One of the biggest barriers to SME house builders is a lack of finance according to research by the UK’s Federation of Master Builders.
The issue is causing house building companies to fail to meet the growing demand for new homes. Over half of small house builders (54%) say a lack of finance is a major barrier to their ability to build more homes. That figure is up from 50 per cent in 2016.
A shortage of available land and skilled workers were other issues identified in the research.
The report is the first of its kind for the building trade. It follows the government’s introduction of the finance platforms referral scheme which aims to match business bosses who are denied bank funding with alternative finance lenders.
So far, just 230 small businesses have benefitted from the scheme and have received £3.8m from alternative lenders.
50,000 businesses are estimated to have been turned down for finance from the major banks last year.
Brian Berry, chief executive of the FMB, said:
“Almost a decade after the financial crisis, access to finance for small house builders is getting worse instead of better.
“The results of the FMB House Builders’ Survey suggest a slight worsening in the problems these firms face in accessing the finance they need to build.”
Businesscomparison.com Head of Finance Laura Thomas comments:
“It would appear Brexit is a major factor in the worsening of developer’s ability to access finance. As Brian Berry comments, the potential shortage or even loss of skilled workers from the EU will negatively impact developer’s financial situations, which is a huge concern.
“Additionally, I find the statistics from the BBA referral scheme disappointing. There are many alternative lenders out there with access to significant pots of money ready to lend, so I would always urge businesses to look at alternative lenders and brokers if declined by their high street bank. There are so many alternative finance and lender options out there that should be explored, it’s one of the fundamental reasons we created Businesscomparison.com!”
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