Invest & Fund extends Homes England partnership with new product
Invest & Fund has extended its Homes England partnership with the launch of a new development finance capped rate facility.
In September 2020, alternative lender Invest and Fund announced a seven-year partnership with Homes England to increase the amount of finance available to small- and medium-sized enterprise (SME) developers.
The partnership initially created a £25m revolving fund which would fund constriction loans of between £400,000 and £2.5m, at up to 80 per cent loan-to-cost.
This partnership has now been extended to include the new capped rate facility to help borrowers navigate economic challenges such as rising inflation and interest rates.
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The new facility will offer funding for up to 70 per cent loan to gross development value (LTGDV) at 6.65 per cent plus the Bank of England base rate.
Invest & Fund said that this new product will cap the rate at the point of drawdown, covering the borrower at a pre-agreed rate up to a percentage of the total future facility.
“Bringing confidence back to the market will be vital in the coming months,” said Invest & Fund in a blog post.
“As rates continue to rise as predicted, we believe fewer and fewer funders will be willing or able to absorb those costs, and the increases will be passed onto clients and consumers.
“At the market point that could most benefit from access to this type of capital, one of the most significant challenges is not having the size of business yet to negotiate upfront fixed price deals with contractors and professional parties; if their costs go up over time, so do yours, and that means that any aspect of forward planning when it comes to controlling the costs, in our experience, is always welcomed.”
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