Small and medium-sized construction firms are finding it harder to access finance despite growing optimism over their prospects next year, a new survey shows.
Quarterly research from business finance investment firm Bibby Financial Services (BFS) found that 58 per cent of construction SME business owners expected their order book to grow in 2025, reflecting a broader growth in confidence across the industry.
Derek Ryan, UK managing director at BFS, said: “In many respects, the construction sector is the bellwether for the economy, and it’s clear that many of the sector’s SMEs owners are seeing an increase in work volumes.”
However, 53 per cent reported that it had been harder to access loans and other debt finance since February this year, BFS said in its Q2 SME Confidence Tracker, released this week.
At the same time, 43 per cent of respondents said their need for external finance had grown since the start of 2024.
More than 200 construction firms were included in the survey of over 1,000 business owners.
It found that most construction SME owners were investing in their businesses despite the challenges they faced. Only 38 per cent of respondents said they were halting investment plans until after the 4 July general election — a lower proportion than the survey-wide average of 46 per cent.
Inflation and high material costs were respectively identified as a problem by 56 per cent and 65 per cent of construction firms in the Q2 survey.
Bad debt is also an issue, according to 34 per cent of respondents.
Supply-chain disruption, as reflected by the continuing high number of insolvencies, remains a pain point for construction SME owners. More than four in 10 (42 per cent) cited this as the main problem affecting their business, compared with 27 per cent of other sectors in the survey.
Ryan said that the rest of 2024 “could be a pivotal time” for the construction industry.
“It’s vital that whichever political party takes power after the general election keeps the interests of the sector front and centre of their policies,” he added.