NACFB Magazine - July 2018

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Issue 60 July 2018

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The magazine for the National Association of Commercial Finance Brokers

A GAME CHANGER

In this issue

Professional indemnity insurance

Why it’s necessary and how it supports brokers

Midlands’ moment

Is the region becoming one of the leading services hubs in the UK?

MEES

How a bridging loan can help

Agriculture Finance

Productivity.

Diversification.

Growth.

(Whatever the weather.)

Demand for food continues to grow at a global level and UK farming remains a vital sector to the domestic economy.

To support farms competing regionally, nationally or on an international scale, at Shawbrook we can offer a range of finance facilities.

Whether investing to generate long term productivity gains; diversifying into special breeds, food production or renewables; or simply seeking to protect cash flow whilst renewing critical equipment, we will take the time to understand your business before providing a bespoke finance proposal to suit you.

Agriculture finance at a glance Assets we finance include: ■

Tractors, trailers, combines, balers and other farm machinery

■

Forestry equipment

■

Robotic milking machines

■

Vehicles and transport, including bulk haulage

■

Recycling and plant equipment

■

Renewable energy projects

We can also offer repayment schedules to suit the seasonal nature of your business.

The solutions we offer: ■

Hire purchase

■

Finance lease

■

Sale & leaseback

■

Loans

Key advantages of working with us:

Call: 0345 604 0975 agriculture@shawbrook.co.uk shawbrook.co.uk/agriculture Proudly different.

■

Dedicated team, offering you expertise and support throughout the process

■

Flexible approach, providing facilities and payment schedules to match the seasonal nature of your business

■

Industry experience and understanding, enabling fast and informed decision making

■

Free up capital from existing assets to renew equipment, diversify your business or simply improve your cash flow

■

Finance structured to maximise the benefits of your Annual Investment Allowance

Welcome | NACFB What a month it has been. We are fresh off the back of the biggest and most successful Commercial Finance Expo the NACFB has ever staged.

The Expo, my first as CEO, was a reminder of just how privileged a position the NACFB holds. From our vantage point, we get to see the very best and most dynamic brokers engaging and working with some of the UK’s most innovative and pioneering lenders – and our Expo illustrated perfectly how both operate together to help fund UK business.

Thank you to all those who joined us at the NEC last month. You can read the full write-up and view photos from the day on page 8.

Two key aspects of the day really stood out to me. First, the address from Rhys Herbert, senior economist at our headline sponsor, Lloyds Bank. Rhys spoke eloquently about what life may look like beyond Brexit for the commercial finance community. He reaffirmed my view that commercial brokers have a vital role to play in guiding SMEs through any Brexit uncertainty by ensuring they have access to the right kind of growth capital.

Another highlight was the panel discussion examining the changing dynamic of the lender/broker relationship. I chaired this discussion and once again felt privileged to witness such high-level debate from a selection of the sectors’ leading figures. I took away with me a greater appreciation of how modern finance professionals will need to balance the increasing use of technology while safeguarding traditional personal relationships.

Thank you once again to all those who made this year’s Expo the genuine triumph it was, and here’s to maintaining that energy, knowledge and – above all – enthusiasm throughout the rest of 2018.

Graham Toy, CEO, NACFB

Graham Toy CEO NACFB

In this June issue NACFB News 4 6 8-12

In the news Notes from our sponsor Cover story

Compliance Update 14-15 Step inside our model office

Commercial Finance 16-17 Essential news bites

Top Story 18

Funding Circle helped unlock 45,000 UK jobs in 2017

Introducing 20

Pivot launches new fund management platform

Case Studies 22

£1.3m invoice finance facility turns into longterm solution 24-25 Fast funding for off-market transaction 26 Portfolio refinance boosts self-made landlord business

Special Features 32-34 SMEs to seize opportunities in the midlands 36 A second string 38-40 Professional indemnity insurance: what could go wrong?

Industry Guides 42 44

When to turn to marketing bridges How a short-term loan can help with MEES

Opinion & Commentary 46 48 50

Should we be more sociable?

Altfi is meeting the requirements of eventdriven finance This year, consider collaborating

Patron Profile 28-29 Pivot’s roots lie deep in property

Ask the Expert 30

Stephen Todd

For further information Kieran Jones, communications manager t. 020 7101 0359 33 Eastcheap, London EC3M 1DT Email: Kieran.Jones@nacfb.org.uk

ADVERTISING & EDITING: Medianett t. 0203 818 0163 www.medianett.co.uk

Vera Sugar, editor t. 0203 818 0171 71 Gloucester Place, London W1U 8JW Email: vera@medianett.co.uk

DESIGN & PRODUCTION: Carbide Finger Ltd t. 0845 812 8206

GC_BF_AGF_factsadvert_201805_V1

SPECIALIST SECTOR FINANCE: AGRICULTURE | AVIATION | HEALTHCARE | MARINE | RENEWABLES | TAXI | TECHNOLOGY

NACFB Magazine | 3

Agriculture Finance

Productivity.

