Issue 115
Broker
NOVEMBER/ DECEMBER 2023
COMMERCIAL
The award-winning magazine for the National Association of Commercial Finance Brokers
14 A NEW LENDING ERA? Private wealth fuelling homebuilding through P2P
28 A TANGIBLE DIFFERENCE Why ethical banks are key to navigating challenges
Going global Broking all over the world
34 TOO SOON FOR OPTIMISM? Market reflections after an eventful 12 months
40 READING THE LEAVES Efforts to decipher commercial market signals
Contents
In this issue NACFB News
Special Features
4 6 8
20
10-11 12
Note from Norman Chambers Updates from the Association Note from headline sponsor, Allica Bank Industry news round-up Membership news
22-24 26-27 28 30-31 32-33
Funding Circle: Taking you further NACFB: Bridging oceans Brickflow: Can we solve the UK’s housing shortage? Unity Trust Bank: A tangible difference Close Brothers Invoice Finance: Opening doors Lloyds Bank: Creating opportunity
Industry Insight 34-35 36 38-39
Praetura Asset Finance: Building up and out multifi: Imagine all the SMEs… Reward Finance Group: Too soon for optimism?
Opinion & Commentary 40-41
16 Patron Profile 14-15
Invest & Fund: A new era of lending?
Compliance Update 16-17
42-43 44 46-47 48 50
Aquilae Capital: Reading the leaves Together: Realising ambitions, Together Arbuthnot Latham: Property matters Reparo Finance: It takes a village NACFB: And the winners are… Five minutes with: Simon Knowles, Senior Director, Development Finance Shawbrook
Triodos Bank UK: From A to B Corp
Further Information KIERAN JONES Editor & Feature Writer
33 Eastcheap | London | EC3M 1DT Kieran.Jones@nacfb.org.uk JENNY BARRETT Communications Consultant
33 Eastcheap | London | EC3M 1DT Jenny.Barrett@nacfb.org.uk LAURA MILLS Graphic Designer
33 Eastcheap | London | EC3M 1DT Laura.Mills@nacfb.org.uk MAGAZINE ADVERTISING T 02071 010359
Magazine@nacfb.org.uk
NACFB: Rewiring the web
Ask the Expert 18
34
26
MACKMAN Design & Production T 01787 388038
mackman.co.uk
NACFB | 3
Welcome
Norman’s Note
A
s we close the final pages of our Commercial Broker magazine for 2023, I find myself reflecting on an extraordinary year for the Association and the commercial lending industry at large. Firstly, November’s Commercial Lender Awards were a resounding success, showcasing the exceptional talent and dedication within our community. Those of you who were there would have heard our Chair, Paul Goodman, deliver his opening address. Paul emphasised three key elements, namely the NACFB’s size, its confidence, and its ambition. With a record-breaking 2,400 individual brokers from 1,200 Member firms, the trade body’s voice is not just louder but also carries a weight of new trusted standards. This year, we've seen our size and confidence translate into tangible achievements, marking a significant evolution in our journey.
Norman Chambers Managing Director | NACFB
Further testament to these collective efforts came with the NACFB being honoured as the ‘Association of the Year’ at the Association Excellence Awards 2023. This incredible recognition is a tribute to both the community’s hard work and the collaborative spirit that defines us. The close of 2023 will also see us bid farewell to Allica Bankʼs headline sponsorship and we thank them for their unwavering support. For 2024, we welcome NatWest as headline sponsor. As we stand on the cusp of new opportunities and challenges, our partnership with NatWest marks the beginning of another exciting chapter in our story, promising further growth and success. Your Commercial Broker magazine will return in the new year with a slightly revised format and frequency, yet the essence of our publication remains unchanged. We are committed to delivering the same high-quality content that you have always valued. As we step into the new year, let's carry forward the momentum that has been inspired by our collective achievements. Here’s to a new year filled with promise, progress, and continued excellence in all our endeavours.
4 | NACFB
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NACFB News
Association updates for November & December 2023
NACFB crowned Association of the Year Trade body’s pedigree recognised at Association Excellence Awards 2023
T
he NACFB has secured the coveted title of ‘Association of the Year (with over 1000 Members)’ at the prestigious Association Excellence Awards 2023. The momentous achievement was celebrated during an in-person ceremony held at Covent Garden’s historic De Vere Grand Connaught Rooms on Friday 3rd November. In a fiercely contested category that featured formidable competitors such as the National Residential Landlords Association, the CIPD, the Chartered Institute of Payroll Professionals, and the Institute of the Motor Industry, the NACFB’s triumph marks a remarkable milestone in the Association’s journey. The Association Excellence Awards, established in 2015, are widely regarded as the premier accolades in the UK and Europe, spotlighting exemplary practices and excellence among industry bodies, professional membership organisations, and trade unions. Paul Goodman, Chair of the NACFB, expressed his pride in the accomplishments of the Association in recent years. He shared: “This award is a testament to the extraordinary steps the NACFB has 6 | NACFB
taken on its path of growth and transformation. We’ve implemented innovative measures, fostered groundbreaking ideas, and harnessed the boundless energy and drive of our team. This recognition motivates us to continue striving for excellence, and I am confident that the best is yet to come for the NACFB.” Norman Chambers, managing director of the NACFB, added his thoughts on the NACFB’s remarkable win, noting that it was the first time the NACFB had entered the prestigious Association Excellence Awards. “The NACFB operates in a people-led industry, and this award recognises not just the dedicated individuals who help keep the wheels of the trade body turning, but also our vibrant and growing group of finance professionals. It highlights the significance of every membership interaction, fostering growth and excellence within our dynamic community,” he remarked. The NACFB is immensely proud of this accolade and extends its gratitude to all its Members, Patrons, Partners, and supporters who have been instrumental in the Association’s journey towards excellence. The trade body remains dedicated to driving innovation, professionalism, and growth in the intermediary-led commercial finance sector.
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Note from our Sponsor
Full steam ahead
Brandon Hall Head of Asset Finance Sales Allica Bank
W
here did 2023 go? Looking back at the year, it’s astonishing to see just how far Allica Bank’s asset finance offering has come. In 2023 alone, we’re now forecasting to have lent over £230 million to help businesses buy or refinance the equipment they need. That’s nearly 50% more than what we achieved in 2022, and a significant chunk of the over-£400 million we’ve lent since launching asset finance nearly three years ago.
get is incredible – over 97% of brokers rated their BDM as good or excellent in our latest survey, while 95% said the same about their overall experience. This combination of people and technology will always be central to Allica Bank’s service.
2. Expanding our product range Allica’s asset finance proposition has also broadened significantly this year, meaning we can help far more businesses buy or refinance a whole raft of different assets. This includes the launch of hard asset refinancing and medium and soft assets, supported by the Recovery Loan Scheme (RLS). I’m pleased to say that we’ve already made £17 million of RLS advances, showing the strong appetite for this kind of finance.
There have been two key drivers of this growth:
1. A commitment to service Our aim is for Allica to be the easiest, simplest and fastest lender for asset finance brokers to work with. To achieve this, we invest significantly in our technology, built especially for the needs of brokers and their established SME clients. This year we have continued to develop our offering, such as the launch of automated decisioning towards the end of this year. But the part I’m most proud of is our ongoing focus on relationships. To meet the increased demand, our team has expanded, with our BDM team growing by 40%, and our sales support team, led by Rachel Eckersley-Fallon, now numbering 19. The feedback our colleagues 8 | NACFB
We were also excited to introduce a special green asset lending proposition this autumn, which is going to be a core focus in 2024 as demand for energy-efficient equipment continues to increase.
Even more in 2024 None of it would have been possible without the support and feedback of you, our trusted broker partners. So I’d like to extend my sincere thanks to you, and encourage you to continue to share your thoughts and feedback with us on what more we can be doing to support your clients. It’s been a very special year for us here at Allica, and we can’t wait to continue this journey in 2024.
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Industry News
Industry News 1. Chancellor unveils 110 pro-business measures
4. FCA reviews approach to ‘secondary brokers’
Last month’s Autumn Statement saw Chancellor Jeremy Hunt announce 110 ‘pro-business’ measures to stimulate the UK economy. Central to these plans was ʻfull expensing,ʼ allowing firms to deduct spending on new technology and equipment from taxable profits, the measure aims to increase investment by £20 billion annually. In response, NACFB Chair Paul Goodman called for a re-evaluation of the Bank Referral Scheme to better support UK entrepreneurs.
The FCA has revised its interpretation of legislation for secondary credit brokers, mainly those in non-financial services. The review could signal a shift of some full permission credit brokers to limited permission status, potentially leading to regulatory fee refunds. Firms no longer authorised but impacted by this change may also be eligible for refunds. The FCA advises firms to use its online decision tool to determine their eligibility for impact.
2. Banks to face broader BoE stress tests
5. Future Fund start-ups failing faster than rivals
The Bank of England will conduct stress tests on UK banks, insurers, and pension funds, assessing their resilience against market shocks like those post-2022’s mini-Budget. This will include about 50 institutions like hedge funds and asset managers. The tests, focusing on short, sharp shocks, aim to gauge institutional reactions without evaluating individual firm resilience. KPMG UK’s Peter Rothwell noted these expanded tests address concerns about financial crises stemming from geopolitical events.
Start-ups backed by Rishi Sunak’s £1.1 billion Future Fund are underperforming compared to non-funded peers, raising doubts about the schemeʼs profitability. RSM analysis shows these companies are raising less funding and facing higher bankruptcy rates. Initially, the fund helped start-ups during the pandemic, but recent failures and funding challenges have sparked concerns. The British Business Bank commissioned RSM report found a 22% funding decline for Future Fund companies in 2022.
