Lenders are continuously looking for ways to enhance their lending portfolios, particularly when it comes to SMEs and the property development sector.
Among the lesser-known, yet powerful, tools available to these lenders are the British Business Bank’s ENABLE Guarantee and ENABLE Build programmes. These government-backed initiatives offer significant opportunities to expand lending capabilities while mitigating risk. However, many financial institutions and smaller business lenders may not fully appreciate the potential of these programmes.
Earlier this year, Lenvi, a leading provider of backup servicing, supported ThinCats—one of the UK’s top SME finance providers—in delivering standby servicing for a funding facility involving Citi and Barclays Bank PLC. This facility supports lending up to £696 million for mid-sized SMEs in the UK, with guarantees provided by the British Business Bank’s ENABLE Guarantee programme. This example underscores the critical role these programmes play in supporting UK businesses, but there remains much to be explored regarding their wider potential.
The ENABLE Guarantee programme was launched to address a fundamental issue in SME financing: the difficulty many businesses face in securing loans. By providing partial guarantees on portfolios of SME loans, the programme lowers the capital requirements for lenders. This allows both banks and non-bank financial institutions to expand their lending to a wider range of businesses, including those that may be perceived as higher risk.
Who it’s for: Primarily aimed at larger banks and non-bank financial institutions, including asset-based finance providers that already have established SME lending portfolios.
Purpose: To provide partial guarantees on SME loan portfolios, thereby reducing the risk for lenders and encouraging them to extend more credit to businesses that might otherwise struggle to secure financing.
Eligibility: Lenders must demonstrate that they make a material contribution to the UK economy and meet specific criteria related to SME lending.
For financial institutions, this programme offers a path to grow their customer base without taking on disproportionate risk. As the British Business Bank provides guarantees, lenders can confidently offer loans to SMEs that have less traditional financial profiles, or that operate in sectors typically considered riskier.
While the ENABLE Guarantee programme focuses on SME lending, the ENABLE Build programme targets a different, but equally important, sector: property development. Smaller housebuilders and property developers often find it difficult to compete with larger firms when it comes to securing financing. ENABLE Build helps level the playing field by supporting lenders that provide financing to these smaller developers.
Who it’s for: Lenders that cater to smaller developers and housebuilders who may struggle to obtain traditional financing.
Purpose: To make it easier for smaller developers to access the capital they need to build homes and contribute to local economic growth.
Benefit: By easing the financing process for smaller developers, ENABLE Build plays a key role in boosting housing supply across the UK.
By offering similar guarantees to those in the ENABLE Guarantee programme, ENABLE Build allows lenders to support smaller developers who are critical to increasing housing availability, but who may not have access to the same financing options as larger companies. This not only contributes to the UK’s housing market but also stimulates broader economic growth.
The ENABLE Guarantee and Build programmes have been in operation for nearly a decade, and the impact has been substantial. As of March 2024, these programmes have completed 17 transactions, with commitments totaling approximately £2.95 billion. In the 2023/24 financial year alone, £771 million was committed to smaller finance providers, providing them with the capital they need to support SMEs and property developers across the country.
Despite these impressive figures, many lenders are still unaware of the full scope of opportunities these programmes offer. Beyond traditional SME loans, the programmes can also support asset classes like bridging finance, development finance, and more. This opens up avenues for lenders to diversify their portfolios and offer new types of financing that they might not have considered previously.
For lenders, the ENABLE Guarantee and Build programmes offer several compelling benefits. First, they provide access to a broader range of potential clients, allowing lenders to extend financing to businesses or developers that might otherwise be deemed too risky. Second, the programmes help lenders mitigate risk by offering partial guarantees on their loan portfolios, ensuring that they can expand their lending capabilities without exposing themselves to excessive financial uncertainty.
As an experienced supplier of standby services to lenders using the British Business Bank’s programmes, Lenvi has seen firsthand how these initiatives can transform lending capacity. Owain Chambers, Senior Business Development Manager – Capital Markets for Lenvi, highlights the potential: “The ENABLE Guarantee programme presents an excellent opportunity for the investment community to fund a diverse range of asset classes. It offers both assurances and new opportunities for emerging market lenders as well as established players.”
Michael Strevens, Head of Structured Guarantees at the British Business Bank, echoes this sentiment: “We are encouraged to see the continued expansion of the ENABLE Guarantee and Build programmes. They provide crucial support to lenders and, by extension, smaller businesses, which are vitally important to the UK economy.”
In today’s economic climate, with rising costs and financial uncertainty affecting businesses across the UK, the importance of having access to flexible financing solutions cannot be overstated. For SMEs and smaller developers, the ability to secure affordable financing can mean the difference between success and failure. For lenders, participating in the ENABLE programmes represents a way to enhance their portfolios, support economic growth, and reduce risk.
The British Business Bank’s ENABLE Guarantee and ENABLE Build programmes are not just financial tools—they are pathways to sustainable growth for the UK’s SME and property development sectors. As these programmes continue to evolve and expand, lenders that embrace them will find themselves well-positioned to meet the growing demand for financing, while also playing a key role in supporting the broader economy.
In conclusion, the ENABLE Guarantee and ENABLE Build programmes offer lenders a unique opportunity to expand their offerings and reach new markets. By lowering the risks associated with lending to SMEs and smaller developers, these programmes can help lenders unlock new potential and make a meaningful impact on the UK’s economic landscape.
