The company: A property developer of residential properties, established in July 2020, as a subsidiary of a larger organisation. The company focuses on unique, generally semi-rural properties in the South East, generally in Kent, Sussex, and Surrey. The company is small but growing with a USP of creating good relationships with buyers to ensure their house move is as stress-free as possible. All homes are of a high build standard.
Funding: Funding from BLG under the Coronavirus Business Interruption Loan Scheme.
Purpose: To fund the acquisition of new land to develop residential properties with a resale value of between £1 million – £5 million.
The company found that during 2020 it became harder to raise property development finance. The company always needs to raise finance for projects, and Covid-19 has put off private investors. It became clear to the company that the housing market still needs to fulfill the new housing needs on a long-term basis, so it was vital to continue building. Property development is one industry that can continue to operate during the pandemic, securing the employee’s jobs.
Without funding, the company would not have been able to buy the land for the latest project, although it would continue to exist.
Solution: Coronavirus Business Interruption Loan Scheme (CBILS).
The funding and backing received have given the company the support it needs to move forward with the new project. Furthermore, the company has gained some security in knowing that if the project is held up due to coronavirus, there are several months when the government backs the loan. This gave the company the confidence to move forward with the project and to continue employing people.
The company director said, “CBILS gave us the confidence to continue growing our business and building homes for the future within an uncertain environment. Our industry sector is one of those that can continue during the pandemic, and therefore it seems appropriate that CBILS have helped us, which in turn guarantees jobs in our sector.” The company director continued to say, “Property development relies on the confidence of the developer and the lender, and CBILS delivered this to both parties to ensure that we, and the property development market as a whole, did not contract unnecessarily. Thus endangering jobs and the wider economy.”
Conclusion: The company found the process easy to apply for with the help of BLG. The company conducted adequate research before entering into the loan and recognised that while CBILS is an easy way to raise funds, it still needs to be paid back and become part of the business’s long-term strategy.