3. FCA accused of ‘astonishing’ data grab in new plans
6. Retailers face high street recession as sales slump in October
The Financial Conduct Authority (FCA) has faced criticism for its proposal to collect detailed personal data from consumer credit companies. The plan, aimed at enhancing oversight and reducing ad hoc data requests, has raised concerns about its impact on small and mid-sized companies. Consumer Credit Trade Association CEO Jason Wassell called the level of detail “astonishing”. The FCA defended its plans, emphasising the importance of quality data for identifying market issues.
Retail sales slumped in October, signalling a high street recession amidst rising prices and borrowing costs. The Office for National Statistics (ONS) reported a 2.7% year-on-year sales decline, with clothing and household goods stores most affected. October’s retail sales were the lowest since February 2021, attributed to factors like bad weather and prioritisation of essential items. The EY Item Club’s Martin Beck predicts no near-term recovery for the retail sector due to rising interest rates.
10 | NACFB
6 7. Net Zero investment ‘may prolong high interest rates’ Bank of England’s Monetary Policy Committee member Megan Greene warns that investments in the green transition and defence spending could keep interest rates high. She notes that this spending reverses a global trend of higher savings, which has kept interest rates low. However, long-term investments in Net Zero could improve productivity and help keep rates down. Greene also highlights challenges in the UK like high wage growth and low productivity in achieving the Bank’s 2% inflation target.
8. UK banks set to be hit by tax scandal UK banks and financial workers may soon be embroiled in Europe’s largest tax scandal, the Cum-Ex affair, involving dividend tax fraud. Major banks like Barclays, Bank of America Merrill Lynch, Morgan Stanley, BNP, and Nomura are under investigation, alongside law firms and auditors. The UK Supreme Court recently allowed Danish authorities to pursue a £1.4 billion fraud case in London, potentially leading to more European claims. Cum-Ex, a ‘double-dipping’ strategy, exploited dividend tax loopholes, allowing multiple investors to claim fraudulent tax refunds.
10. ONS: Pay is outpacing inflation
9. Insolvencies jump 18% in October Insolvencies in England and Wales rose by 18% in October year-on-year, largely due to high interest rates and weak consumer spending. Of the 2,315 insolvencies, 82% were creditors’ voluntary liquidations. The increase reflects the struggles of UK firms, especially smaller businesses in sectors like engineering and hospitality. PwC’s David Kelly and Azets’ Matthew Richards expect high insolvency numbers to persist, particularly in the construction and real estate sectors.
Office for National Statistics data shows real wages growing at the fastest rate in two years, outpacing inflation. Pay including bonuses rose by 7.9% in the three months ending in August, compared to a 6.7% inflation rate. This increase means real pay grew by 1.4%. Chancellor Jeremy Hunt welcomed the inflation fall and real wage growth. Unemployment rates remained steady at 4.2%.
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Membership News
Membership News Signature agrees additional funding line with Paragon
iwoca: High street banks ‘reducing SME appetite’
Following a record year with £70 million earnings to date, Signature Property Finance has secured the first £15 million tranche of a £30 million funding agreement with Paragon Banking Group.
A November survey from iwoca has indicated that 83% of SME finance experts believe high street banks are less willing to fund the UK’s 5.5 million SMEs, a trend, they say, that is likely to continue for the next year.
The funding is a strategic step towards the NACFB Patron’s ambition of reaching a £100 million loan book target, underpinning a three-year growth strategy. Thomas Howells, chief operating officer at Signature Property Finance, commented: “Despite news of the difficulties currently being faced by the residential property market, we have seen little sign of any slowing in demand from our developer clients for short-term property finance. “Agreeing this first £15 million tranche of a £30 million funding agreement with Paragon Bank demonstrates funders understand our ambition and recognise the impressive performance Signature has delivered year-on-year since we implemented our new management structure,” Howells added. Jamie Pickering, Paragon’s structured lending co-head, shared: “We’re keen to support non-bank lending businesses to expand their own lending activities and Signature has an excellent reputation, a growing customer base and an experienced management team.” Adding: “The business is a good example of the type of short-term property finance lender Paragon wants to support and this funding agreement enables Signature to continue delivering its client-centric service and for Paragon to be part of Signature’s continued success.” 12 | NACFB
The NACFB Patron shared that with 82% of brokers forecasting increased capital demand from SMEs, a potential financial gap is expanding. iwoca observed that as traditional routes for small business financing reduce and are unable to meet the needs of SMEs, more than half of brokers (51%) report a negative view of high street banks. The data revealed a fourth consecutive quarter where more than eight in ten brokers have warned that the major banks have reduced their support to the UK’s small businesses. Colin Goldstein, commercial growth director at iwoca, said: “This research demonstrates in the clearest possible terms that SME funding options are being stripped back – better suited lenders can and must step into the place of traditional banks.” iwoca’s SME Expert Index is taken from a survey carried out with over 110 brokers who’ve collectively submitted over 2,700 applications for unsecured finance on behalf of their SME clients across the UK over a four week period in September and October.
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Patron Profile
A new era of lending? Connecting private wealth with homebuilding through P2P
Alan Fletcher Partnership Director Invest & Fund
I
nvest & Fund started with a problem to solve; how to make it easy and rewarding for both individuals and institutions to lend to businesses looking for alternative high-quality sources of finance. Since late 2015, we have focused exclusively on supporting experienced developers and aim to be the leading player in the residential development market. We have appointed a board with substantial experience in senior banking, wealth management, property lending and peer-to-peer finance backed by a team of credit experts with deep expertise in property development and credit risk assessment. Peer-to-peer (P2P) is well-established with a proven track record of success. It’s been fantastic as an NACFB Patron to work alongside the Association’s Members and explore conversations about the core mechanics and the value it can provide their borrower clients. Having our introducer base rooted inside the mortgage and alternative finance intermediary market, many of the difficulties NACFB Members’ clients tackle in the traditional markets are solved by the disintermediation of the traditional lending model. Having had these conversations with Members over the last 12 months, they recognise the same issues our founders recognised, not only the problem of available liquidity in the SME property development market but how difficult and complicated the legacy system had become. 14 | NACFB
Pace of change The speed at which the traditional lending market has been disrupted over the last decade by swathes of new tech-driven entrants has been staggering, offering all takes on the same problems. However, one conundrum is as accurate today as it was back then. On the one hand, there is a vast appetite to invest in the development of UK housing from the serious custodians of wealth, and on the other hand, there is a massive demand for capital; the problem is how do you create infrastructure in the middle to deploy it, that’s relevant for today’s market? The challenge almost becomes paradoxical; your model needs to cherry-pick the core competencies of traditional bank lending and wealth management. At the same time, it needs to offer a hands-on
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The investment demand in the UK residential development market will only increase
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We knew monitoring construction costs that loan to cost would be one of the core issues clients would face
boutique feel that’s fit for the challenge of dealing with the complexities of the alternative financial market. You also need to be both traditional, and tech-driven, and you need to be able to move with the demands of the market, and be steadfast in your approach, and this is where the P2P structure comes into its own. Part of the hands-on approach is recognising the challenges NACFB Members face in placing this kind of business. In the period coming out of the pandemic, we knew by monitoring construction costs that loan to cost would be one of the core issues clients would face, as the price of materials would go up quicker than the value of land would come down. So we were quick to rebalance our offering in favour of a higher cost metric to support that demand. Our ability to manoeuvre quickly and make those credit decisions is one of the advantages of being nimble – there is no vast infrastructure to support, to a certain extent we can be led by the market, and try and solve problems as and when they occur. This has allowed us to fund developments with a combined value of £492 million. We are proud that our core credit competencies have resulted in 100% capital and interest paid back to our investors.
The work continues One of the things we get asked the most about from NACFB Members we talk to is the nature of our relationship with Homes England. Becoming a trusted partner of Homes England initially was a credit to the founders and the quality of the then team. One of the mainstay issues in P2P is the notion of counterparty risk; you don’t have a legacy reputation to build on when you are building something new, so to be endorsed for the quality of what we were doing at that stage was infinitely rewarding. It inadvertently drew us into what several years later would become the frontline of solving the UK housing crisis. The clients NACFB Members work with, the nation’s homebuilders, are vital to resolving these national-level issues, and we will continue our work with Homes England, offering these funding solutions to them. We firmly believe that P2P will be the central conduit between private wealth and homebuilding; the investment demand in the UK residential development market will only increase, as will the requirement to build, and we are excited to continue to work with NACFB Members and their clients as our business continues to grow. NACFB | 15
Compliance
Rewiring the web The implications of the UK’s Online Safety Bill Charlotte Mathieson Compliance Manager (TCH) NACFB
T
he UK’s Online Safety Bill has been a work in progress for over half a decade, the details of which have been overseen by eight (8!) government ministers. But now, as we reach the end of the year, the Bill is set to receive Royal assent and pass onto the statute books as law. Its ambitious aim is to solidify the UK’s position as the ideal place for digital business, whilst ensuring the online world is as safe as possible for its users. The implications of the Bill, however, stretch far beyond just the major social media platforms. For the NACFB’s membership of brokers and lenders, understanding the scope and potential impact of this Bill is paramount.
The origins of the Bill The genesis of the UK’s tech regulation blueprint can be traced back to Theresa May’s tenure. Occupied initially with the fall out of Brexit after her post-referendum appointment, it wasn’t until late 2018 that May earnestly focused on curbing online malpractices. This focus signalled a pivotal shift from the UK’s previously hands-off stance on tech, wherein 16 | NACFB
the responsibility for content moderation was largely shouldered by the platforms themselves. Such a lenient attitude had once positioned the UK as a beacon in Europe’s emerging technology landscape. However, two significant incidents forced something of a rethink. In 2017, the heart-wrenching suicide of Molly Russell, a 14-year-old who was exposed to a barrage of harmful Instagram content, shook the nation. Subsequently, in 2018, the controversial Cambridge Analytica episode revealed the industrial-scale, unauthorised harvesting and manipulation of massive amounts of Facebook user data for political objectives. These incidents bolstered Westminster’s resolve to adopt a firmer stance against ‘big tech’.
