Financing Difficulties in the Construction Sector

Financing difficulties in the construction sector are compounded by late payments from long chains of subcontractors, especially to the micro and SME sector. In addition, only a fraction of these companies are creditworthy, which is why it is particularly important for them to obtain advances from customers, the National Federation of Hungarian Building Contractors (ÉVOSZ) told the state news agency MTI on Tuesday.

The organization added that in this expensive construction environment, construction companies can only ensure continuous operation and pre-financing of projects with higher loan amounts than in previous years.

Commercial banks primarily consider the financing of medium and large construction companies to be less risky, while micro and small enterprises are turning to simplified Széchenyi loans. Many micro and small enterprises, however, do not approach banks or are not creditworthy, which is why the amount of advances requested from the public has increased.

ÉVOSZ believes that this financial and financing situation makes written contracts for work for the public even more justified.

The trade association also raised the issue of performance and payment guarantees. If the client believes that the contractor has not performed a task under the contract properly, he can call on the bank to provide performance guarantees.

In addition, ÉVOSZ also proposes to introduce a compulsory obligation for the client to provide a payment guarantee, a declaration that the client has the necessary funds to pay for the work.