Bridging & Commercial Supplement — SME Market Outlook

2022

SME Market Outlook

in association with

It’s about relationships.

Lending is about more than just the numbers.

With Allica Bank, every broker has an expert relationship manager to help find the best solution for their customers.

Paired with our bespoke Introducer Portal, you can expect clarity, consistency and collaboration every step of the way.

Find out more at allica.bank/introducers or give us a call on 0330 094 5555

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98% OF BROKERS SAID THEIR ALLICA BANK BUSINESS DEVELOPMENT MANAGER WAS GOOD, VERY GOOD OR EXCELLENT.

HIGHLY COMMENDED - SERVICE EXCELLENCE, LENDERS

Source: Allica Bank’s Q4 2022 Broker Survey of 164 brokers

Allica Bank Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority (FRN: 821851). Registered office: First Floor, Eldon House, 2-3 Eldon Street, London EC2M 7LS. Registered in England and Wales with company number 7706156.

2022 SME Market Outlook

Welcome to the Bridging & Commercial Magazine supplement, in association with Allica Bank

Contents 4 6 10

Intro Feeling positive for 2022?

Case study: My Car Import

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2022 SME Market Outlook

WE NEED TO GIVE BROKERS THE TOOLS TO EMPOWER SMES TO SUCCEED

With years of uncertainty ahead of us following Brexit and the Covid pandemic, broker expertise is going to be more vital than ever for business owners. There’s so much opportunity out there, but they can’t be expected to achieve it on their own That’s why, at Allica Bank, we have built our commercial mortgage broker proposition to enable you to empower your clients to succeed.

For us, this means combining two things: relationships and technology. We give every broker on our panel access to a dedicated, expert BDM. Someone to work in partnership with you to find the right solutions for your client.

While our bespoke introducer portal is designed to make working with Allica Bank as easy as possible—whether it’s submitting applications, getting real-time status updates, or uploading documents—it can all be done from a place and a time that suits you.

So far, it seems to be working. In a recent survey of 164 of our broker partners, 98% rated their experience positively, with 50% giving us the top rating of ‘excellent’. I’m especially proud that 77% of our broker partners rated their BDM as ‘excellent’.

We were also very grateful to be named as ‘Commercial Lender of the Year’ at the most recent Bridging & Commercial Awards, alongside being highly commended in the ‘Lender Service Excellence’ category.

But, of course, there’s always more we can do. And we have plans to release new products and enhancements to our proposition regularly throughout the year.

We’d love to tell you more about it and learn how we can help you to support your clients.

Turn to the back page to find out how to speak to an Allica Bank BDM or join our panel.

By Nick Baker, managing director of intermediaries at Allica Bank

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2022 SME Market Outlook

5

“SMES ARE FEELING POSITIVE FOR 2022— AND BROKERS SHOULD, TOO. OUR DATA SHOWS THAT THIS COULD BE A BUMPER YEAR FOR BROKERS”

By Nick Baker, managing director of intermediaries at Allica Bank

2022 SME Market Outlook

Who would have thought two years ago that coronavirus would still be top of the news agenda? When lockdown was first announced in March 2020, I for one certainly never imagined the disruption continuing to plague us even today Thankfully, the signs are that we’re in for a much more positive 2022. A survey by Allica Bank of 164 brokers revealed that 85% believe that their SME customers are feeling confident about business growth in 2022, with one-quarter of all surveyed saying they were feeling “very positive”.

How positive are your SME customers feeling about business growth in 2022?

Very positive 25% Quite positive 59% Neither positive or negative 16% Very negative 0.75%

This comes on the back of a strong recovery last year thanks to the vaccine rollout—meaning we’ve been able to ease restrictions—and the continued resilience of our business community.

Of course, some sectors, such as local convenience stores, warehouses, and industrial units, have absolutely boomed throughout the pandemic.

But even for those that did feel the hit of the restrictions, many were able to innovate and adapt—for example, restaurants pivoting to delivery services, or offices fitting themselves out to be covid-friendly workspaces.

So much so, in fact, that nearly half of brokers that we polled said that, since most restrictions were lifted last summer, the SME sector has recovered better than they had initially expected.

