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Request for Proposals under the ENABLE Build Programme

In this section:

1. Introduction

1.1 British Business Bank

The British Business Bank plc 1  (“BBB”) is an economic development bank which is 100% owned and funded by the UK Government. Established on 1 November 2014, the BBB’s mission is to drive sustainable growth and prosperity across the UK, and to enable the transition to a net zero economy, by supporting access to finance for smaller businesses.

BBB has four strategic objectives supporting its mission:

  • Driving sustainable growth, ensuring smaller businesses can access the right type of finance they need to start, survive, and grow;
  • Backing innovation, ensuring innovative businesses can access the right capital to start and scale;
  • Unlocking potential, unlocking growth by ensuring entrepreneurs can access the finance they need regardless of where and who they are; and
  • Building the modern, green economy, financing groundbreaking solutions to climate change and helping smaller businesses transition to net zero so they thrive in a green future.

BBB brings together expertise and funding to support economic growth by improving the UK’s business finance markets. BBB invests or administers Government funding alongside or through private sector partners and uses targeted guarantees and funding options to encourage more private sector lending and investment.

1.2 ENABLE Build Programme

The ENABLE Build Programme (the “Programme”) is a scheme that aims to increase the availability of finance for small and medium-sized enterprise (“SME”) housebuilders. It does this by encouraging participating finance providers (the “Participating Originators”) to increase their financing of the UK’s SME housebuilders by, for example, addressing the high capital consumption associated with such financing. The Programme provides guarantees that support defined portfolios of debt finance in return for a fee (the level of which will be agreed commercially on a case-by-case basis).

The Programme as referred to in this Request for Proposals is provided by the Secretary of State for Levelling Up, Housing and Communities (“DLUHC”). It is administered by British Business Financial Services Limited (“BBFSL”) on behalf of DLUHC.

There is a separate Request for Proposals for the “ENABLE Guarantee” programme which is provided by the Secretary of State for Business and Trade (“DBT”). If you are seeking a guarantee to support the availability of finance for SMEs, but do not fulfil the criteria set out in this Request for Proposals, please refer to the ENABLE Guarantee Request for Proposals. 

This Request for Proposals is open to:

who provide finance, or intend to provide finance, to viable SME housebuilders operating in the UK. Applicants must be able to demonstrate that they make a material contribution to economic activity in the UK.

Participating Originators that are banks will be able to benefit from a zero (for standardised banks) and close to zero (for IRB banks) risk-weighted HM Government guarantee on a certain percentage of credit losses in excess of an agreed first loss threshold on the portfolio originated under the Programme.

Each transaction with a Participating Originator will involve the provision of a guarantee that supports a defined portfolio of debt instruments. In order to maximise any capital treatment or funding efficiencies, a guarantee will activate only after an agreed proportion of the maximum notional guaranteed portfolio size has been originated. To avoid adverse selection, either all non-defaulted loans or debt finance instruments or a random allocation of loans or debt finance instruments, in each case which comply with the pre-agreed eligibility criteria, will be required to be included in the defined portfolios subject to a maximum exposure per borrower.

To be eligible, loans or debt finance instruments must meet the eligibility criteria agreed between BBFSL and the relevant Participating Originator. These criteria will include risk parameters as well as conditions related to the target groups of SME housebuilders. For example, the debt finance instruments included in the portfolio should support SME housebuilders who create new units of residential property.

1.3 Objectives of the Programme

The primary objective of the Programme is to increase the availability of finance for UK SME housebuilders through Participating Originators. Proposals that deliver against more than one of BBB’s strategic objectives will be viewed more favourably.

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    British Business Bank plc is a public limited company registered in England and Wales registration number 08616013, registered office at Steel City House, West Street, Sheffield, S1 2GQ. Please refer to the Legal Notice section of this Request for Proposals for further details. British Business Bank plc and its subsidiary entities are not banking institutions and do not operate as such. A complete legal structure chart for British Business Bank plc and its subsidiaries can be found at www.british-business-bank.co.uk.

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    Direct lending funds include funds or similar structures designed to raise capital market and institutional funds to lend through originators such as marketplace lenders.