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The Online Safety Bill, while noble in its intent, has been mired in debate and contention
The Bill’s primary target appears to be user-to-user platforms such as Facebook and search engines like Google. However, its tentacles spread across a variety of online services. The intent behind the Bill is to implement a stringent regulatory framework around these services, placing duties related to illegal content, child protection, user empowerment, news content, freedom of expression and privacy, fraudulent advertising, and more. At the helm of this regulation is Ofcom. Empowered with significant authority and new powers the regulatory body will be able to levy heavy fines on non-compliant providers and even subject senior managers to potential imprisonment for not providing the requisite information. The wide-ranging scope of Ofcom’s authority, especially the so-called ‘spy clause’, has led to concerns. These revolve around the potential infringement on encrypted communications, and by extension, privacy.
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Whilst global tech giants have had the luxury of preparing for such regulatory landscapes for years, smaller businesses might find themselves caught in the crosshairs unexpectedly
Contentious legislation The Online Safety Bill, while noble in its intent, has been mired in debate and contention. High-profile encrypted communication platforms, including Signal, WhatsApp, and others, have expressed serious reservations, urging a reconsideration of specific components. The overarching concern is around the potential erosion of user privacy and the technical infeasibility of breaking encryption reliably. However, amidst the broader debate, the potential ramifications for smaller and adjacent entities, like brokers and lenders under the NACFB, must not be overshadowed. The Bill might primarily target larger platforms, but according to some reports it could have a cascading effect on up to 25,100 businesses, saddling them with a collective £250 million cost to sidestep legal action by Ofcom. For these businesses, the road to compliance is not only expensive but also fraught with uncertainty. Whilst global tech giants have had the luxury of preparing for such regulatory landscapes for years, smaller businesses might
find themselves caught in the crosshairs unexpectedly. The current lack of clear guidance on which entities fall under the ‘regulated company’ category exacerbates these concerns. For NACFB Member brokers and Patron lenders, this paints a complex scenario. The fluid nature of their finance transactions and interactions with clients, often occurring through digital channels, could potentially bring them under the purview of this Bill. It is conceivable that a broker’s communication platform, or a lender’s user-to-user service, might need to adhere to the same regulations as a massive social media conglomerate. The Online Safety Bill, while commendable in its pursuit of a safer digital Britain, presents a labyrinth of challenges for entities across the spectrum. For the NACFB’s brokers and lenders, it’s a stark reminder to ensure they’re not only compliant but also aware of the shifting sands of the digital regulatory landscape. The era of online safety is clearly upon us, and it’s imperative for all stakeholders to navigate it judiciously. NACFB | 17
Ask the Expert
From A to B Corp
Q Phillip Bate Director of Business Banking Triodos Bank UK
T
he B Corp movement was first established back in 2006 but has significantly gained momentum in recent years. Many readers will now be familiar with the term, but what does achieving B Corp certification mean in practice? Phillip Bate, director of business banking at Triodos Bank UK – a certified B Corporation since the movement launched in Europe in 2015 – explores why businesses might seek B Corp status and what it means for brokers working with clients who have already achieved this.
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In order to become a B Corp, businesses are certified by the non-profit B Lab to voluntarily meet rigorous standards of social and environmental performance, accountability and transparency.
A
What kind of businesses become B Corps? According to B Lab’s latest figures, there are currently 7,605 B Corps around the world, in 93 countries and 161 industries. Many people associate B Corp status with clothing and food brands – with household names such as FatFace, Berghaus and Innocent Drinks on the list – but the movement is also a growing force in the services and financial sectors.
What is a B Corp?
Why might a business be motivated to gain B Corp status?
Certified B Corporations do business in a particular way. Instead of operating purely to generate profit, they prioritise working for social and environmental good. Ultimately, the B Corp movement aims to drive a shift towards an economy that’s better for workers, communities and the environment.
B Corp certification is a means of distinguishing credible businesses that are genuinely committed to doing good. Achieving this status can help a company to build trust with consumers, communities and suppliers, attract and retain employees and draw mission-aligned investors.
18 | NACFB
What do brokers need to bear in mind when working with B Corp clients – or those seeking certification? The rigorous B Corp verification process takes into consideration factors such as a company’s business model, its operations and structure. Plus, a business can benefit from choosing services from other organisations in the community – for example, additional impact points can be awarded for selecting an ethical finance or banking option. B Corp businesses are required to undergo the certification process every three years, so adhering to practices that help protect their B Corp status will be important to them. Whether you’re working with a client seeking B Corp status, or looking to maintain their certification, helping them find financial solutions that reflect their values can be important. That could mean looking for lenders that are responsible and transparent about how they work and who they lend to, and the extent to which environmental and social impact underpins their own practices. For more information on the B Corp movement for UK-based companies visit: bcorporation.uk
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Special Feature
Advertising Feature
Taking you further Using innovation to drive SMEs Matt Barton Sales Director Funding Circle
T
he economic landscape continues to be tricky for small businesses, with interest rates remaining high, the cost-of-living crisis and ongoing uncertainty about the economic environment. We’ve been supporting small businesses through the good and bad since 2010, and to date, we have lent more than £16 billion to around 140,000 small businesses. In the current climate, we’re on a mission to elevate our service now more than ever – so we can be there for even more small businesses and help them continue to grow and thrive. Here’s a look at what we’re doing to support you as a broker and your clients this year.
Streamlining processes We’re continuing to see strong demand for finance, with our 33-strong introducer team working on more than 40,000 broker applications in 2023 so far already. To operate at this scale, efficient processes are critical, and we’ve invested in innovative technology and processes to make this happen. Applying for a loan takes just 10 minutes, decisions take as little as one hour and funds are typically paid within 20 | NACFB
48 hours, if approved. Limited companies can also get their personalised quote with no impact to their credit score, which means your clients can assess their options with complete peace of mind. For our introducer community, we’ve also built a dedicated portal which allows brokers to track the progress of their applications – driving transparency and good communication between us as the lender, brokers, and their clients.
Expanded product range With the needs of SMEs constantly changing, we’ve improved our product range to solve the problems small businesses face. We recently launched FlexiPay by Funding Circle, a brand new business credit card that allows you to spread the cost of business bills, invoices and everyday purchases over three months. This product is specifically designed to offer more flexibility and tackle the late payments, long terms and cash flow gaps that are widespread issues for SMEs, as well as helping them take more opportunities, bulk buy stock and more. Alongside our business loans, we’ve also once again been accredited to offer the government-backed Recovery Loan Scheme (RLS), so we can offer more businesses the finance they need to adapt during challenging times. What’s more, thanks to our innovative technology you only need to make one application, which doesn’t impact the customer’s credit score, and we’ll assess which loan product the business is eligible for.
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Small businesses are essential to their local areas, and we want to support them as they drive value in their communities
Events like this only help to nurture the relationships we have and improve communication and efficiency, so we’re already looking forward to hosting another next year.
Backing small businesses and big players Small businesses are essential to their local areas, and we want to support them as they drive value in their communities. Through our sponsorship of Premiership Rugby, now in its second season, we’ll be creating fun content with some of the top players, running competitions and helping to promote businesses at games – to show the challenges small businesses face, and how we’ve got their back through them all.
Looking to the future
Staying connected is key We work hard to continually share our knowledge with our brokers and have run almost 1,500 face-to-face meetings over the last year to keep you in the loop about our new products and processes. With our team having a close relationship with their brokers, we also wanted to take the time to celebrate the work we’ve done together by holding our first ever Broker Summer Party. Hosted at the Kia Oval in London, the event saw former cricketer and keynote speaker Jeremy Snape give a talk on the power of a growth mindset, before all the guests received a tour of the iconic location and networked over a summer BBQ.
With an improved offering and streamlined processes to better support our customers, we’re looking forward to being able to support more businesses despite the wider economic challenges. One final thing I’d like to add is this new, multi-product offering combined with better processes and a fresh customer focus will make it even easier for businesses to access the finance that suits them. Our introducer community is key to this mission – having lent £300 million to more than 3,000 SMEs this year already – and we’ll continue to nurture these relationships to maintain the high-quality experience for customers, and ultimately to say yes to even more businesses. To find out how Funding Circle can help your clients, email the introducer team on broker@fundingcircle.com or call 020 3667 2208. NACFB | 21
Special Feature
Bridging oceans Broking all over the world Norman Chambers Managing Director NACFB
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ow does your business approach problem solving? Here at the NACFB, the problems the organisation and the community face tend to unearth multifaceted dilemmas. However, the solution to addressing key industry-wide troubles, although not always straightforward, can sometimes lie in a healthy blend of introspection and knowing where to look externally. The trade body believes in learning not just from its experiences but also in drawing parallels with other sectors. This year, for example, the UK’s intermediary-led insurers were also grappling with Consumer Duty implementation and the ever-evolving dynamics of effective commission disclosure. Viewed correctly, such quasi-external comparators provide the Association with a framework, an alternative lens, and a starting point from which it can delve deeper into commercial finance practices. Yet, in an increasingly interconnected world, the quest for knowledge and improvement does not always need to be confined to within UK borders. Sometimes, in order to solve a problem, you have to pack a suitcase.
