The new product allows SME housebuilders to access building supplies and materials directly, without the need to demonstrate any trading or credit history, where a relationship with the client already exists and funding has been agreed via their lender.
Through the new escrow account, the housebuilder gives consent for Close Brothers to pay Travis Perkins directly for the materials, which have been identified at the outset for the project and subsequently approved by the monitoring surveyor.
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This reduces the risk for both providers and gives the developer access to materials as and when they need them and frees up significant time for the SME builder to focus on other key areas of its business.
Daniel Joyce, director at Close Brothers Property Finance, said: “This is a brilliantly innovative product which allows us to tackle yet another barrier to growth for SME housebuilders.
“The largest developers are able to bulk buy on significant credit facilities, making it cheaper and quicker for them to build.
“While SPVs provide a number of advantages, the lack of credit history has long been a thorn in their side, but this new escrow account eliminates that challenge, allowing SMEs to benefit from the SPV model without the downside.”
The new account has already been used for the first time by Goldrose Sharpe Developments to help with the development of its new £8m GDV, nine-unit Bastion House project in Hackney, London.
Edwin de Silva, business development director at Travis Perkins, commented: “This is a lovely story of two multi-billion-pound businesses supporting the government's desire to help small businesses flourish — one David and two Goliaths that have become agile to the needs of SME builders!"
Paresh Chandegra, director at Goldrose Sharpe Developments, added: “This really is a win-win in [as] everyone in the partnership benefits.
“The materials crisis over the past two years has been a huge challenge, and this escrow account allows us to shore up our supply chain while reducing our financial and sourcing costs — it’s a no-brainer.”
Pictured above (L-R): Daniel Joyce, director at Close Brothers Property Finance; Paresh Chandegra and Daniel Goldsmith, directors at Goldrose Sharpe Developments; Edwin De Silva, business development director at Travis Perkins