Best Invoice Finance for Construction 2026

Bibby Financial Services is the best all-round choice for construction. They have the largest dedicated construction team, accept startups from day one, understand applications for payment and retentions, and offer advance rates up to 90%. Close Brothers is the cheapest option starting at 0.5%.

Yes. Subcontractors are the primary users of construction factoring. You submit your application for payment to the main contractor, then the factoring provider advances 80-90% of the certified amount. The key is the main contractor's creditworthiness - providers assess them, not you.

The provider advances against the gross invoice value minus retention. On a £100,000 application with 5% retention, they advance against £95,000. The retention itself isn't released until the defects liability period ends (typically 12 months). Some providers offer separate retention release facilities.

Specialist construction factoring providers accept certified applications for payment under JCT, NEC, and other standard contracts. This is different from standard invoice finance where only formal invoices are accepted. Always confirm this capability before signing up.

Bibby Financial Services leads the construction sub-sector in 2026 with dedicated underwriters who handle stage payments, retentions and pay-when-paid clauses. Bibby acquired Aldermore Working Capital Finance in 2023, strengthening its construction book further. Close Brothers competes on £500,000-plus turnover construction businesses with the lowest published service charge (0.5%). Ultimate Finance underwrites smaller construction SMEs with 3-day setup but is more cautious on stage-payment models. IGF and Skipton Business Finance handle mid-market construction. Banks (Barclays, NatWest) write large-cap construction but slowly.

Construction carries three risk factors mainstream providers price for. Stage payments mean invoices are issued progressively against contract milestones, creating valuation disputes if work is questioned. Retentions (typically 5% held back until practical completion) reduce the effective advance rate. Pay-when-paid clauses delay payment until the main contractor receives from the developer, extending payment terms unpredictably. Together these inflate service charge by 0.3% to 0.5% above other sectors. Providers with construction underwriters (Bibby, Close Brothers) price more accurately; generalists tend to decline or quote defensively.

Yes, selectively. Kriya and Triver offer single-invoice or single-project selective invoice finance with no whole-book commitment, useful for subcontractors funding one large contract. Mainstream providers like Bibby will write whole-book facilities once the subcontractor has £100,000-plus annual turnover and a recurring customer base. For one-off projects with a single main contractor, selective is the better fit. Pricing on construction selective is 2% to 4% all-in, higher than whole-book but with no minimum-term commitment.

Retentions (typically 5% of contract value, released on practical completion and final defects period) are usually excluded from the funded ledger. Providers advance against the 95% of invoice value that is payable on normal terms, with the 5% retention parked outside the facility. Some specialists (Bibby, Close Brothers) will fund retentions separately at a higher margin once practical completion is documented. For subcontractors with £500,000-plus in held retentions, a dedicated retention release facility can be added; this is bespoke and usually only available above £1m annual turnover.