Diversification.

Growth.

(Whatever the weather.)

Demand for food continues to grow at a global level and UK farming remains a vital sector to the domestic economy.

To support farms competing regionally, nationally or on an international scale, at Shawbrook we can offer a range of finance facilities.

Whether investing to generate long term productivity gains; diversifying into special breeds, food production or renewables; or simply seeking to protect cash flow whilst renewing critical equipment, we will take the time to understand your business before providing a bespoke finance proposal to suit you.

Agriculture finance at a glance Assets we finance include: ■

Tractors, trailers, combines, balers and other farm machinery

■

Forestry equipment

■

Robotic milking machines

■

Vehicles and transport, including bulk haulage

■

Recycling and plant equipment

■

Renewable energy projects

We can also offer repayment schedules to suit the seasonal nature of your business.

The solutions we offer: ■

Hire purchase

■

Finance lease

■

Sale & leaseback

■

Loans

Key advantages of working with us:

Call: 0345 604 0975 agriculture@shawbrook.co.uk shawbrook.co.uk/agriculture Proudly different.

■

Dedicated team, offering you expertise and support throughout the process

■

Flexible approach, providing facilities and payment schedules to match the seasonal nature of your business

■

Industry experience and understanding, enabling fast and informed decision making

■

Free up capital from existing assets to renew equipment, diversify your business or simply improve your cash flow

■

Finance structured to maximise the benefits of your Annual Investment Allowance

Welcome | NACFB What a month it has been. We are fresh off the back of the biggest and most successful Commercial Finance Expo the NACFB has ever staged.

The Expo, my first as CEO, was a reminder of just how privileged a position the NACFB holds. From our vantage point, we get to see the very best and most dynamic brokers engaging and working with some of the UK’s most innovative and pioneering lenders – and our Expo illustrated perfectly how both operate together to help fund UK business.

Thank you to all those who joined us at the NEC last month. You can read the full write-up and view photos from the day on page 8.

Two key aspects of the day really stood out to me. First, the address from Rhys Herbert, senior economist at our headline sponsor, Lloyds Bank. Rhys spoke eloquently about what life may look like beyond Brexit for the commercial finance community. He reaffirmed my view that commercial brokers have a vital role to play in guiding SMEs through any Brexit uncertainty by ensuring they have access to the right kind of growth capital.

Another highlight was the panel discussion examining the changing dynamic of the lender/broker relationship. I chaired this discussion and once again felt privileged to witness such high-level debate from a selection of the sectors’ leading figures. I took away with me a greater appreciation of how modern finance professionals will need to balance the increasing use of technology while safeguarding traditional personal relationships.

Thank you once again to all those who made this year’s Expo the genuine triumph it was, and here’s to maintaining that energy, knowledge and – above all – enthusiasm throughout the rest of 2018.

Graham Toy, CEO, NACFB

Graham Toy CEO NACFB

In this June issue NACFB News 4 6 8-12

In the news Notes from our sponsor Cover story

Compliance Update 14-15 Step inside our model office

Commercial Finance 16-17 Essential news bites

Top Story 18

Funding Circle helped unlock 45,000 UK jobs in 2017

Introducing 20

Pivot launches new fund management platform

Case Studies 22

£1.3m invoice finance facility turns into longterm solution 24-25 Fast funding for off-market transaction 26 Portfolio refinance boosts self-made landlord business

Special Features 32-34 SMEs to seize opportunities in the midlands 36 A second string 38-40 Professional indemnity insurance: what could go wrong?

Industry Guides 42 44

When to turn to marketing bridges How a short-term loan can help with MEES

Opinion & Commentary 46 48 50

Should we be more sociable?

Altfi is meeting the requirements of eventdriven finance This year, consider collaborating

Patron Profile 28-29 Pivot’s roots lie deep in property

Ask the Expert 30

Stephen Todd

For further information Kieran Jones, communications manager t. 020 7101 0359 33 Eastcheap, London EC3M 1DT Email: Kieran.Jones@nacfb.org.uk

ADVERTISING & EDITING: Medianett t. 0203 818 0163 www.medianett.co.uk

Vera Sugar, editor t. 0203 818 0171 71 Gloucester Place, London W1U 8JW Email: vera@medianett.co.uk

DESIGN & PRODUCTION: Carbide Finger Ltd t. 0845 812 8206

GC_BF_AGF_factsadvert_201805_V1

SPECIALIST SECTOR FINANCE: AGRICULTURE | AVIATION | HEALTHCARE | MARINE | RENEWABLES | TAXI | TECHNOLOGY

NACFB Magazine | 3

NACFB | in the news Association news and updates for July 2018

Introducing the NACFB Patrons Charter We are delighted to announce the NACFB Patrons Charter. Produced in consultation with lenders, it outlines the professional expectations that come with NACFB patronage.

