Originally written by Timothy Adler on Small Business
Small builders are set for a boost as the government launches a scheme to fund home building developments.
The state-owned British Business Bank will make up to £1bn of guarantees available to banks that that lend to small builders. This will reduce the amount of capital these banks are required to hold against such small builder finance, encouraging additional lending to smaller developers.
The chancellor pledges to help small and medium-sized builders in last autumn’s budget in an effort to hit the 300,000 new homes every year.
The BBB has struck deals with specialist lenders to help with small builder finance, but this is the first time a dedicated scheme has been set up for the industry.
ENABLE Build is a new variant of the BBB’s existing ENABLE guarantee programme, which takes on a portion of the lender’s risk on a portfolio of loans to smaller businesses, in return for a fee.
The scheme is open to applications from banks where at least 80pc of the loans are to developments in England. (Housing policy in Scotland, Wales and Northern Ireland is developed to their governments.)
The proportion of homes put up by small builders has halved since the late