Going global Recognising the power of global collaboration, the NACFB approached counterparts in both the United States and Australia. Our aim was twofold: to gain a broader understanding of how the commercial lending landscape is sculpted in these jurisdictions but also to uncover insights that could potentially refine our own approaches here in the UK. From the United States, we spoke to Scott Wheeler, a seasoned finance professional with over 40 years of industry experience. 22 | NACFB
As a member of the National Equipment Finance Association (NEFA), Scott possesses a wealth of knowledge and an acute sensitivity to the pulse of the American market. Offering perspectives from down under is David Gill, the former CEO of the Commercial & Asset Finance Brokers Association of Australia (CAFBA). David’s unrivalled experience and insights provide another valuable lens through which we can seek to better understand the ins and outs of the Australian market. Such an exploration into the commercial finance landscapes of these three anglosphere nations – the UK, the US, and Australia – reveals that despite cultural and regulatory differences, there are underlying truisms in the spaces that transcend borders and span oceans. As we probe further into the global nuances of intermediary-led commercial finance for small businesses, we aim to uncover universal truths, compare and contrast divergent approaches, and, perhaps most importantly, learn from each other’s experiences and strategies.
Lender/broker dynamics In both Australia and the US, the commercial finance landscapes have matured and evolved, paralleling the UK’s own journey in understanding, and catering to the needs of SME borrowers. Crucially, discussions with David Gill and Scott Wheeler reveal a shared appreciation for intermediaries across these markets, albeit with some distinct differences in their respective approaches and challenges. David Gill, representing the Australian perspective, emphasised the significant role of intermediaries, with a remarkable: “…72% of commercial equipment finance currently being broker sourced”. This statistic is reflective of a broader trend where Aussie intermediaries, many with banking backgrounds, play a pivotal role, neatly mirroring their British counterparts. This broker-centric model, Gill shared has fostered: “…a strong sense of trust and reliance from lenders,” who can “confidently outsource” their distribution channels to such skilled professionals.
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Embracing the improvements and advancements made by others on its foundational work is a hallmark of a modern, progressive society
Scott Wheeler’s insights paint a picture of a US market in a comparative state of flux. Whilst American commercial lenders still seem to recognise the vital role of intermediaries in sales, particularly within a variable cost framework, the current climate is one of “transition and recalibration”. As Wheeler points out, there is a discernible “…shift towards fostering relationships with intermediaries that align more closely with lenders’ long-term objectives,” especially considering “tightening capital” and a focus on “portfolio performance”. Such a strategic realignment mirrors recent shifts observed here in the UK this year, where many NACFB Members have pointed toward a trend of lenders prioritising bigger ticket transactions as the market seeks to find stability.
Traversing the regulatory landscape Despite operating under vastly different regulatory frameworks, both Australia and the US have shown a strong commitment to maintaining high industry standards alongside the ability to adapt effectively to evolving regulatory landscapes. Gill told the NACFB that in Australia, commercial and asset finance brokers operate under “a self-regulating framework,” – a real point of pride for the team at CAFBA. Much like the NACFB, the association focuses on elevating industry professionalism, evident in initiatives like the CAFBA Education Council and the Professional Standards Scheme (PSS). These efforts aim to maintain self-regulation while ensuring high standards. Gill highlighted the introduction of the
PACE digital education platform, and how the Australian Certified Lease & Finance Professional (CLFP) accreditation are making “… significant strides toward demonstrating professional excellence.” The US commercial equipment finance industry, Wheeler shared, is navigating through a period of “regulatory transformation”. Much like the UK and this summer’s introduction of the FCA’s Consumer Duty, developments across the pond have included new state-level disclosure requirements and federal regulations like Rule 1071 of the Consumer Financial Protection Bureau (CFPB), mandating additional data reporting. Wheeler outlined that these changes have initially been “very challenging”. Whilst they are expected to standardise transparency, they could “…possibly increase the cost of lending due to heightened compliance requirements.” This regulatory evolution would spark an all too familiar debate among UK commercial finance professionals, one often echoed by NACFB Members. Here a universal question arises: at what point do regulatory and compliance requirements begin to hinder the provision of viable and sound intermediary services? The notion that some international jurisdictions enjoy 'lighter touch’ regulatory environments in broker-led small business lending is seemingly for the birds. Global regulators of all varieties face a delicate task of balancing the drive for growth through targeted lending with the imperative to protect borrower interests. In this balancing act, it seems there is much to NACFB | 23
learn from the Australian approach, where a confident blend of selfregulation and professional development initiatives appear to have created a relatively robust and responsive industry framework.
The impacts of COVID Uniquely in 2020, the US, UK, and Australia all faced precisely the same challenge. Unlike historic economic downturns – which can have more regionalised variances – the pandemic struck with equally unforgiving ferocity and did not take exception to borders – a distinctly tragic leveller. Both Gill and Wheeler shared that the post-pandemic period has strengthened the SME funding market in both countries, albeit through different government interventions. In Australia, the government's stimulus measures, such as the Instant Asset Write-Off Scheme, seemed to have “positively influenced the commercial lending sector”, encouraging capital investment and helping to maintain a robust lending landscape. In contrast, Wheeler outlined how the US economy was, “…heavily subsidised during, and immediately after, the pandemic.” Therefore, he said, access to capital remained relatively strong, with intermediaries enjoying multiple funding options through various funders willing to provide capital across most levels of credit risk. Much like the UK, global post-pandemic trading conditions have required brokers and lenders to adapt. All jurisdictions have had to traverse a landscape redrawn by state intervention, one where the very perception of finance has been altered significantly. Looking ahead, a few key players look set to dominate the Australian SME sector, with technology and AI expected to enhance broker efficiency rather than replace them. Here also, non-bank lenders and fintechs are emerging as significant players. Gill outlined how Australia’s commercial finance industry is poised for evolution, with CAFBA leading the charge in education and professional standards, ensuring the industry's long-term sustainability. Stateside, application-only transactions are prevailing in the smaller ticket space, with funders increasingly seeking more information for larger transactions. Creative financial structures are also gaining 24 | NACFB
traction to counter rising interest rates. Wheeler was keen to point out that the US outlook remains strong, with a focus on efficient processes, creative products, and technological advancements whilst intermediary-led funder partnerships are only expected to grow, adapting to market changes.
Echoes of the past As Britain seeks to embody a new global identity, there is value in adopting a stance of observation and learning from other nations. Whilst the country has historically viewed itself as a trailblazer in various fields, recent years have brought a necessary introspection, particularly regarding the legacies of its past. Yet, amidst these reflections, Britain’s contributions to banking and lending infrastructure stand as notable achievements. Our nation’s history in pioneering technologies and systems is undeniable – from railways to early computing innovations. However, the progress made by other countries in these domains serves as something of a compelling lesson. The Japanese advancements in rail systems, the strides in shipbuilding by the Chinese, and the leaps in technology by Silicon Valley – all stemming from initial British innovations – are but testament to the continuous evolution of great ideas. This reality presents an opportunity for Britain, particularly in its finance sector. Recognising that the UK has at times led the world in societal advancements, it is equally important to acknowledge that maturity and confidence as a nation are reflected in the ability to in turn learn from the global community. Embracing the improvements and advancements made by others on its foundational work is a hallmark of a modern, progressive society. In this spirit, the UK’s finance sector will benefit from engaging with and learning from international practices and approaches, such as those in the US and Australia. By observing how other nations have navigated similar challenges and adapted to changing landscapes, Britain can not only honour its past contributions but also ensure continued relevance and leadership in the global financial arena.
Up to 75% LTV available Most asset classes considered No maximum loan size
Product and criteria information correct at time of print (10.11.23)
04-09-03 (1)
Special Feature
Can we solve the UK’s housing shortage? And why private sector finance might be key Ian Humphreys Founder & CEO Brickflow
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rickflow recently published a comprehensive white paper on Solving the UK’s Housing Shortage, with input from 12 leaders from across the property sector, including Knight Frank PwC, property finance brokers, developers, lenders, and the NACFB itself.
It’s the first report of its kind to provide any in-depth analysis of the issues hindering UK housebuilding, including the government’s somewhat scattergun approach to housing policy. With a housing deficit of approximately 4.75 million, the white paper offers an actionable framework for moving forward, which the government itself has failed to produce. Whilst the barriers to housebuilding are complex and interwoven, our findings show that the ‘toxic triangle’ of the planning system, the land market and insufficient access to funding are three of the leading barriers, combining to cause SME housebuilder numbers to drop by 80% since the early 1990s (Home Builders Federation).
Inaccessible funding Despite significant government investment in funding initiatives, industry consensus is that the private sector can make more headway in addressing funding as a barrier to building. Indeed, as the NACFB’s managing director, Norman Chambers, shared in the white paper: “The impending government, irrespective of political orientation, must prioritise building homes en masse. However, it should not be achieved by reinventing the wheel but by maximising existing resources and ensuring the finance community’s 26 | NACFB
integral involvement in any steps forward.” So, just what are the issues, and how do we move forward?
Borrowing to build Housebuilding requires considerable upfront investment, hence the need for finance. However, 41% of SME housebuilders said the sites that they were interested in had stalled due to finance-related reasons (FMB’s House Builders’ Survey 2022). Lenders have undoubtedly tightened their lending criteria since the 2008 financial crash, but this isn’t the main factor contributing to finance being less readily available. The reality is that with every 1% increase to the base rate, a developer needs £10,000 more in equity per £1 million borrowed. With a 5%+ increase in interest rates, based on the UK’s £8 billion development finance market, £400 million more is needed in equity by developers to borrow the same amount as they could just two years ago. Understandably then, there are calls for government guarantees to lenders to help bridge the gap between current lending terms and higher leverage ratios.