NACFB brokers already adhere to the NACFB code of practice, which establishes a set of principles and professional standards for intermediaries in the commercial finance sector. The Association supports brokers’ compliance with this code through the use of a minimum standards scorecard.

While a Patrons’ code of practice would be inappropriate, we have launched the Charter and will ask all Patrons to acknowledge its content as part of their involvement with the NACFB. The objective of the Charter is to formally recognise that the aim of any collaboration between NACFB brokers and Patrons is to maintain and promote business relationships for the mutual benefit of client firms.

The Charter forms part of our efforts to promote the advancement of professional standards throughout the wider commercial finance industry by: encouraging professional and social interaction between Members and Patrons encouraging Members to consider the products and funding options of Patron firms, when appropriate, to meet the needs of their clients achieving recognition by government, lenders, other professional bodies, the business community and the public of the strength of this collaboration and mutual professional standards.

Reminder: NACFB office move The NACFB has moved from our Hamilton House head offices – where we have been based for the past seven years – to new premises at 33 Eastcheap in the City of London.

New address: NACFB, 33 Eastcheap, London, EC3M 1DT Bank, Monument, Fenchurch Street, Tower Gateway, Tower Hill, Liverpool Street and London Bridge stations are all within a short walk away from the new offices.

The NACFB Patrons Charter 1. Patrons acknowledge the provisions of the constitution of the Association.

2. Patrons acknowledge the NACFB code of practice, which lays out the framework under which brokers are expected to conduct their business.

3. Patrons recognise that the NACFB logo is a marque that stands for integrity, professionalism, conduct and practice that is expected of the Association’s Patrons and Members for the further protection of the consumer.

4. Patrons recognise the importance of conduct in the marketplace and the standards expected by regulators, and the context of this in building robust reputations as well as SME and consumer confidence.

5. Patrons recognise the benefits of appropriate levels of due diligence when it comes to accepting introductions from intermediaries, understanding the regulatory requirements of this activity.

It's a contact sport.

We’re obsessed with touching base with you, so you don’t have to worry about being left on the sideline.

6. Patrons recognise the benefits of an open and honest relationship with the Association and its Members, as well as the appropriate regulatory bodies.

7. Patrons recognise the benefit of dealing with brokers and clients with the utmost good faith and with a standard of competence, fairness and courtesy.

8. Patrons recognise the value of training and education and whenever possible contribute to the raising of professional standards in the commercial finance sector.

9. In becoming a Patron of the NACFB, you are prepared to adopt and uphold this charter.

Call us on 0203 846 6809 or visit intermediaries.lendinvest.com. LendInvest Limited is registered at 8 Mortimer Street, London, W1T 3JJ (Company 08146929).

ICO number ZA179467. Your client’s property may be repossessed if they do not keep up repayments on their mortgage. For intermediaries only.

4 | NACFB Magazine

NACFB | in the news Association news and updates for July 2018

Introducing the NACFB Patrons Charter We are delighted to announce the NACFB Patrons Charter. Produced in consultation with lenders, it outlines the professional expectations that come with NACFB patronage.

NACFB brokers already adhere to the NACFB code of practice, which establishes a set of principles and professional standards for intermediaries in the commercial finance sector. The Association supports brokers’ compliance with this code through the use of a minimum standards scorecard.

While a Patrons’ code of practice would be inappropriate, we have launched the Charter and will ask all Patrons to acknowledge its content as part of their involvement with the NACFB. The objective of the Charter is to formally recognise that the aim of any collaboration between NACFB brokers and Patrons is to maintain and promote business relationships for the mutual benefit of client firms.

The Charter forms part of our efforts to promote the advancement of professional standards throughout the wider commercial finance industry by: encouraging professional and social interaction between Members and Patrons encouraging Members to consider the products and funding options of Patron firms, when appropriate, to meet the needs of their clients achieving recognition by government, lenders, other professional bodies, the business community and the public of the strength of this collaboration and mutual professional standards.

Reminder: NACFB office move The NACFB has moved from our Hamilton House head offices – where we have been based for the past seven years – to new premises at 33 Eastcheap in the City of London.