Conversely, only 9% said they recovered worse than they predicted.

Of course, there is always the risk that new restrictions could be put in place. But we needn’t worry too much. According to our findings, 60% of brokers believe that Britain’s SMEs have “learned to live with covid”, suggesting that the impact would be far less than what we saw in 2020 or 2021. Finally, some good news!

And then there are the industries that are set to bounce back, such as our hospitality and tourism businesses, which had been some of the hardest hit. Numerous respondents highlighted the huge potential for our pubs, hotels, and tourist attractions to boom in 2022 as the UK starts travelling, dining out and exploring our rich culture like we did before.

Thinking back to when most Covid restrictions were lifted in summer 2021, do you think the SME sector has recovered better or worse than you expected?

It was more than I expected 46% It was as expected 44% It was less than I expected 10%

Have SMEs 'learnt to live' with Covid, or do they still see it as major source of uncertainty?

They have learnt to live with it 60% Still a source of uncertainty 24% Not sure 16%

Cheers to that!

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2022 SME Market Outlook

“THE RESULT WILL BE THAT MANY BUSINESSES MAY FIND THEMSELVES ON THE MARKET FOR A NEW LENDER, POTENTIALLY FOR THE FIRST TIME”

A YEAR OF OPPORTUNITY

DRIVING THE RECOVERY

It’s a refreshing change of tune to what we’ve become used to of late, and spells what could be a brilliant opportunity for brokers, too.

We’ve long spoken at Allica about the pivotal role that the lending expertise and market knowledge of the broker community will play in Britain’s economic recovery from the pandemic. For it to be sustainable, it’s crucial that businesses get the right kind of finance from the most appropriate lender.

With confidence high, there will be plenty of businesses looking to expand and achieve growth objectives they’ve had to put off for the past 24 months. I am predicting a big jump in the number of transactions brokers see this year from those looking to release capital to achieve that growth.

Businesses may also explore how to diversify their income streams to protect themselves from future disruptions. Investing in a commercial portfolio built on good old bricks and mortar could be the solution for many of them.

This boost in confidence hasn’t been matched by the high-street banks, however. Their appetite remains very cautious, with many still feeling the operational strain of CBILS and BBLS. Some are even turning down requests for lending from existing customers as they look to manage overexposure to certain sectors or geographies.

The result will be that many businesses may find themselves on the market for a new lender, potentially for the first time! It all adds up to the prospect of a very busy year for brokers, from new and returning customers alike.

8

And now, as transaction volumes look set to boom, and with traditional lenders unlikely to match that demand, it’s going to be more important than ever. Thankfully, if I know Britain’s brokers, that’s not an opportunity that will be left wanting.

If you’d like to explore how Allica Bank could support one of your clients, reach out to the team at introducers@allica.bank We’d love to help!

Let’s keep this simple.

Our bespoke Introducer Portal was rated as good, very good or excellent by 98% of brokers for ease of use.* • Make simple online applications • Track applications in real time • Manage all your deals in one place • Fund more SMEs

Combined with access to our expert relationship manager team, you can expect clarity, consistency and collaboration from Allica Bank every step of the way. * Source: Allica Bank’s Q4 2022 Broker Survey of 164 brokers

Find out more at allica.bank/introducers or give us a call on 0330 094 5555

WINNER - COMMERCIAL LENDER OF THE YEAR HIGHLY COMMENDED - SERVICE EXCELLENCE, LENDERS

Allica Bank Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority (FRN: 821851). Registered office: First Floor, Eldon House, 2-3 Eldon Street, London EC2M 7LS. Registered in England and Wales with company number 7706156.

2022 SME Market Outlook

CASE STUDY

SUCCESS STORIES: HOW WE HELPED MY CAR IMPORT BUY THEIR PREMISES AND EXPAND My Car Import is an end-to-end service for importing cars into the UK. Having experienced significant growth in the past year, it needed to find a bank willing to help purchase its new premises.

Who is My Car Import?

Based in the east Midlands, My Car Import manages the whole import process—from transporting the vehicles across the globe, through to handling all the admin that comes with it.

