The construction SME sector is showing growth optimism despite financial hurdles.
- A significant 58% of construction SME owners anticipate order growth in 2025, indicating increasing confidence.
- Access to finance has become challenging for 53% of these SMEs since early 2024.
- Roughly 43% report heightened demand for external finance this year, underscoring financial pressures.
- Persistent issues include high material costs, inflation, bad debt, and supply-chain disruptions.
The construction sector’s small and medium-sized enterprises (SMEs) are experiencing a paradox of optimism and financial difficulty. A survey by Bibby Financial Services (BFS) reveals that 58% of SME business owners in this industry expect their order books to expand in 2025, reflecting broad confidence in the sector’s growth prospects.
However, this optimism is tempered by increasing challenges in obtaining necessary financial backing. Since February, 53% of SME owners have found it more difficult to access loans and debt finance, a critical lifeline for many businesses. This issue is compounded by an increase in the need for external finance, with 43% of respondents indicating a growing reliance on such funding since the start of 2024.
Despite these financial obstacles, many construction SMEs continue to invest in their businesses. Only 38% of owners are pausing their investment activities until after the general election on 4 July, a figure below the average of 46% across other surveyed sectors.
Key challenges for SMEs in this sector include inflation and high material costs, which were highlighted by 56% and 65% of firms respectively. Bad debt is also a concerning issue, cited by 34% of businesses. Moreover, supply chain disruptions remain a significant hurdle, with 42% of construction SMEs viewing this as their primary business issue, compared to just 27% in other sectors.
Derek Ryan, UK managing director at BFS, notes that the remainder of 2024 could be crucial for the industry. He stresses the importance of policy-makers prioritising the construction sector’s needs following the upcoming general election.
The construction SME sector faces a complex landscape of optimistic growth prospects and significant financial challenges.
