during the matching process so you can compare like‑for‑like quotes.

Alternatives and complementary finance options for construction businesses

• Contract or staged loans — term lending tied to project milestones.
• Development finance — for project delivery and build‑to‑sell schemes.
• Bridging finance — short‑term capital to bridge a cashflow gap.
• Supply‑chain finance (reverse factoring) — where buyer arranges funding for approved supplier invoices.
• Performance and retention bonds — reduce the need for cash retentions in some contracts.

If you’re unsure which product suits your needs, complete our short enquiry and we’ll match you to specialists who can advise on the best approach. Get a Free Eligibility Check

How UK Business Loans helps — our process

1. Complete a short enquiry — takes two minutes; tell us the type of finance you need (invoice finance, retention funding), contract counterparty and contact details.
2. We match you — we connect you to 1–3 specialist lenders or brokers who understand construction cashflow and retentions.
3. Rapid responses — lenders/brokers typically contact you within hours to request documentation and provide indicative terms.
4. Compare and decide — review quotes, select a partner, complete due diligence and drawdown funds when agreed conditions are met.

We only introduce you to providers who are experienced in construction finance. Submitting an enquiry does not commit you to borrow — it simply opens a conversation. Remember, we arrange facilities from around £10,000 and upwards.

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FAQs

Can invoice finance fund certified payment applications only?

Yes. Many specialist providers will advance against certified payment applications once a valuation or payment notice confirms the amount due. Lenders will check contract documentation and counterparty strength before offering terms.

Can I get funding against retentions before a contract ends?

Some lenders offer retention finance against retention ledgers or where a third‑party retention bond/certificate exists. Eligibility depends on contract terms, the counterparty and whether release triggers are documented.

Will applying affect my credit score?

Submitting an enquiry with UK Business Loans will not affect your credit score. Lenders or brokers may perform credit checks only if you progress to a formal application with them.

How quickly can I get funds after a payment application is certified?

Once documentation is supplied, some specialist lenders can issue an advance within 24–72 hours. Speed depends on complexity, counterparty checks and whether the application is straightforward or disputed.

Do all lenders fund construction retentions?

No. Funding retentions is specialist — not all providers will accept retention risk. We’ll match you to lenders who specifically offer retention finance where appropriate.

What happens if an employer disputes an application?

If an application is disputed, lenders normally reduce advances and retain more in reserve until the dispute is resolved. That’s why lenders place emphasis on robust certification and evidence of entitlement.

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Ready to get a quote?

Complete our short enquiry form and we’ll match you to lenders and brokers experienced in construction invoice finance and retention funding. It’s free, confidential and no obligation — often you’ll receive contact from a specialist within hours.

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We are an introducer — not a lender. We only share your details with providers relevant to your enquiry. The enquiry form is not an application; it only helps us match you to the best partners.

More useful pages

• About Us
• How it Works
• Invoice Finance
• Privacy Policy
• Terms & Conditions
• Contact

For sector‑specific support, see our construction finance hub on construction business loans: construction business loans.

Image suggestions & alt text:

• Hero: construction site with manager reviewing paperwork — alt: “Construction site manager reviewing payment application on clipboard”.
• Diagram: flow of certified payment → lender advance → employer payment → retention release — alt: “Flowchart of invoice finance process for construction payments and retentions”.
• Case study: contractor meeting lender — alt: “Contractor discussing invoice finance with lender”.

Note: We commonly arrange facilities from around £10,000 and upwards.

UK Business Loans is an introducer — not a lender. We do not provide regulated financial advice.