"We have backed more than £2.2m in development loans this year alone, marking a 120% increase in their deployed funds compared to last year"
CR: What are FutureBricks' main areas of specialism and products?
FutureBricks launched its mobile application in 2018 for lenders who want asset-backed investments and is dedicated to backing small and medium-sized housebuilders, offering accessible finance, vetting property development projects and monitoring every stage of construction. Our focus is on bridging and development. This means we offer to lenders the accessibility of property-backed investment by way of first charge, with the goal to normalise this category of investments by breaking the barriers of entry into the world of real estate for anyone to invest with as little £500 with up to double-digits returns. This also gives us the opportunity to work with architects and SME housebuilders who complete property development projects below a £5 million value and in return, we offer speediness of funds delivery, once we have completed our rigorous vetting process. Our lending is fully automated and we strive on the power of technology and data on both the lending and borrowing sides, with data analytics available at our fingertips and an expert team of underwriters, who bring a wealth of insight and knowledge. Ultimately, we want SME housebuilders to access affordable capital, in the private sector.
CR: How are you supporting SME housebuilders?
Access to development finance continues to be a major challenge for SME housebuilders, with a recent survey conducted by the Home Builders Federation (HBF), showing that one in five developers considers access to finance as a major barrier to housing delivery, demonstrating there is need for significant new funding. With mounting pressures against the SME housebuilding sector, there has never been a greater need for accessible finance in order to meet the Government’s building targets.
One of the main challenges for property developers is finding the right finance to support their projects. Most of the high street banks don’t assess each development finance loan on its merits, but rather run inflexible tick box systems. As an alternative finance lender, we are in a unique position to help this heavily resilient sector, providing access to funds from both individual and retail investors, together with corporate entities, offering borrowers a greater array of funds and product choice. Despite a rejection rate of 80, there are still many projects of quality in need for funding in the market today, despite Covid-19. We are proud to be in a fortunate position that allows us to continue to support the SME housebuilding sector through the pandemic.
CR: Have you seen an increase in demand for alternative finance from developers?
We have backed more than £2.2m in development loans this year alone, marking a 120% increase in their deployed funds compared to last year and that is due to the pent up demand from lenders who want to access asset-backed investments, as they compare this option with regular savings account or the more volatile stock market. On the other hand, many high street lenders are continuing to tighten their eligibility criteria and have a high rejection rate on SME housebuilders’ loan applications, which is driving a surge in demand for alternative finance.
CR: What do you think are the key challenges for the small to medium housebuilders during the pandemic and further potential lockdowns?
As per the government regulations, construction was open during the first lockdown and has received the green light for this current second lockdown too. In terms of challenges, there could be a slight slowing down in deliverables as developers may face the timing of receiving the right quantity of materials on time.
CR: What will the Seedrs fundraising mean for your business?
The FutureBricks crowdfunding campaign on Seedrs went public on Monday, November 2nd. Following a private funding that was launched on Friday, October 30th, just a weekend ahead of its public launch, the campaign was overfunded on the same day within the first few minutes, meeting its target at 100%. The Seedrs campaign will help propel the growth of the company, enabling us to support, through access to capital, our plans for sales and marketing and help grow our lenders base. This will in turn will mean a larger pool of capital to fund an increasing number of property development projects. At the same time, this will allow us to launch the IFISA faster, making sure the public is aware of this option for their ISA. We are also looking to build our loan book to achieve £100 million in the next three years and 2021 is another year to drive it closer to this vision.