It successfully manages the import of thousands of vehicles each year and is the only car importer in the UK to have a DVSA-approved testing facility on-site. This means it can be much quicker and more personable, and is able to manage the whole registering process onsite, rather than having to drive the car to a DVLA testing centre.

Established in 2007 by Tim Charlesworth, the business is now jointly run by Tim and his son, Jack. It employs 10 people at its Castle Donington base, but has a worldwide network of agents to ensure every customer is benefitting from the most up-to-date local knowledge.

The story The business had seen impressive growth of 70% over the previous 12 months and was fast outgrowing the three premises it was operating from. It found an available property that was perfect for its needs, valued at £900,000. It had an office space and a workshop, and space for up to 200 cars. There was the potential to develop the site even further, too, should the business need to expand again.

Condensing its operations down from three sites to one would also have the added benefit of making its service even slicker than before, as it would no longer need to drive the vehicles between sites.

Having identified its perfect premises, My Car Import was able to move into the property on a rolling lease while it arranged the final purchase.

During this time, the business spent £100,000 on improving the site.

How Allica Bank helped My Car Import sought out the help of Darren Willoughby at 2XL Commercial Finance to secure a commercial mortgage to purchase the premises. However, despite My Car Import’s impressive growth and being fortunate enough to have thrived throughout the Covid pandemic, it initially struggled to find a bank willing to lend the business enough money.

Darren explained that, with the property purchase agreed at a valuation of £900,000, the banks it spoke to refused to take into consideration the £100,000 investment that had subsequently been made in the site.

That’s when Darren decided to speak to Allica Bank.

We took a different view. By listening to Darren, we quickly recognised the strength of the business and the impressive work My Car Import had

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2022 SME Market Outlook

“With Allica’s support, we recently acquired new premises with updated workshops in Castle Donington, doubling our previous storage capacity and giving us the room to grow the business over the coming years”

done upgrading the site. We were happy to be more flexible with how we calculated the LTV, taking into account the true value of the site, and agreed to lend My Car Import the funds it needed to complete the purchase.

Darren explained: “This was the second case we have completed with Allica Bank and, as a commercial brokerage with over 15 years’ experience, we are naturally sceptical when using a new bank in the market. However, I found Allica’s credit underwriting, understanding of the business, and communication to be superb throughout. Allica provided first-class support to a first-class client.”

What’s next for My Car Import?

My Car Import is now the proud owner of its new premises and continues to grow. Talking about the deal and My Car Import’s ambitions for the future, Jack Charlesworth, managing director at My Car Import, said: “Although the pandemic has caused significant challenges, we have been incredibly fortunate to be able to continue to grow the business over the past 18 months.

“With Allica’s support, we recently acquired new premises with updated workshops in Castle Donington, doubling our previous storage capacity, and giving us the room to grow the business over the coming years.”

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Find out more 0330 094 5555 allica.bank/introducers

Nick Baker Managing director of intermediaries Nick.baker@allica.bank

Josh Compton Central BDM 07377 081359 | Josh.compton@allica.bank

Charissa Chang Senior BDM (North West) 07494 596 184 | Charissa.chang@allica.bank

Stephen Spinks Senior BDM (South & London) 07943 184 749 | Stephen.spinks@allica.bank

Maria Fraughan BDM (North West) 7398 716 087 | Maria.fraughan@allica.bank

Michael Mann BDM (South & London) 07950 167 153 | Michael.mann@allica.bank

Michael Horner BDM (North East) 07983 129 652 | Michael.horner@allica.bank

Danny McMurdo BDM (South West) 07943 184 754 | Danny.mcmurdo@allica.bank

Garry Wilkinson Senior BDM (Midlands) 07958 370 153 | Garry.wilkinson@allica.bank

Anthony Newman Specialist BDM (healthcare) 07949 314 631 | Anthony.newman@allica.bank

Ben Green BDM (West Midlands) 07535 061 376 | Ben.green@allica.bank

Chelsea O’Grady Business development support officer 7494 055 519 | Chelsea.o’grady@allica.bank

Jonathan Prince BDM (East & Midlands) 07949 990 584 | Jonathan.prince@allica.bank