One of the main issues facing building projects in the UK today is the stalling of the process when a contractor pulls out. This can leave firms scrambling for cash and desperate for funding mid-project.
According to data from The Insolvency Service, 4,032 UK construction firms went insolvent in the 12 months leading up to April 2025, notably the highest number of insolvencies of any UK industry.
These project delays or halts can create funding gaps, unable to be solved with traditional finance, like bank loans or developer finance. The urgent nature of building projects requires fast, flexible funding options that are available to developers mid-project, to prevent a dead stop.
With construction insolvencies at an all-time high, making up 15.7% of all company failures in April 2025 and thousands of firms folding every year, abandonment risk is a major concern for any ongoing build.
Bridging loans and mid-project financing options
When a project stalls, builders can turn to short-term financing. The most common solutions include:
Bridging loans
Bridging loans are short-term, interest-only loans secured on property. These can be arranged in days rather than months, making them ideal to bridge a funding gap until longer-term funds or sales proceeds become available.
Development finance
These are structured loans for new builds, but these typically require planning or multiple valuations and may take weeks to arrange – too slow for an emergency.
Turnkey/project completion loans
Some lenders specialise in finishing off another lender’s project, but these are often bespoke and similarly slow without prior setup.
Asset-based lending or invoice finance
Builders may draw on equipment financing, but these only release limited cash (against invoices) and don’t tap into the project’s latent equity like bridging can.
Therefore, bridging loans are the standout choice for their speed and flexibility. The Bridging & Development Lenders Association notes that in Q1 2025, £2.8bn of new bridging loans were completed in Q1 2025, with applications jumping 55% in just three months. This surge in the use of bridging loans is in keeping with the trend of increasing insolvencies amongst construction firms. A broker or specialist lender can often approve a bridging loan in 1-2 weeks, using the property (even unfinished) as security.
Key features of bridging loans
These include interest-only payments (often rolled up), loan-to-value ratios of up to 70%, and terms of typically 3-12 months, but some can be longer term, up to 18-24 months.
Eligibility
Lenders look at the borrower’s exit plan (sale or refinance of the finished property), value of the project (often using Gross Development Value), and the borrower’s track record. If a builder has, for example, 50% of a project completed and planning for sale, a bridging lender can lend against the completed + remaining value.
Drawbacks/considerations
Bridging rates are higher (0.5-1.5%/month) and fees exist, but the speed and certainty often outweigh cost when time is critical. In a crisis, paying a bit more interest is worth avoiding a full project abandonment.
Why UK construction needs bridging loans
The broader UK construction market shows strains that make mid-project finance more necessary than ever. High input costs (despite recent softening in materials), rising wages, and cautious bank lending leave builders cash‑tight. For example, industry analysts at TMHCC note that UK repair-and-maintenance work has been one of the few growth areas – up 9% year-on-year as of early 2025 – while new build output has actually fallen by 5.5% over the same period. This suggests that builders are pouring their money into existing properties (most likely stalled projects) rather than starting new ones. Bridging loans are the key to turning stalled projects into revenue-generating assets. With new orders collapsing in late 2024 (-22% in Q3), traditional finance firms tighten their criteria whilst specialised lenders actively increase their bridging books. For builders aware of these shifting trends, bridging is now seen as a strategic contingency plan, rather than a last resort.
Example scenario
A builder is on site with 70% of a block of flats built. The main contractor walks off-site. Traditional development finance might pull out or demand new terms. A bridging loan can be used to pay subcontractors and secure completion. Once the flats are ready and on the market, proceeds repay the bridge.
Steps for securing mid-project funding
Securing funding mid-project is not always simple, so here is a quick guide on how you might go about it if you find yourself stuck.
1. Assess the gap and exit plan
Calculate how much money is needed to finish current contracts (pay outstanding contractors, materials, etc.) and over what timeframe the project can exit (e.g. sale of units, refinance with a mortgage).
2. Explore lending options
Contact a financing specialist (like Rise Funding) to pitch the project. Prepare basic info: property value/completed percentage, permits, remaining costs, and a brief business plan or exit strategy.
3. Choose a lender
Bridging lenders differ. Some focus on unregulated bridging loans where the build is done via a limited company (typically around £200-300k). Some focus on regulated bridging (for home building projects) vs commercial bridging (often over £6.5m or non-residential). Quotes will vary based on LTV, term, and loan size.
4. Complete due diligence quickly
Expect a property valuation and financial checks. Because the project is mid-build, lenders will value what’s there plus the expected value of completion (GDV).
5. Use funds to resume work
Once funds arrive (often in 1-3 weeks from approval), allocate them to contractors, materials, and fees to get the project moving again.
6. Exit and repay
When the project finishes and sells (or long-term funding is arranged), repay the bridging loan in full. Bridging lenders often allow interest to roll up, making a single final payment.
Conclusion
Securing funding mid-project can save a build from collapse. Bridging finance is one of the fastest solutions, and UK lenders have scaled up to meet the need. As the UK construction sector faces a challenging period with plummeting new orders and record-high insolvencies, builders should have a plan before disaster strikes. If you find yourself short on funds because a contractor has dropped out, consider contacting Rise Funding to guide you through the process. Our specialists understand UK construction nuances and can arrange a deal in no time.
Ready to finish your project? Complete our questionnaire for an instant quote. Whether you need a small top‑up or a large development exit loan, we can tailor a solution that keeps your construction on track.
Rise Funding also offers in-depth guides on construction financing. See our Construction Loans – All You Need to Know and Home Construction Loans in the UK for information on loans, grants and payment schedules.
