The British Business Bank has announced that Hampshire Trust Bank (HTB) has secured an ENABLE Guarantee. This is the second time such a guarantee has been offered by the government-owned British Business Bank that is specifically targeted at boosting the SME housebuilding sector.
The transaction is expected to enable HTB and the British Business Bank to support the building of new housing to a value of over £500m over the lifetime of the guarantee. This is a significant increase in the amount of housing built by SMEs that HTB can finance.
HTB’s Development Finance division offers financing solutions to experienced SME property professionals across the UK. HTB has a dedicated team in the North of England, with a new office in Leeds expected to be opened in the next few months.
The 2018 Federation of Master Builders (FMB) survey highlighted the challenges that SME housebuilders face in accessing finance. It found that 46% reported that a lack of finance constrained their ability to build more houses.
The British Business Bank’s ENABLE Guarantee programme encourages banks to increase their lending to SMEs by reducing the amount of capital required to be held against such lending. Under an ENABLE Guarantee, the UK Government takes on a portion of the counterparty’s risk on a portfolio of loans to smaller businesses in return for a fee.
In this instance HTB has said it will allocate this additional capital to increase its funding to SMEs across the UK in order fund further growth across the sector.
Robert Grigg, executive chairman of development finance, HTB said: “We are committed to helping SME housebuilders make the most of the opportunities available to them. The ENABLE Guarantee will bolster our ability to support the development and financing of housing in the UK. Working with SME housebuilders up and down the country, we can continue to drive housebuilding activity. Hampshire Trust Bank is focused on developing strong and lasting business relationships and this announcement demonstrates the benefits of co-operative private and state sector engagement.”
Reinald de Monchy, managing director of guarantee & wholesale solutions British saiBusiness Bank, d: “The ENABLE Guarantee is specifically designed to address the issue of high capital requirements associated with small business finance, which restricts banks’ ability to lend to SMEs.
“This is the second ENABLE Guarantee that we have announced which will help specifically to provide the extra finance that smaller housebuilders require to allow them to grow, succeed and increase the country’s new housing stock.”
Business Secretary Greg Clark said: “The UK’s 5.7 million small businesses are the backbone of our economy.
“Through our modern industrial strategy and the construction sector deal, the British Business Bank is supporting small businesses in the housebuilding sector to access the finance they need to maximise their potential, grow and boost the number of homes built.”