New address: NACFB, 33 Eastcheap, London, EC3M 1DT Bank, Monument, Fenchurch Street, Tower Gateway, Tower Hill, Liverpool Street and London Bridge stations are all within a short walk away from the new offices.

The NACFB Patrons Charter 1. Patrons acknowledge the provisions of the constitution of the Association.

2. Patrons acknowledge the NACFB code of practice, which lays out the framework under which brokers are expected to conduct their business.

3. Patrons recognise that the NACFB logo is a marque that stands for integrity, professionalism, conduct and practice that is expected of the Association’s Patrons and Members for the further protection of the consumer.

4. Patrons recognise the importance of conduct in the marketplace and the standards expected by regulators, and the context of this in building robust reputations as well as SME and consumer confidence.

5. Patrons recognise the benefits of appropriate levels of due diligence when it comes to accepting introductions from intermediaries, understanding the regulatory requirements of this activity.

It's a contact sport.

We’re obsessed with touching base with you, so you don’t have to worry about being left on the sideline.

6. Patrons recognise the benefits of an open and honest relationship with the Association and its Members, as well as the appropriate regulatory bodies.

7. Patrons recognise the benefit of dealing with brokers and clients with the utmost good faith and with a standard of competence, fairness and courtesy.

8. Patrons recognise the value of training and education and whenever possible contribute to the raising of professional standards in the commercial finance sector.

9. In becoming a Patron of the NACFB, you are prepared to adopt and uphold this charter.

Call us on 0203 846 6809 or visit intermediaries.lendinvest.com. LendInvest Limited is registered at 8 Mortimer Street, London, W1T 3JJ (Company 08146929).

ICO number ZA179467. Your client’s property may be repossessed if they do not keep up repayments on their mortgage. For intermediaries only.

4 | NACFB Magazine

NACFB NEWS

Notes from our sponsor In the last 10 years, awareness of the challenges caused by late payments has risen steadily. The maintenance of healthy cash flow, the lifeblood of any enterprise, is put under significant pressure if payments are delayed. But despite increased attention from government and industry, the problem persists.

Andy Bishop National director of business development Lloyds Bank

I

n January, the downfall of Carillion brought the issue to the fore once again, especially as it was pointed out that the UK’s second largest contractor – a prolific holder of multi-million-pound government contracts – would take up to 120 days to settle its bills.

The scale of the problem is something we’ve reflected in our own research.

Lloyds Bank’s Working Capital Index found one in four UK companies said their customers had taken longer to pay them than was stipulated in their agreed contract.

Our research also reinforced the negative effects late payments can have on a business’s ability to grow.

In the past, previous highs in this index have coincided with improving financial conditions as businesses tie more money into working capital to support growth. With the UK’s economic and political landscape still uncertain, firms now need to balance investing in growth with weathering turbulent financial conditions.

payment behaviour. Each initiative’s aim has, quite rightly, been to soften the negative impact on small businesses, which feel the strain on their working capital most acutely.

The UK’s largest firms are now required to report their payment practices, policies and performance twice a year. The hope is that this initiative will encourage them to pay their supply chains faster, while giving SME suppliers the information they need to make informed decisions about who to trade with.

Based on our analysis of the 336 companies that reported at the end of 2017, 31 per cent paid more than a third of their invoices late and 18 per cent paid more than half their invoices late.

It’s clear that these problems aren’t going to disappear any time soon.

So, what can businesses, and particularly SMEs, actually do?

There are a range of levers that businesses can use, one of which is invoice finance, which can help to mitigate the negative effects of slow or late payments.

The impact on small businesses In extreme cases, the recovery of unpaid invoices can be the difference between solvency and insolvency for SMEs – an important consideration that hit the headlines post-Carillion.

How invoice finance can help Invoice finance allows businesses to release up to 90 per cent of the value of their invoices, usually within 24 hours. It also allows them to take the guesswork out of payments, providing them with certainty as well as faster access to funds.

Successive governments have created new regulations to change negative

In the context of slow and late payments, invoice finance’s

6 | NACFB Magazine

applications are clear, but we firmly believe that a company’s wider working capital requirements should be treated holistically.

To that end, helping our clients gain a strategic overview of their growth objectives and create a bespoke plan to achieve them is a big part of our offering.

In January, we launched a dedicated broker channel for this growing sector.

Brokers who refer their clients to Lloyds Bank can receive a 40 per cent share of the invoice finance service fee for the lifetime of the bank’s relationship with the client. These market-leading contracts are zero month, have no minimum service fee and have a notice period of only one month for the first six months.