2. Process for ENABLE Build Programme

2.1 Eligible Applicants

The Programme is open to:

  • Banks;
  • Asset and asset-based finance providers; or
  • Direct lending funds,

who provide finance, or intend to provide finance, to viable SMEs operating in the UK. Applicants must be able to demonstrate that they make a material contribution to economic activity in the UK.

2.2 Application Process

BBFSL, in its capacity as agent of DLUHC, welcomes proposals from any applicant that is able to meet the objectives and criteria set out for the Programme in this Request for Proposals, and to comply with the application process detailed below, together with our indicative timings. BBFSL adopts a risk and judgment-based approach to appraising Expressions of Interest and subsequent applications: accordingly, Expressions of Interest and applications may be rejected at any stage of the process at BBFSL’s sole discretion. Applicants unsuccessful at any stage of the application process will be advised of this by the Programme team.

  • Expression of Interest: Applicants are encouraged to contact BBFSL at the earliest opportunity by email to [email protected] to express an interest in the Programme.
  • Initial Meeting and Information Schedules: If BBFSL believes there is potential to work together, it may invite applicants for an initial meeting. Either at this meeting or by written correspondence BBFSL will provide information schedules which will require completion if the applicant wishes to proceed to make a Formal Proposal.
  • Formal Proposal: After the Initial Meeting and/or receipt of the information schedules, applicants may submit a “Formal Proposal” outlining how their proposal meets the criteria set out in this document.
  • Management Presentation: Following the receipt of a satisfactory Formal Proposal, BBFSL will expect to meet with representatives of selected applicants, including selected members of its SME housebuilder lending management team, to discuss the Formal Proposal and the applicant’s operations. BBFSLwill endeavour to set this up promptly on receipt of a satisfactory Formal Proposal.
  • Eligible applicants: After the Management Presentation, BBFSL will decide whether to proceed to the review and negotiation stage. This will focus on whether, on the face of it, the applicant’s business and its proposal meet the criteria in this Request for Proposals. In order to make this decision BBFSL may ask the applicant additional questions after the Management Presentation.
  • Initial review, negotiations, and award: Selected applicants will be notified and BBFSL will proceed to the first phase of review. Initial review will focus on formally assessing the extent to which the applicant meets the Origination Criteria outlined in Section 3 below. Any information provided by an applicant may need to be satisfactorily validated by BBFSL at the end of this stage.
  • If initial review is completed to BBFSL’s satisfaction, BBFSL and the selected applicant will start negotiating the structural aspects of the proposed transaction, such as guarantee attachment points, and BBFSL will provide an indication of pricing of the guarantee. Subject to meeting the overall Objectives of the Programme and following satisfactory conclusion of the review and negotiation process, BBFSL will communicate to the applicant its intention in principle to enter into a guarantee contract on behalf of DLUHC, subject to final review, approvals 3  and legal completion (an “Award”).
  • Final operational review, approvals, closing and portfolio ramp-up: BBFSL will then proceed with final operational review, to be conducted by an external auditor and/or rating agency and/or law firm, approvals, agreement of final terms and completion of legal documentation. If an applicant is successful at this stage, guarantee facilities will be committed by DLUHC to be used by the applicant according to an agreed guaranteed portfolio ramp-up schedule.

Awards will be valid for a period of one month following notification. If completion has not taken place within one month of the applicant receiving notification of an Award, the Award may be withdrawn. Prior to an Award being allocated, BBFSL reserves the right to change the one-month period that the Award is valid for without prior notice, or to negotiate different availability periods for specific proposals on a case-by-case basis.

BBFSL intends to consider applications on a “first come first served” basis. BBFSL reserves the right not to make any Awards should the quality of proposals, in its opinion, not meet the requirements of the Programme.

BBFSL will make reasonable endeavours to respond promptly to applicants at each stage of the application process. 

2.3 Delivery of Formal Proposals

Expressions of Interest and Formal Proposals should be submitted by email and in portable document format (‘PDF’) to [email protected]. Any accompanying spreadsheets should be compatible with Microsoft Excel. By sending in an Expression of Interest, applicants confirm they have read this Request for Proposals. Your attention is drawn to the important Legal Notice set out in Section 4 below.

