Chancellor of the Exchequer, Phillip Hammond, is due to deliver the next Budget on Wednesday, 22 November.
Chief Executive of the FMB, Brian Berry, has called on the Chancellor to commit to underwriting loans from banks to small house builders "to get finance flowing into our sector once more.
"Nearly a decade after the financial crisis, difficulty in accessing finance remains a major barrier to small house builders increasing their delivery of new homes," he said.
"Indeed, the FMB's 2017 House Builders' Survey showed little signs of improvement in this picture and if anything suggested slight deterioration in lending conditions. Assessments of lending conditions to SME developers were down slightly from 2016, the first fall in this measure since 2013.
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"These difficulties make it much harder for existing SME house builders to flourish and grow and deter new firms from entering the market. This has resulted in a less dynamic house building sector that is less able to expand to build the homes we need."
Mr Berry added the Chancellor must "pull as many levers as possible" so more finance can reach SMEs.
"One thing the Government can do is act to reduce the capital costs of lending to this sector for smaller specialist lenders," he continued.
"The initiative announced last week by the British Business Bank to extend its ENABLE Guarantee to house building by striking a deal with United Trust Bank is welcome. This type of Government action, because it pushes down the capital costs of lending to SME builders, will allow lenders to do much more of this. The Chancellor needs to back this initiative, encourage its expansion and explore all other options to reduce the risk and costs to banks of lending into this sector.
"If the Government wants to meet the ambitious housing targets it has set itself, it will need to ensure the long-constrained SME housing sector can once again access the finance it needs to meet the challenge of tackling Britain's housing crisis."
(LM/MH)