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The ‘toxic triangle’ of the planning system, the land market and insufficient access to funding are three of the leading barriers
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Whilst policy of course impacts house building, it’s the private sector, rather than government, who can make a real difference when it comes to funding
Government funding Government-backed initiatives to stimulate house building are welcomed, and there’s been many schemes, such as the £3 billion Home Building Fund (launched 2016), the £7.1 billion National Home Building Fund (active from 2020-2022), and the £11.5 billion Affordable Homes Programme (set to run until 2026). However, industry leaders who commented on Brickflow’s White Paper unanimously highlighted their shortcomings. Andrew Lazare, director at Mint Finance, shared that, “…overall awareness of these schemes remains low, and they’re complex and difficult to navigate.” A sentiment echoed by Gareth Davies, head of business development at Hodge Bank, who believes the difficulty and length of time to secure government funding, “…put people off applying in the first place.” Adding that the reality of government initiatives is that they work for some developers, but not all, and the housing shortage cannot be altered solely by government-funding schemes.
The lending market Whilst policy of course impacts house building, it’s the private sector, rather than government, who can make a real difference when it comes to funding. Despite soaring inflation, interest rate hikes and economic challenges, there’s still plenty of credit available to property developers – if they know where to find it. The problem is a lack of access to the lending market. Most developers – and indeed brokers – who don’t specialise in commercial real estate (CRE) funding, normally know two or three
trusted lenders, which they likely revisit for every deal. However, equity requirements, rates, and criteria vary hugely between lenders, so by not shopping around, borrowers may fail to find the best loans, potentially losing hundreds of thousands of pounds.
The need to digitise The primary reason for the lack of market transparency is the absence of technology. Borrowers and intermediaries cannot easily compare the market; the process of searching for funding and applying has, until recently, been a manual process, with the CRE finance industry being one of the last to digitise. The Brickflow platform, a digital marketplace for the specialist property finance industry, allows borrowers and brokers to instantly compare bridging and development loans from across the whole of the market and apply online. But this is just the start of the journey. The private sector must improve access to development finance through investment in digitisation of the wider market. And it’s vital for lenders, brokers, and developers to adopt the technology already available, thereby attracting more investment into digitising the sector. Technology can eliminate inconsistent loan application processes, uncertainty around lenders’ criteria (resulting in a high proportion of rejected loan applications) and lengthy credit-approval wait times. Most significantly though, a transparent digital market can help eliminate inefficient equity deployment, so the money borrowers save can be used to accelerate business growth and ultimately deliver more housing. NACFB | 27
Special Feature
A tangible difference Why ethical banks are key to navigating challenges Joshua Meek Head of Impact & Sustainability Unity Trust Bank
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he World Economic Forum declared 2023 as the year of the ‘polycrisis’. In the UK, cost of living, high interest rates, political uncertainty and the effects of climate change are impacting organisations of all sizes. For organisations to adapt and grow during this period, banks can play a critical role in helping to build confidence, set plans and achieve goals with their customers. Organisations may feel there is a tension between choosing to borrow from an ethical bank and securing the funds they need. Will the rates be competitive? Will I get good service as a customer? Will an ethical bank want to work with me? The answer to the above is yes; ethical banks provide a wide range of services to all types of organisations which deliver impact in their communities. Banks like Unity don’t just serve charities or third sector organisations. Unity believes every business has the potential to contribute to a better society. From specialist and traditional care home providers to small businesses providing local job opportunities, ethical banks will work to understand how an organisation contributes to social, economic, or environmental outcomes. 28 | NACFB
The likelihood is, if you’re making a positive impact through employment, delivering goods and services in key sectors or driving forward the green economy, banks like Unity will want to meet you and find out more. Furthermore, lenders like Unity specialise in the sectors that positively contribute to people and planet. They often have relationship managers with experience in areas like health services, education and housing. In the current climate, it’s more important than ever to have support from your bank and an effective and knowledgeable relationship manager who understands the strategic direction of your business, its goals and potential challenges. Partnering with an ethical bank is just one way that businesses and organisations can make a tangible difference to society and, in turn, build their own credentials with customers and stakeholders, all of whom are placing greater emphasis on ESG when it comes to selecting commercial partners. There’s no doubt that conversations around lending are changing. After 14 years of low base rates in the UK, businesses now have to consider a new economic environment. At Unity, we’re proud to have 40 years of solid experience and social good behind us. Despite the challenges, enterprising organisations and businesses still have the courage and desire to invest in growth. Choosing to partner with an ethical bank can be an integral part of an organisation’s financial strategy, enabling entrepreneurs and business leaders to secure the investment they need to achieve their goals whilst also making a meaningful positive impact on society.
Four tips to maximise asset valuations To get the best valuations for your clients, here are the team’s 4 top tips to help maximise the value, right first time...
Tip 1 on new assets from Claire “Always supply supporting documentation if you have it. A specification or quotation is really helpful and enables us to fully understand any incremental costs.”
Tip 2 on multi assets from Kai “When supplying details of more than 5 assets, please provide all the information in a spreadsheet covering make, model, age, and usage plus include additional specifications as these can have a huge impact on the valuation.
Tip 3 on specialist assets from Andy “It is often critical to understanding the asset and what is included within the transaction, such as options and warranty periods. It is also helpful to see supporting documentation in the form of quotations, scope of supply, or an order form as opposed to generic brochures.”
Tip 4 on refurbished assets from Nicola “If an asset is refurbished let us know when, who carried out the work, and what has been replaced. These details often have a positive impact on values.”
Dedicated broker support: 01254 685850 newbusiness@haydockfinance.co.uk
FOR INTERMEDIARY USE ONLY. Haydock Finance Ltd is authorised and regulated by the Financial Conduct Authority. Financial Services Register no. 722545.
Special Feature
Opening doors Unlocking the power of invoice finance Fiona Parkinson CEO Invoice Finance Close Brothers Invoice Finance
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ne of the key barriers to growth for SMEs in the UK is late payments, with government statistics estimating that companies were on average owed £22,000 in 2022. Close Brothers most recent Business Barometer, which surveys 900 SMEs throughout the UK and Ireland, highlighted that 40% of businesses missed a form of viable opportunity due to the lack of available finance in the past 12 months. Invoice finance remains a fantastically underutilised tool for companies struggling with late payments and is useful across sectors and sizes of business. Often referred to as ‘alternative’ lending, the inherent flexibility of such a tool is why we see companies continue to use this form of finance, with it able to grow in line with their business.
Bridging the knowledge gap Invoice finance is a tool that helps open the door for future investment, both short-term and long-term, and can support SMEs in stable or more unpredictable environments. Just under half of the SMEs we surveyed were aware of invoice finance, but many were also using loans (42%), credit cards (32%), and overdrafts (28%) as a primary source of funding. For those advising SMEs on their funding options, having providers that have high levels of communication is important. Additionally, highly functional platforms, access to dedicated support and a flexible approach are essential for those companies deploying a successful invoice finance facility. Brokers and financial advisors can maintain 30 | NACFB
successful relationships and credibility with clients by working with companies that look after their customers.
Using invoice finance Often referred to as cash flow solutions, invoice factoring, invoice discounting and asset-based lending (ABL) allow companies to release the value of unpaid customer invoices and other assets on their balance sheet. This can provide a financial boost, as well as lessening challenges related to customers paying late. Available funds can be drawn down as necessary, mirroring both periods of growth and decline. This offers increased levels of flexibility compared to many other financing solutions enabling businesses to access valuable working capital when situations are changing rapidly. Used in a broad range of scenarios it can both help keep up with growth of competitors or allow flexibility after a more challenging trading period.
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Just under half of the SMEs we surveyed were aware of invoice finance
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With invoice discounting a facility is confidential, the user maintains control over the collection of payments and the relationships with clients
For companies that find their trading or financial health has been impacted by the cost of doing business or energy prices, using assets as security can offer a way to improve liquidity that doesn’t rely on a perfect credit score. Plus, these solutions can be completely confidential, with no need to declare any details of funding decisions to customers or partners. Similarly, invoice finance and ABL can provide an excellent way to restructure lending that has become unsuitable since it was taken out.
Invoice finance can support many businesses needing additional cashflow to navigate higher energy costs, supply chain issues or late payments but it can also be used to invest and grow. A survey by the British Chambers of Commerce found that 73% of the almost 5,000 companies it polled had faced hiring difficulties in the July to September quarter. Firms are still trying to attract talent but should also find ways to upskill their current employees to ensure talent is retained and nurtured. Using invoice factoring can support this two-fold, additional capital released can be used for training and improving efficiency. Whilst also freeing up time and energy of managers and existing finance teams by removing payment chasing from their day-to-day workload.
With this type of funding, each facility can be tailored to individual circumstances. This can include capital to refinance existing agreements, or a higher lending limit to guarantee headroom for future events like MBOs and acquisitions. With invoice discounting a facility is confidential, the user maintains control over the collection of payments and the relationships with clients.
Finding added value
Invoice factoring works in a similar way but also removes the administrative task of chasing payments by outsourcing this to the facility provider. This may be a suitable option should there be more of an appetite to free up time in a business.
Brokers will often be best aware of the specific pain points for their clients. Whether it is cashflow pressure, limited ability to borrow against tangible assets or concern about longer payment terms for a new customer.
Successful solutions
We see an increasing trend in a holistic approach to problem solving for their clients, choosing to incorporate specialist finance for investment opportunities that businesses may not believe attainable in the current climate, with simple implementation and opportunities for flexible long-term growth.
The changing economy and higher cost of trading are stretching many SMEs. During challenging times innovating and investing can seem difficult, with many leadership teams focusing on survival.
