Challenger fintech Penny launches cash flow lifeline for construction SMEs


Managing cash flow is a priority for any business, but in the construction industry, cash flow is an even more acute challenge that can restrict growth and threaten business survival.

Even pre-pandemic, payments to construction firms were taking an average of 83 days*, and the further a business gets from the top of the payment chain, the later payments get.

While lower tier suppliers wait for cash to trickle in, they get caught in a vicious circle of paying for materials and wages while raising invoices on extended terms. 

Compounding that, finance options for SMEs in the construction industry can be extremely limited. Some banks flatly refuse to lend to construction companies while traditional invoice finance lenders are reluctant to lend against applications for payment in this sector, with those that do making it increasingly difficult. 

Challenger fintech lender Penny is on a mission to give construction businesses access to the cash flow they need by unlocking the income in their unpaid invoices.

Introducing Penny Construction+

Penny launched in 2019, providing on-demand invoice finance for small businesses and SMEs.

It quickly became clear to the team behind Penny that construction was an industry woefully underserved by business lenders, prompting their launch of a specialist construction division. 

Penny’s co-founder, Colin Gunnell, explains:

“We created Penny so businesses could free themselves from waiting for invoices to be paid and get the cash flow they need to achieve their goals. 

Over time, we found we were dealing with more and more construction clients –  often financially sound businesses who were just stuck in this awful cycle of waiting up to 90 or 120 days to get their invoices paid.

And they had nowhere else to go – banks and traditional lenders didn’t want to know, they were just totally disenfranchised financially. 

We thought this was crazy; construction was one of the first sectors to open up after the first covid lockdown and start to pull the economy forwards, yet the industry just gets knocked at every turn.

So, we’ve launched Penny Construction+ as an industry-specialist finance solution for construction businesses. 

Penny’s unique platform lets businesses instantly create and finance invoices, so cash flow keeps rolling. There’s no credit checks, turnover requirements, personal guarantees or binding contracts.

Most of the construction businesses we work with are repeat clients, using Penny as a revolving cash-flow facility, getting their invoices paid upfront, while their clients pay on their normal terms. 

Expertise is also a factor. Many lenders aren’t comfortable with the likes of CIS or VAT Domestic Reverse Charge whereas we are dealing with these all the time, so our construction clients have confidence in our team.”

Financial commitment to construction

Such is Penny’s commitment to serving the financial needs of UK construction SMEs, it has ear-marked substantial funding specifically for the industry.

Gunnell explains:

“We firmly believe that no business should ever go under just because of lack of cash flow or waiting for invoices to be paid. 

Through Penny Construction+ we’re committed to funding £70 million to construction SMEs over the next 12 months. We hope this goes some way to empowering these businesses to take on more projects, employ more people and help the construction industry thrive.”

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