Important Note:

Selection is competitive. DLUHC cannot provide a guarantee to every applicant who delivers a proposal. The application process is designed to enable BBFSL to select proposals that are considered to offer the best overall value-for-money in promoting the objectives and satisfying the criteria of the Programme. BBFSL reserves the right to reject, or decline to progress, any application for any reason, including if it does not, or in BBFSL’s opinion based on the information provided is not likely to, meet the objectives or satisfy the criteria for in the Request for Proposals, at any stage in the application process.

Applicants submitting a new Expression of Interest or proposal that does not relate to SME housebuilders under this Request for Proposals may be directed to the ENABLE Guarantee Request for Proposals. 

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    These may include Ministerial and HM Treasury approvals. Completion, commitment, and portfolio ramp-up may also be subject to additional approvals.

3. Origination Criteria

The paragraphs below detail the criteria against which proposals will be assessed. Formal Proposals should seek to address each of these criteria and meet the Objectives of the Programme (Section 1.3 above) as closely as possible.

The information provided in the Formal Proposal will be used to assess to what extent the criteria outlined here have been met. Where any requested information is unavailable, or cannot be disclosed, applicants should make this clear in their Formal Proposal.

3.1 Origination Strategy

The applicants’ origination must primarily be based on the provision of development finance. Formal Proposals will be assessed on the extent to which the new debt financing will create, accelerate or improve additional housing, rather than just displace, or substitute existing sources of finance available to SME housebuilders.

Formal Proposals will be considered more favourably if they:

  • provide evidence of the applicants’ ability to provide new types or additional supply of finance to SME housebuilders who develop smaller plots and deliver less than 2,000 residential units per annum; and
  • aim to achieve more than one of BBB’s strategic objectives.

The following will not be eligible for inclusion into a portfolio benefitting from the guarantee:

  • exposures to SME housebuilders in financial difficulty;
  • exposures to retail buy-to-let investors; and
  • proposals involving the acquisition of secondary debt assets (on a portfolio or single asset basis).

3.2 Origination Levels

Formal Proposals should specify the proposed maximum notional size of the guarantee, including information on what percentage increase relative to the applicant’s existing or projected SME housebuilder annual credit origination this amount would constitute. BBFSL prefers proposals involving at least 100 borrowers and portfolio amounts of at least £25m.

Applicants considering submitting a proposal for a to a programme guarantee in excess of £250m must demonstrate that they will deliver the Objectives of the Programme more effectively relative to a programme guarantee limited to £250m.

In exceptional circumstances, BBFSL will consider proposals seeking a programme guarantee for portfolio amounts of less than £25m. Applicants whose proposals involve portfolio amounts of less than £25m must strongly evidence a proposal’s ability to meet all other origination criteria and the Objectives of the Programme.

Applicants must evidence their ability to suitably utilise the guarantee within 12 months of closing. Where the Formal Proposal is to support new types of origination, applicants must also evidence an ability to originate the relevant portion of the portfolio no later than one month after the transaction closes.

3.3 Origination Standards

The Formal Proposal should provide details of the origination standards including, but not limited to:

  • track-record of ability to originate finance to SME housebuilders;
  • availability of historic SME housebuilder portfolio performance data and prediction power of internal probability of default and loss given default models;
  • current and expected net income defined as: (net interest income + fee income) – (overheads + business-specific costs);
  • portfolio management and origination procedures;
  • granularity of the historic and expected portfolio and approach to portfolio diversification and risk management, including ESG risks; and
  • quality of risk management.

The Formal Proposal must also demonstrate that robust and tested systems and processes are in place for making and managing development finance (and, where relevant, other types of debt finance) including but not limited to loan documentation, back-office systems, monitoring and governance arrangements and management information reporting. Applicants will also be expected to report on the number of planned units for each loan.

3.4 Minimum Eligibility and Portfolio Criteria

BBFSL will apply certain minimum requirements in terms of portfolio and eligibility criteria.