NACFB | 31
Special Feature
Advertising Feature
Creating opportunity Continuing to support through tangible changes
Jonathan Wilcox Head of Business and Commercial Banking Intermediaries Lloyds Bank
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ince becoming the new head of intermediaries here at Lloyds Bank, I’ve had the chance to meet with many of you. It’s clear that there is a huge opportunity for the intermediary market in helping small businesses with funding and financial solutions. We all play a vital role with this, and we’re already looking at ways to improve how we serve you and the SME market in 2024. One of the ways to achieve this is by putting actions against the feedback we receive, not only from our brokers, but from our business development managers who are out there working with you day in, day out. Building on those relationships has already meant a number of tangible changes to our proposition for clients in 2023, including development of our part-amortising loan products, extending to a 40-year term in real estate, launching a pilot for our trading sectors, and supporting smaller deals within the healthcare sector. We’ve also launched an enhanced commission proposition for trading and real estate introductions, and enhanced pricing discretion in asset finance. Next year looks set for more of the same, with plans to further enhance your clients’ experience, helping to diversify your income, and provide a mix of lifetime commissions and one-off payments. We have a number of updates to look forward to, with new product innovations across our merchant services offering Cardnet, and invoice finance, through a digital factoring solution, to name just two. Moreover, we’ll be making it easier for you and your clients to do business with us, with a new 32 | NACFB
end-to-end lending platform that should be online next year. In addition to this, our business development managers will be as focused as ever; working with you to help shape deals, sharing their knowledge and expertise to ensure we can make decisions and get the right outcomes for your clients. I’ve really enjoyed meeting lots of you since joining the team to discuss how we can support you even more. I appreciate that we are only one of many lending options for your clients, so it’s imperative that we continue to build on the relationships we have and do all that we can to encourage new brokers to our panel, and new opportunities, by giving your clients what they need, when they need it. Have a wonderful festive break, and I look forward to working with as many of you as possible in 2024. All lending is subject to status. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under Registration Number 119278.
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We’re already looking at ways to improve how we serve you and the SME market in 2024
Delivering for you
Our multi-product solutions and specialist sector teams dedicated to healthcare, real estate, and trading businesses, give you a single contact point, and ensure your clients get the funding option they really need. Contact your local Business Development Manager or visit our website.
lloydsbank.com/ businessintermediaries
All lending is subject to status. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under Registration Number 119278.
Industry Insight
Building up and out SMEs need greater support in their funding search
Ric Simmons Managing Director Praetura Asset Finance
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from major thought-leaders and stakeholders from across the finance industry; including the British Business Bank, the Federation of Small Businesses, the NACFB’s chair Paul Goodman and a host of NACFB Patrons, Members and Partners including Responsible Finance, PMD Business Finance, the AFS Group, MAF Finance Group, Anglo Scottish Asset Finance and many more.
ew research from Praetura Group’s Lending Division has revealed what many of us know all too well; that UK SMEs are struggling to access the finance needed to grow amid ongoing times of economic uncertainty.
Topics covered in the report include asking what finance SMEs need, what the current state of the lending landscape looks like, how lenders can offer more, what the outlook for the future is, and how we can build a better finance sector to support SMEs across the UK.
59% of SMEs and their broker partners surveyed say that it is more difficult now to access the funding they need to grow – with almost three-fifths of UK businesses saying access to capital has decreased in the last five years.
Meaningful growth
Our lending division surveyed and interviewed over 400 business owners, directors, finance brokers, and advisers to discover their thoughts and opinions about the current state of the SME funding landscape in the UK. Results from the survey formed the basis of the new ‘Fund the Gap’ report that is now available to download from our website.
What we found The UK SMEs that we surveyed said that servicing demand is their biggest challenge, not creating it. Accessing funding is one of the biggest challenges firms face, according to 46% of the small businesses surveyed, which follows 68% highlighting rising costs as the biggest challenge to businesses. This compares to only 24% of those surveyed indicating that business development was holding them back. It’s a wide-ranging report which is not wholly focussed on the survey responses. Instead, it collates a range of comments and contributions 34 | NACFB
In the foreword to the report, Dame Teresa Graham DBE, SME finance champion and chair of the SME advisory group at UK Finance writes: “There are some hard truths that we all must face when it comes to UK SMEs accessing finance – the vast majority of SMEs are struggling to grow at a meaningful rate.”
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66% of SMEs use brokers and advisers to navigate the increasingly complex set of finance options available
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Mainstream lenders play a crucial role in the success of our specialist finance market and through this support many small businesses, but the reality is a significant portion of the market is still going underserved
“The common problems limiting SMEs’ potential are access to markets, talent, infrastructure and other known issues, but we rarely talk about patient capital and leadership. Patient capital is finance on their terms, from a provider who takes time to understand their needs and puts their goals first. And while leadership is slightly more nuanced, delivering an education that actually reaches our SME leaders is essential for solving avoidable business failure,” Graham added. What comes through loud and clear throughout the report is the important role that brokers and advisers play in helping and guiding SMEs to the most suitable funding options for each specific situation and that as an industry, whether a broker or funder, knowing your customer is key and taking the time to understand the whole picture – the past, the present and the future – of each individual SME is imperative.
Identifying the underserved Other notable elements from the report reveal that only 27% of institutional lenders take the time to understand their SME clients, whilst some 66% of SMEs use brokers and advisers to navigate the increasingly complex set of finance options available.
Peadar O’Reilly, CEO of Praetura Lending Division, commented: “We all need to rally around our SME community to offer the advice, backing and environment that will create a meaningful platform for growth. Mainstream lenders play a crucial role in the success of our specialist finance market and through this support many small businesses, but the reality is a significant portion of the market is still going underserved. That’s why collaboration between specialists and the institutional lenders is so important for the future.” Based on findings and commentary from across the lending landscape, Praetura outlines six key areas the industry needs to focus on to help UK SMEs get access to the finance they need to succeed: collaboration, education, innovation, transparency, diversity, and accessibility. Our Fund the Gap report underscores a critical juncture for UK SMEs, revealing a pressing need for cohesive action in financing. With collaboration and understanding at its heart, the future of SME growth hinges on a finance sector that prioritises accessible, transparent, and diverse funding options, and on education that empowers leadership. It’s time for the industry to fully embrace the role of nurturing SMEs by providing the patient capital and insightful guidance necessary to fuel their expansion in these uncertain economic times. NACFB | 35
Industry Insight
Imagine all the SMEs… Simply accessing credit to unlock growth Rob Keown-Boyd Co-founder and CEO multifi
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magine being a passionate entrepreneur with a clear vision for your business – the desire to expand, create jobs, and make a meaningful impact. However, as you take those bold steps toward growth, you encounter a significant roadblock: a shortage of funds. It’s not just about the numbers; it’s about the emotional toll. It’s the uncertainty, the feeling of being trapped in a financial maze with no clear way out.
The hidden culprit: cashflow In the world of SMEs, cashflow problems loom as the primary threat. According to U.S. Bank, a staggering 82% of business failures are attributed to cashflow issues. These aren’t just cold statistics; they represent the very real struggles of business owners who face a constant battle to keep their operations afloat. The burden of ensuring that bills are paid, suppliers are satisfied, and employees are compensated on time can become overwhelming. It’s not just a matter of survival; it’s about achieving the vision you had for your business.
The need for simplicity Traditionally, gaining access to credit has been a complex and arduous process involving a labyrinth of paperwork, endless meetings, and frustrating delays. The SMEs of today need a simpler, more straightforward solution. Imagine if securing credit was as easy as a few clicks, with funds available when needed, so that business owners can focus on what truly matters – growth. This is where innovative financial solutions and simplified access to credit can address SMEs’ challenges. 36 | NACFB
Imagine a world where SMEs can swiftly determine how much credit is available to them. Picture a scenario where once approved, businesses can make unlimited payments to suppliers within their credit limit. This isn’t just about finance; it’s about providing businesses with the stability and confidence they need to thrive.
The promise of a brighter future In a financial landscape that often feels like a battleground, solutions that simplify access to credit can act as lifelines for SMEs. These businesses are the lifeblood of our economy, and they deserve support that’s accessible, efficient, and tailored to their needs. It’s not about any specific product or company; it’s about the broader concept of unlocking potential. Simplified access to credit can empower SMEs to seize opportunities, navigate challenges, and ultimately build a brighter future for themselves and their communities. And of course, brokers are an integral part of that journey. As we navigate an ever-evolving economic landscape, lenders and brokers must continue to explore innovative ways to support the growth and resilience of small businesses. Simplified access to credit holds immense promise. It’s a step toward a future where SMEs can thrive, unburdened by the complexities of traditional finance.
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A staggering 82% of business failures are attributed to cashflow issues
Industry Insight
Too soon for optimism? Market reflections after an eventful 12 months
Simon Adcock Regional Director for London and the South East Reward Finance Group
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ver the past year, the UK economy and wider lending market have been surrounded by seemingly unending political and economic uncertainty.
With seven Bank of England Base Rate rises in the past year alone, which followed an upward trend since December 2021, commercial finance has significantly and predictably slowed down owing to an increased nervousness. SME lending from main high street banks remains subdued and the demand for new finance continues to trend below pre-pandemic levels. In a recent study, 84% of finance brokers said banks are increasingly reluctant to lend to SMEs whilst 81% predicted a rise in demand for financing over the next six months. Discussions with our intermediaries indicate asset finance and leasing usage drifting up, while working capital finance has been reducing month-on-month, demonstrating that SMEs are having to pledge hard balance sheet assets to raise finance. 38 | NACFB
Although loan applications continue across the UK, borrowing criteria has tightened and deals are taking a lot longer to complete. This could be partly due to commercial property values falling 30% and residential dropping 5%. While this presents opportunities for some, it poses further challenges for current landlords, along with higher debt burdens as many fixed-term mortgages come to an end.
A forensic approach As we transition into a new era of customer-focused lending, the alternative finance market offers greater flexibility and evolving advice.
