"Too often SMEs are deterred from applying for finance because they are unsure about where to look or whether they’ll be successful."
UK Finance and the Federation of Master Builders have launched a new guide to the development finance process for SME housebuilders.
The guide offers advice to smaller housebuilders on how they should present their project to lenders to improve their chances of success, as well as the alternative options available if an application for finance is turned down.
It also offers smaller housebuilders advice on how to make the most of the diverse range of finance options available including challenger banks, private equity, crowd funding, finance brokers and government-supported funds.
Stephen Pegge, managing director of commercial finance at UK Finance, said: “The range of finance options available to SME housebuilders is now greater than ever, from traditional high street lenders to crowd funding and government-supported schemes. But too often SMEs are deterred from applying for finance because they are unsure about where to look or whether they’ll be successful.
“This guide is designed to help smaller housebuilders navigate this diverse landscape and find the right form of finance for them. Through close cooperation between UK Finance, the Federation of Master Builders and the government, we are determined to help SME builders grow their business and build the homes the country needs.”
Brian Berry, chief executive of the FMB, commented: “Over the past decade, for many SME house builders, development finance has been difficult to access. Although there have been improvements in this picture in recent years, nearly half of SME house builders still view lack of access to finance as a major constraint on their ability to build new homes. We will continue to work with the Government and UK Finance to identify ways to improve this situation by enabling lenders to lend more to this sector.
“However, it is also the case that the process of obtaining development finance can be complex and difficult to navigate, especially for new entrants or those without recent experience of the market. It is important that SME builders and developers understand what to expect when seeking development finance, the options available and the process they will go through. That is what this guide is designed to achieve and we are really pleased to have joined forces with UK Finance to develop some practical advice for builders. We believe it will open doors and play a part in helping more new homes get built.”
Small business minister, Kelly Tolhurst, added: “Smaller housebuilders in particular face challenges accessing the finance they need and this new guide provides useful, practical information on the available options that will help them build the homes the country needs.
“As part of our modern industrial strategy, the Government is working with the construction sector to boost skills and foster modern building techniques to help the sector reach its full potential.”