Preferred minimum high-level eligibility criteria:

  • the instrument is an interest yielding debt instrument with a stated maturity;
  • the instrument has been originated by the Participating Originator;
  • the lending is for the benefit of an SME operating in the UK;
  • the related development is in the UK;
  • the instrument is for the purpose of creating additional residential units;
  • the borrower is a private limited company, a public limited company, a partnership, a trust, a foundation, a sole trader, a society, a charity or a club or any other entity which is typically considered capable of being an SME;
  • at least one drawdown must have been made and the debt instrument is not in arrears;
  • no default under the instrument or insolvency of the SME has occurred; and
  • the SME is not in financial difficulty.

Preferred minimum portfolio criteria:

  • no single exposure should exceed 2% of the maximum notional portfolio size;
  • the minimum expected number of borrowers is 100.

A substantial majority of the portfolio (expected to be not less than 80%) must relate to developments in England.

3.5 Management Team and Track Record

Applicants must be able to demonstrate that they have a competent team, with sufficient expertise to execute the proposal’s origination strategy. Applicants should provide:

  • information on the applicant’s management team and key personnel, including information on diversity within the applicant’s relevant key decision-making forums, such as the Board, credit committees and executive management team;
  • recent and relevant experience of, and successful track record in, debt financing to SMEs; and
  • evidence of the management and origination teams having worked together effectively, and their ability to execute the mandate for the full life of the transaction.

Applicants must have suitable standards of reputation and integrity, including appropriate ethical standards in all areas of its proposed operations and must demonstrate this as part of their proposal. Diversity Equity and Inclusion (DEI) policies and practices and any activities to improve DEI within the applicant’s organisation should be included within or in advance of the Formal Proposal.

If an applicant identifies any shortfalls in the levels of resources, skills and competencies required to deliver against the Origination Standards, they will be required to demonstrate how they would expect to address these.

3.6 Environmental, Social and Governance

BBFSL will consider how the applicant integrates ESG factors into its investment strategy, decision making and risk management.

For example, applicants will be viewed more favourably if they:

  • have an ESG Policy and Strategy, can demonstrate they have considered how climate risk may affect their business, have set targets for reducing their greenhouse gas (GHG) emissions, and/or who actively monitor and promote DEI within their portfolio; and
  • are able to measure and report on GHG emissions of their lending portfolio in a manner that supports any of BBB’s own reporting requirements or commit to doing so.

Applicants must be:

  • Banks;
  • Asset and asset-based finance providers; or
  • Direct lending funds,

who provide finance, or intend to provide finance, to viable SME housebuilders operating in the UK. Applicants must be able to demonstrate that they make a material contribution to economic activity in the UK.

Where appropriate, the applicant must confirm that they, and other parties involved in the origination or servicing of the guaranteed debt finance, have the necessary authorisations, licenses, and permissions to conduct credit, lending and/or banking activities in the UK. 

The proposal must be consistent with the requirements of British Business Bank plc’s group-wide tax policy, a copy of which can be found on the British Business Bank website.

By responding to this Request for Proposals, all applicants are deemed to acknowledge and accept the terms contained herein including in particular this Section 4.

British Business Financial Services Ltd (“BBFSL”) is a wholly owned subsidiary of British Business Bank plc. This Request for Proposals is being funded and delivered by the Secretary of State for Levelling Up, Housing and Communities (“DLUHC”) acting through its agent which is BBFSL. BBFSL carries out administrative and operational assistance to HM Government and, for the avoidance of doubt, does not provide any investment services or perform any investment activities on a professional basis.

HM Government and BBFSL reserve the right at any time not to grant a guarantee, not to continue with the wider Programme and/or cancel or withdraw from the process at any stage and any costs or expenses incurred by an applicant will not be reimbursed. DLUHC and BBFSL exclude their liability for any costs, expenses or losses incurred by an applicant to the full extent permitted by law.

DLUHC and BBFSL reserve the right to amend any timetable and/or other aspects of the process set out in this Request for Proposals at their discretion.

DLUHC and BBFSL reserve the right to reject any and all proposals submitted under this Request for Proposals.

DLUHC and/or BBFSL may request clarification of information and additional information regarding a response. DLUHC and/or BBFSL may also request face to face meetings. Refusal to provide such clarification, information or meetings may cause a submitted response to be rejected. Where no reply to a request for information or for clarification is received within ten business days, DLUHC and/or BBFSL may assume that the submission has been withdrawn.

