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Getting access to money: the $64,000 question

There has been much in the media lately about the Chancellor urging the big banks to lend more money to the business community. By Mark Newman

As a result, many construction companies are understandably asking the question “How can I get access to money?”

For all the talk of green shoots and the boost from 2012, there is no doubt that the construction industry still faces turbulent times. But banks are still willing to write cheques in tougher times as well as good, and there are still opportunities for ambitious, well-run firms.

So how can your business secure the funding and support it needs to stay successful in these difficult times?

  • First, banks are looking for well-run businesses with a clear strategic direction. Before committing to lending to a new customer, banks want to take time to get to know the management team and develop a real understanding of what you are trying to achieve and how you intend to get there. As a result, they can offer the best financial package that mirrors their needs.
  • Second, both bank and business need to develop and maintain a close working relationship. This may sound simple, and needn’t mean you have to invite them to the Christmas party. But it does mean communicating regularly to understand any issues before they become a potential problem, even more so in challenging times.
  • Third, firms that can demonstrate a prudent management of costs and working capital are likely to succeed. Banks are keen to see that management teams have a breadth and depth of experience, clearly defined responsibilities and are able to take considered but decisive action when needed. This could include re-negotiating payment periods with customers and suppliers, outsourcing fleet management, contract hire or overtime bans.

What’s more, good leaders learn from their experiences. It’s no surprise that those companies led by management teams who have survived previous downturns are the best prepared for these current times, and also the ones likely to lead us out of it again.

We want our construction customers to not just survive but thrive in the current economic climate: after all, the long-term success of our business depends on theirs too.

Lloyds recently provided a £10 million package to Morrish Builders, based in Poole. Understanding its business and future strategy, the bank provided the funding as a long-term commitment and Morrish has already seen sales of £4m worth of properties this year.

Mark Newman is relationship director at Lloyds TSB