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SMEs are having to pledge hard balance sheet assets to raise finance
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Despite the pessimism… there seems to be a renewed sense of confidence following the most recent hold in interest rates
Lenders are taking a forensic look at various aspects of an SME’s business before devising a plan. This includes assessing needs and vulnerabilities to achieve the best outcome for all parties. Investors, Private Equity Houses and alternative lenders are continuing to display confidence and inject significant capital into the market. We’ve experienced this directly ourselves, recently receiving an additional £50 million funding boost to our lending facility from Foresight Group, which provides us with further capital to support SMEs. Despite the pessimism, political and economic uncertainty, and static bank lending of the past year, there seems to be
a renewed sense of confidence following the most recent hold in interest rates. I am sure many SMEs are now likely to seek new opportunities as their circumstances evolve, which will, in turn, increase demand for traditional forms of working capital finance and asset-based lending. My main takeaway from this is that, although we are still in uncertain times, we appear to have reached the peak of current interest rates. A view recently echoed in a talk I attended with the Bank of England which suggested that rates are likely to hold at their current level until the fourth quarter of next year, with a gradual reduction thereafter. The outlook for growth is optimistic but steady. NACFB | 39
Broker Voice
Reading the leaves Efforts to decipher market signals
Matthew Yassin Managing Director Aquilae Capital
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ou don’t need me to tell you that recent years in the commercial finance sector have been marked by a series of global events that have significantly impacted the market. As commercial finance brokers, we have all observed these changes closely, and I am sure that like me, you too have noted how they’ve influenced both lender and borrower behaviours and the cost of funds – the fundamental product of our industry. Current forecasts suggest that UK interest rates might peak between 5.75% and 6% by early 2024. However, given the ceaseless unpredictability of recent events, this outlook remains uncertain. Since December 2021, the Bank of England has raised rates 14 times in a row in an attempt to bring inflation closer to its 2% target. These efforts, however, have been continually challenged by both foreseen and unforeseen global occurrences, which have combined to destabilise the UK market. This situation leads to the question of whether we are nearing the peak of this rate-rising cycle.
The signal and the noise Looking ahead, expectations indicate that UK interest rates might not fall until mid-2024, potentially plateauing at around 4.5% by 2026. These predictions, based on current data, could well change rapidly, as seen in the past few years. The approach of using interest rate hikes to control inflation seems somewhat outdated in a market heavily influenced by global factors. In the period from April to June 2023, the annual growth for regular pay, excluding bonuses, was 7.8%, the highest since records began in 2001. This trend suggests that wages are outpacing core inflation, which is positive for the economy as it implies increased consumer spending power. However, this scenario is somewhat complicated by the fact that inflation remains stubbornly high. For example, the Core Consumer Price Index, which excludes energy, food, alcohol, and tobacco, rose by 6.1% in the 12 months to September 2023. This increase indicates that higher wages could lead to greater spending, potentially driving up inflation further. If viewed simplistically, one might conclude that we are not yet through with interest rate increases, especially considering the Bank of England’s ambition to maintain a 2% inflation rate.
Market response Mortgage data, coupled with the effects of 14 consecutive rate increases, suggests there’s a lag in the market’s response, indicating a potential downturn in retail sales. The data seems to be pointing in different directions for now, but the expected impact of the raterising cycle could lead to a “recession” on the high street, despite
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If viewed simplistically, one might conclude that we are not yet through with interest rate increases
the data on wage inflation. This situation remains speculative, and certainty will only come with time. In the mortgage market, the pressures are particularly evident. Rates have increased almost fourfold, with people refinancing 1.5% fixed rates at around 6%. The additional wages people are earning are largely being absorbed by these higher mortgage costs, further exacerbated by the current cost-of-living pressures. Though economic theory might suggest that rates should continue to increase to control inflation, the reality on the ground, as observed from my position in the industry, suggests that a more cautious, wait-and-see approach is warranted over the next six months. Beyond mortgages, the impact on the broader funding market is significant. Many development schemes have become economically unviable due to inflated land prices and increased finance and material costs. This shift is causing uncertainty throughout the finance market, affecting the attitudes and strategies of both lenders and borrowers. Bridging finance has emerged as a popular temporary solution, but it may only delay addressing the underlying market issues.
The broker’s vantage point From my perspective as a commercial finance broker, I see these market fluctuations firsthand. The insights gained from both lenders and borrowers indicate a market in transition, grappling with the effects of the rate increases. The uncertainty in the market is palpable, and it’s clear that a new cycle of adjustment is underway. We know the market will eventually stabilise in this new landscape, but the question remains: how much more volatility can it withstand? Whilst it appears we may be approaching the end of the current cycle of rate increases, the market’s ability to adapt to further unforeseen events will be crucial. As an intermediary, my observations of lender and borrower attitudes suggest a market on the cusp of change, seeking a new balance between controlling inflation and supporting economic growth. The market’s resilience in adapting to new conditions will be key in determining the future landscape of commercial finance. The insights gathered from both lenders and borrowers suggest a cautious approach to the current situation, with the market awaiting a new equilibrium between inflation control and economic support. And in the interim? We sit tight and continue to proudly and professionally serve our clients, just like we always have. NACFB | 41
Special Feature
Advertising Feature
Realising ambitions, Together BTL opportunities remain - if you know where to look Adam Kerfoot Underwriting Director Together
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n the dynamic landscape of the UK’s buy-to-let (BTL) mortgage market, navigating through a year of high interest rates and shifting economic conditions has been challenging for lenders and brokers alike. Yet there are still significant opportunities for informed commercial finance professionals and their clients. Below I share our perspective on the current state and future trends of the BTL market.
BTL opportunities The BTL market, despite the headwinds of high-interest rates and the cost-of-living crisis, often has a unique way of presenting those who endeavour with unique opportunities, particularly for experienced landlords. While first-time landlords might be cautious due to the current economic climate, experienced landlords are finding fertile ground in the buoyant rental market. Properties that offer the right yield continue to be attractive investments. This resilience in the BTL market is echoed by recent data showing sustained demand in the private rental sector, despite economic uncertainties. Landlords also have the chance to future-proof their investments by making improvements in anticipation of proposed regulatory changes. This proactive approach not only enhances property value but also aligns with evolving standards in the rental market.
Trends in customer demographics Here at Together, we have witnessed a real shift in customer demographics and preferences, with second charges growing 42 | NACFB
in popularity. We’re observing cases where individuals and limited companies, who already have a first charge at a low rate, are seeking additional financing to invest in new BTL properties or enhance existing ones. This trend seems to indicate a more strategic approach by landlords to leverage their existing assets in a rising interest rate environment.
Adapting to serve To meet these evolving needs, we have adapted both our offerings and criteria, demonstrating a commitment to supporting a diverse range of landlords. Our flexibility in the BTL sector allows us to assist everyone from first-time landlords to seasoned investors. Our services extend across various property types, from houses of multiple occupation (HMOs) to holiday lets, catering to a wide spectrum of investment strategies. As the BTL market continues to evolve, understanding these trends and opportunities becomes crucial for commercial finance brokers. The above insights shed light on the resilience of the rental market and the strategic approaches landlords can adopt. With expert guidance and flexible financial solutions, there is substantial potential for growth and success in the UK’s BTL mortgage market, despite the current economic headwinds.
Our dedicated team of experts remain on hand to help NACFB Members with their BTL clients, simply contact us via newbusinessteam@togethermoney.com or call us on 03301 739 437.
Empowering customers to achieve their Buy to Let ambitions. Discover how we can help all types of landlords with our flexible, award-winning offering: • Irregular or multiple sources of income, across a wide range of residential investments. • Multiple properties, from HMOs to holiday lets. • No minimum property value.
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For professional intermediary use only
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03301 739 437
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SPECIALIST BUY TO LET LENDER
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Get in touch with our team.
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• Larger loans available for many different types of purposes and completion timescales.
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Opinion
Property matters The external influences impacting real estate Tony Eden Head of Specialist Commercial Banking and Real Estate Finance Arbuthnot Latham
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nflation, changing yields, rent increases, and government policy have contributed to significant changes in the UK real estate landscape in a short period of time. As we continue to navigate the headwinds across the UK and wider economies, it is more important than ever for SME borrowers to engage with their debt providers.
Interest rates The decision by the Bank of England in early November to maintain interest rates at 5.25% was welcome news to borrowers. However, borrowers still find themselves at a crossroads as the likelihood of a decrease in interest rates in the near future looks minimal. Some members of the Monetary Policy Committee favour a further sharp increase and then steeper decline, whilst others prefer a longer period of higher interest rates to reduce inflation. The impact of variable interest rates has been significant for borrowers in servicing their debt commitments. This can lead to working capital or cash flow issues, which my colleague, Jamie Chaplin, sales director of our asset finance subsidiary Renaissance Asset Finance touched on in the September issue of this magazine.
The rental market and cost-of-living The leverage available on a property continues to reduce as debt servicing requirements increase. We have been working with clients 44 | NACFB
to understand the impact of this and support them while rent in the buy-to-let market catches up with debt costs. As the cost-of-living increases, pressure is being placed on tenants, leaving them with two options – reduce their expenditure, which is the government’s intention, or look for a job that provides an increased salary. With unemployment figures running at a low level of 4.3%, the latter remains a very realistic option for employees, which places extra pressure on employers through wage inflation. Over a short period, we have seen a significant rise in borrowing costs, utilities, and staff salaries for businesses. Ultimately, this leaves business owners and landlords with increased pressure to service lease agreements and debt, which for buy-to-let landlords means having to revisit their investment models and returns.
The impact on developers and landlords Build costs have reduced from the high that was seen earlier this year, but there is still a potential gap from purchasing a property and refurbing it to a suitable EPC grade, with the end goal of generating the required return on investment. The government’s recent decision to roll back the energy performance certificate (EPC) targets that were due to come into force in January 2025 was well received by tenants and landlords alike. The cost of carrying out EPC improvements to meet a minimum rating of C would have impacted rent levels due to landlords needing to make potential expensive upgrades. Considering the timeframe, these upgrades were unachievable for some given access to funds and contractors to complete the work. Now, in the final quarter of the year, the potential for the market to be flooded with assets is high as investors liquidate stock due to negative leverage.