Any Award made by BBFSL in its capacity as agent for DLUHC as a result of this process will be subject inter alia to completion of satisfactory review, necessary approvals, and the prompt and satisfactory agreement of legal terms.

Respondents should note that information received by DLUHC and/or BBFSL as part of the current process, including personal information, may be published, or disclosed in accordance with the access to information regimes. These are primarily the Freedom of Information Act 2000 (FOIA), the Environmental Information Regulations 2004 and data protection regulations and legislation, including but not limited to the Data Protection Act 2018 and the European Union’s General Data Protection Regulation ((EU) 2016/679). In view of this, should respondents consider that any information should be treated as confidential and/or commercially sensitive, it would be helpful if respondents could set out why they consider this to be the case in each instance. Automatic confidentiality disclaimers generated by IT systems will not, in themselves, be regarded as binding.

If DLUHC and/or BBFSL receive a request for disclosure of information provided, full account will be taken of any explanation, but no assurance can be given that confidentiality will be maintained in all circumstances. Decisions on disclosure remain the responsibility of DLUHC and/or BBFSL and ultimately the Information Commissioner and courts. Any personal data (as defined in applicable data protection legislation) an applicant provides to us as part of an Expression of Interest, (including but not limited to any personal data relating to an applicant’s employees or officers), will be processed in accordance with the privacy notice on our website. By sending us any personal data the applicant confirms that it has provided this privacy notice to all data subjects to whom the personal data relates. Applicants should ensure they keep records to this effect. Applicants should not include any special category personal data (as defined in applicable data protection legislation) in their Expressions of Interest.

This Request for Proposals has been prepared for information and discussion purposes only. Other than as set out in this Section 4, It is not a legally binding document and should not be treated as such. Applicants should seek their own independent legal, financial, tax, accounting, or regulatory advice as they see fit before choosing to participate in the programme.

This Request for Proposals is not being distributed by, nor has it been approved for the purposes of section 21 of FSMA by, a person authorised under FSMA. This Request for Proposals is for distribution only to, and is directed only at, persons within the United Kingdom who are:

  1. investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended) (the “Financial Promotions Order”);
  2. high net worth entities of the type falling within Article 49(2) of the Financial Promotions Order; and
  3. to the extent that doing so does not prejudice the lawful distribution or direction of the communication to or at the foregoing, other persons to whom it may lawfully be directed or communicated,

all such persons together being referred to as “relevant persons”. Any investment activity to which this Request for Proposals relates will only be available to, and will only be engaged in with, relevant persons. Any person who is not a relevant person should not act or rely on this Request for Proposals or any of its contents. By responding to this Request for Proposals, applicants are deemed to represent and warrant that they are such person as referred to in this paragraph. No part of this Request for Proposals should be published, reproduced, distributed, or otherwise made available in whole or in part to any other person without the prior written consent of British Business Bank plc. No part of this Request for Proposals should be published, reproduced, distributed, or otherwise made available in whole or in part in any jurisdiction where to do so would be unlawful.

Applicants should be aware that neither British Business Bank plc nor BBFSL is authorised to carry out regulated activity. British Business Bank plc will thus be unable to consider responses where receipt or processing would require any form of regulatory authorisation or permission.

British Business Bank plc is a public limited company registered in England and Wales registration number 08616013, registered office at Steel City House, West Street, Sheffield, S1 2GQ.  As the holding company of the group operating under the trading name of British Business Bank, it is a development bank wholly owned by HM Government which is not authorised or regulated by the Prudential Regulation Authority (PRA) or the Financial Conduct Authority (FCA).  British Business Bank plc operates under its own trading name through a number of subsidiaries.

British Business Financial Services Ltd is a wholly owned subsidiary of British Business Bank plc, registered in England and Wales registration number 09174621, registered office at Steel City House, West Street, Sheffield, S1 2GQ.  It is not authorised or regulated by the PRA or FCA. 

British Business Bank plc and its subsidiary entities are not banking institutions and do not operate as such.

A complete legal structure chart for British Business Bank plc and its subsidiaries can be found on the website.

Any enquiries concerning this Request for Proposals may be addressed by email to [email protected].