Industry Insight
Walk a mile in your client’s shoes Lenders and brokers can march together alongside SMEs Martine Catton Chief Executive Officer Catalyst Business Finance
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keep hearing and reading the phrase ‘we are living in unprecedented times’ and of course this is in relation to how COVID-19 is having an undeniably huge impact on our lives. By now, it is clear that this virus isn’t going away anytime soon and, like me, I’m sure you are closely following the news tracking the race to find a vaccine and of course the threat of a second wave. COVID’s impact on the economy is undeniable too, with figures showing it shrank by over a fifth in April – the largest monthly contraction on record. But the government has responded to the coronavirus crisis swiftly, by introducing various state-guaranteed loan schemes such as CBILS and BBLS along with the much-heralded furloughed scheme. However, these are recognised as hugely expensive short-term fixes and the focus is rapidly shifting to how the economy is going to recover. SMEs are going to play a major role in this recovery. I believe brokers, and NACFB Members in particular, have a hugely important role to play in supporting them by ensuring they have access to the right financial solutions. Just put yourself in the shoes of a typical UK SME. They may well have had access to the government-backed loans that will have helped them deal with a major loss of income. They are now faced with reopening and introducing all the necessary safeguards for staff and customers. In many cases they will have no option but to 38 | NACFB
change their business model and invest in the machinery and infrastructure needed. Every single business will be facing different challenges and the last thing they will need is what I call a ‘quick fix’ solution as businesses will be highly leveraged and cash will be king. This is where I believe commercial finance brokers can really add value by: •
Taking the time to really understand the issues a client is facing; how new funding arrangements are going to work alongside existing commitments and assist in establishing plans for rebuilding/transforming their business;
• Thinking more creatively and having a clear understanding of the facilities available to clients, linking the right asset to the right funding, and providing whole solutions. To achieve this there needs to be a closer and more dynamic relationship with lenders who are set-up to have real conversations with clients. Such conversations are designed to help fully understand a whole range of issues such as: true working capital requirements, order to invoice cycle, cashflow shortfalls and getting to the heart of business plans and challenges. This cannot be achieved through simply filling in an online finance application form for your client. Post-COVID financing will become much more complicated for SMEs and the only way to put all the pieces of the jigsaw together, so you deliver the best solution, will be three way conversations between clients, brokers and lenders. There will inevitably be a significant increase in insolvencies due to
