Construction Finance UK 2026: AfP, Stage Payments and Retentions

Construction main contractors bill the client via Applications for Payment (AfPs) under JCT or NEC standard form contracts, not VAT invoices. AfPs are subject to certification by a contract administrator, can be reduced or rejected, and are paid 30-60 days after certification. Most invoice finance providers won't lend against AfPs because the value isn't crystallised at submission. Specialist construction finance providers handle this with adjusted advance rates and certification-aware monitoring.

Specialist invoice finance for construction businesses billing on JCT or NEC contracts. The provider advances 60-75% of the AfP value at submission, with the balance paid (minus fee) when the main contractor pays the certified amount. Reduces the cash gap between AfP submission and certified payment from 30-60 days to 24 hours. Used heavily by groundworks, M&E, fit-out and specialist subcontractors.

Pulse Cashflow (the leading specialist), Bibby Financial Services (full construction proposition), Ultimate Finance, IGF Invoice Finance, Skipton Business Finance and Aldermore. Pulse Cashflow has the deepest expertise on AfP-specific risk and the highest typical advance rates. Bibby and IGF offer broader facilities including credit control. Standard high street invoice finance providers (NatWest, Lloyds) usually decline construction or apply heavy haircuts.

Yes. Retentions release finance lets you draw cash today against the 5% (typically) of contract value held back by the main contractor for 12-24 months after practical completion. Pulse Cashflow and Ultimate Finance both offer retention release facilities at advance rates of 60-80% of the retention value, fees typically 4-8% of the released amount. For a £500k project with £25k retention, that means £15-20k cash today instead of waiting 12 months.

Standard invoice finance: lends against VAT invoices, typical 80-90% advance, fees 0.5-2%, but rejects most construction billing. Construction finance: lends against AfPs and retentions, typical 60-75% advance, fees 1-3%, accepts JCT/NEC contracts, includes contract administration risk in the underwriting. Construction finance is more expensive per pound advanced but it's the only option for businesses on JCT or NEC contracts.

No. The biggest users are tier-2 and tier-3 subcontractors (mechanical, electrical, plumbing, groundworks, fit-out, scaffolding, plant hire) waiting on payment from main contractors. Construction finance is often the only way for sub-contractors to fund payroll and material purchases between AfP submission and certified payment, especially on long projects with retention overhang.