RELEASE BUSINESS POTENTIAL WITH REFINANCE From a cash injection to funding new equipment, asset refinance provides options for your customers. • Unlock the value of existing assets • Create positive cash flow • Respond quickly to market changes
Contact us today, we’re here to help closebusinessfinance.co.uk
Products and services are subject to eligibility, status, terms and conditions and availability. All lending is subject to status and our lending criteria. The right to decline any application is reserved. Close Brothers Business Finance is a trading style of Close Brothers Limited. Close Brothers Limited is registered in England and Wales (Company Number 00195626) and its registered office is 10 Crown Place, London, EC2A 4FT.
Opinion
It takes a village Why we serve people, not entities Steve Richardson Commercial Director Reparo Finance
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n the world of commercial finance, it’s easy to assume that the landscape is dominated by numbers and transactions, yet at Reparo Finance, we embrace a different ethos: one that acknowledges the old adage, that it really does ‘take a village to raise a child’. This defining principle underscores our commitment to collaborative, heart-led solutions, recognising that behind every financial statistic is a community of individuals, each integral to sustaining the vibrant tapestry of small businesses. These small businesses are facing increasingly complex and challenging circumstances. Not since the 2008 financial crisis have we seen such a high number of SMEs in financial distress, with a reported 10% rise in insolvency cases between 2022 to 2023. And whilst collaboration may not be the first skill that springs to mind when you think of SME funding solutions, it’s certainly one that runs through the core of the Reparo Finance business and our team. And it’s one we believe is vital to supporting SMEs in today’s economic climate.
Feedback loops Behind these worrying statistics sit real people with businesses which they are passionate about. Therefore, helping guide SMEs through 46 | NACFB
these uncertain times requires real understanding and collaboration. Whether helping a local pub to renovate and expand, or a construction company get back into the black, we’re proud to provide funding solutions that offer a lifeline for businesses. But we’re well aware that we don’t do it alone. Our trusted, nationwide network of brokers form the bridge between SMEs and our funding solutions. Together, brokers and the Reparo Finance team work in close partnership to provide an ecosystem of support for SMEs – where a people-first approach is crucial to success on all sides.
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Not since the 2008 financial crisis have we seen such a high number of SMEs in financial distress
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We don’t just finance businesses – we empower communities and kindle the collective spirit essential for navigating the complexities of today’s economic landscape
Working in partnership
Trust and transparency
In our experience, putting in the time to understand businesses’ wants and needs is the ‘secret sauce’ to strong partnerships working.
Designed with transparency in mind, we sought to remove as much friction from the process as possible.
Our latest step to enhance this approach is through the launch of our new digital broker portal which fast-tracks deal submissions. So, we and brokers can spend more time understanding small businesses and getting the right deal for them. Whilst it may sound counterintuitive, making the most of technology allows us to make the most of what’s human too. Suitable for Reparo’s secured and unsecured products, the portal supports quicker decision-making to help small business owners access the finance they need. Designed using feedback from our brokers, the portal saves time, provides live status updates on the progress of their application and secure document storage all in one place. It allows brokers to dedicate more time to client relationships. We’re not interested in tech for tech’s sake. Our portal isn’t meant to replace personal interactions. Quite the opposite. It will help us provide an enhanced service for our brokers. By streamlining our processes, we hope to free up more time to collaborate with brokers, as well as providing guidance and support.
The deal submission process can often be very manual and timeconsuming which can risk errors or duplication. By automating data entry, secure document storage and status updates, all in a seamless and GDPR-compliant way, we hope to make our brokers’ lives easier. We see the portal as part of our promise to be a trusted and transparent finance partner for brokers, allowing for seamless communication between both parties – the foundation of collaboration. Fully integrated with information from Companies House and credit bureaus, the portal does the heavy lifting. It automatically collates data, accurately and securely, which means fewer errors and delays and less paperwork. The mobile-friendly interface also allows brokers to complete deals on the go, in keeping with today’s hybrid and remote ways of working, without compromising data. As we look to the future, Reparo Finance continues to innovate, not just technologically but in nurturing our community-centric approach. By ensuring that ‘it takes a village’ we remain steadfastly dedicated to forging robust partnerships, knowing that together, we don't just finance businesses – we empower communities and kindle the collective spirit essential for navigating the complexities of today’s economic landscape. NACFB | 47
Awards 2023
And the winners are... Results of the NACFB Commercial Lender Awards 2023 revealed
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he winners of this yearʼs NACFB Commercial Lender Awards, (formerly the NACFB Patron Awards), were announced at a gala ceremony on Thursday 30th November at the Westminster Park Plaza hotel. Hosted by comedian and TV presenter Dara Ó Briain, and ably supported by renowned auctioneer Jonny Gould, these new look awards recognise lending excellence within the commercial finance industry. They also enable NACFB Member brokers to thank Patrons for their ongoing commitment to supporting intermediaries and their SME clients. Commenting, Norman Chambers, NACFB managing director said: ”To be shortlisted alone is a great achievement and testament to the esteem in which our Patron lenders and Partner service providers are held, not just by NACFB Members but also by the panel of independent, expert judges who helped determine who will walk away with this year’s accolades.”
Asset Finance Provider of the Year Winner: Aldermore Bank Highly commended: Allica Bank
Buy-to-Let Lender of the Year Winner: Shawbrook Bank Highly commended: Landbay
Unsecured Funder of the Year Winner: Funding Circle Highly commended: iwoca
Service Excellence Award (NEW) Winner: Allica Bank Highly commended: 365 Business Finance 48 | NACFB
Commercial Mortgage Lender of the Year
Underwriting Team of the Year (NEW)
Winner: NatWest Highly commended: Allica Bank
Winner: United Trust Bank Highly commended: Allica Bank
Development Lender of the Year
Short-term Lender of the Year
Winner: United Trust Bank Highly commended: Roma Finance
Winner: Market Financial Solutions Highly commended: Shawbrook Bank
Challenger Bank of the Year (NEW)
Community Lender of the Year (NEW)
Winner: Allica Bank Highly commended: Metro Bank
Factoring and Invoice Discounter of the Year Winner: Bibby Financial Services Highly commended: Close Brothers Invoice Finance
BDM Team of the Year Winner: YouLend Highly commended: Allica Bank
Rising Star of the Year
Winner: Cambridge and Counties Bank Highly commended: Unity Trust Bank
Industry Supplier of the Year Winner: LDS Sales Guarantee Highly commended: Method Valuation UK
Specialist Lender of the Year Winner: Allica Bank Highly commended: Shawbrook Bank & Together
Technological Innovation of the Year (NEW)
Winner: Eshna Harper - Allica Bank Highly commended: Anne Blacker NatWest
Winner: Brickflow Highly commended: Tradeplus24
Deal of the Year
Leadership Award (NEW)
Winner: GB Bank Highly commended: NatWest
Winner: Josh Levy - Ultimate Finance Highly commended: Kate Pullen - NatWest
Business Bank of the Year
Commercial Finance Lender of the Year
Winner: Allica Bank Highly commended: NatWest
Winner: Allica Bank 2023 WINNERS
Clear as day We like to keep things simple. That means clear pricing and transparent fees. Our broker business development managers are here to help better support you and your customers, making you aware of any charges from the get-go. That includes no Early Repayment Charges (ERCs). Also, by joining our broker panel, you’ll get direct access to our broker portal, available 24/7.
Email brokerteam@natwest.com to join
Five Minutes With
ive F Minutes with: Simon Knowles Simon Knowles Senior Director, Development Finance Shawbrook
Describe your role in ten words or less? I oversee all aspects of the development finance team at Shawbrook.
How do you make a difference? I’ve worked in development finance for over 25 years so have a lot of experience to offer my team. Our sector is pretty complex, but it’s rare to face a scenario that I’ve not seen before and hopefully my input helps my team find the right funding solution for a broker or resolve any in life challenges for our clients. Behind the scenes I am continually working on evolving our systems and processes to help refine and improve how we do things.
What is your favourite piece of management/leadership advice? Needless to say I’ve had many over the years! I think the one that always stays with me and works for both people management/leadership and client/ broker relationship is “a tough conversation only gets tougher the longer you leave it, so have it now.” 50 | NACFB
What advice do you have for the modern commercial finance broker? Really own your clients and don’t see them as transactional. Getting a proposal to completion should not be the end but the start of a working relationship. Support and stay with them throughout so they see you as part of their professional team and put their trust in you – you will reap the benefits through repeat business. Also, ensure you really understand what each lender has to offer within each sector so that you can guide your clients in the right direction. Price is only one of a number of considerations and, whilst clearly important, should not be the sole driver for where a proposal is placed. Lenders will always appreciate you showing why you think a proposal/client is right for them. Your working relationships with lenders are as important as those with your clients.
What was the last great book you read? I try to read a book each week so a lot to choose from! I’m a big Harlen Coben fan, so will go for his latest one ‘I Will Find You’. Anyone who likes fictional thrillers will love his books.
Which person has inspired you the most and why? Very easy question – my wife Angela. She is amazing and is a huge rock for our family. She inspires me every day to achieve my ambitions both at work and at home. She just has such a unique way of helping me see everything very clearly and simply.
Where is your favourite place in the world and why? Venice. Absolutely beautiful city and we got engaged there in 2003!
What is the best live music experience you’ve ever had? I’m not one to really go to big music events. I like seeing local bands at smaller venues as I much prefer the atmosphere. For anyone around Sutton Coldfield, Under the Covers are well worth seeing – covers of hits from bands like the The Killers and Kings of Leon (with the odd bit of Wham thrown in!).
What was the last show you binge-watched? Young Sheldon – hilarious.
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