Since then, the number of broker deals we’ve completed has more than doubled, which has fuelled our resolve and reiterated the requirement for a dedicated team. The channel also offers asset-based lending and trade finance to support firms’ bespoke working capital requirements.

The negative effects of late payments on businesses’ cash flow will continue until we see significant change driven by government or industry. We’re firmly committed to supporting UK businesses in this challenging climate.

The success of our SME community is the key to unlocking a prosperous, economically vibrant Britain.

MFS

®

Specialists in fast, flexible, bespoke bridging loans For those purchasing properties at auction, it is vital to have quick access to finance in order to meet the strict timescales for payment.

MFS has vast experiencing working with brokers and borrowers to deliver bridging loans in time for individuals to complete on auction property deals.

Loans from £200,000 to £10 million

Rates from 0.75% per month, with up to 75% LTV

Free valuations on properties £500,000 to £1.5 million

Simple application process and no hidden costs

+44(0)20 7060 1234

www.mfsuk.com

info@mfsuk.com

NACFB NEWS

Notes from our sponsor In the last 10 years, awareness of the challenges caused by late payments has risen steadily. The maintenance of healthy cash flow, the lifeblood of any enterprise, is put under significant pressure if payments are delayed. But despite increased attention from government and industry, the problem persists.

Andy Bishop National director of business development Lloyds Bank

I

n January, the downfall of Carillion brought the issue to the fore once again, especially as it was pointed out that the UK’s second largest contractor – a prolific holder of multi-million-pound government contracts – would take up to 120 days to settle its bills.

The scale of the problem is something we’ve reflected in our own research.

Lloyds Bank’s Working Capital Index found one in four UK companies said their customers had taken longer to pay them than was stipulated in their agreed contract.

Our research also reinforced the negative effects late payments can have on a business’s ability to grow.

In the past, previous highs in this index have coincided with improving financial conditions as businesses tie more money into working capital to support growth. With the UK’s economic and political landscape still uncertain, firms now need to balance investing in growth with weathering turbulent financial conditions.

payment behaviour. Each initiative’s aim has, quite rightly, been to soften the negative impact on small businesses, which feel the strain on their working capital most acutely.

The UK’s largest firms are now required to report their payment practices, policies and performance twice a year. The hope is that this initiative will encourage them to pay their supply chains faster, while giving SME suppliers the information they need to make informed decisions about who to trade with.

Based on our analysis of the 336 companies that reported at the end of 2017, 31 per cent paid more than a third of their invoices late and 18 per cent paid more than half their invoices late.

It’s clear that these problems aren’t going to disappear any time soon.

So, what can businesses, and particularly SMEs, actually do?

There are a range of levers that businesses can use, one of which is invoice finance, which can help to mitigate the negative effects of slow or late payments.

The impact on small businesses In extreme cases, the recovery of unpaid invoices can be the difference between solvency and insolvency for SMEs – an important consideration that hit the headlines post-Carillion.

How invoice finance can help Invoice finance allows businesses to release up to 90 per cent of the value of their invoices, usually within 24 hours. It also allows them to take the guesswork out of payments, providing them with certainty as well as faster access to funds.

Successive governments have created new regulations to change negative

In the context of slow and late payments, invoice finance’s

6 | NACFB Magazine

applications are clear, but we firmly believe that a company’s wider working capital requirements should be treated holistically.

To that end, helping our clients gain a strategic overview of their growth objectives and create a bespoke plan to achieve them is a big part of our offering.

In January, we launched a dedicated broker channel for this growing sector.

Brokers who refer their clients to Lloyds Bank can receive a 40 per cent share of the invoice finance service fee for the lifetime of the bank’s relationship with the client. These market-leading contracts are zero month, have no minimum service fee and have a notice period of only one month for the first six months.

Since then, the number of broker deals we’ve completed has more than doubled, which has fuelled our resolve and reiterated the requirement for a dedicated team. The channel also offers asset-based lending and trade finance to support firms’ bespoke working capital requirements.

The negative effects of late payments on businesses’ cash flow will continue until we see significant change driven by government or industry. We’re firmly committed to supporting UK businesses in this challenging climate.

The success of our SME community is the key to unlocking a prosperous, economically vibrant Britain.

MFS

®

Specialists in fast, flexible, bespoke bridging loans For those purchasing properties at auction, it is vital to have quick access to finance in order to meet the strict timescales for payment.

MFS has vast experiencing working with brokers and borrowers to deliver bridging loans in time for individuals to complete on auction property deals.

Loans from £200,000 to £10 million

Rates from 0.75% per month, with up to 75% LTV

Free valuations on properties £500,000 to £1.5 million

Simple application process and no hidden costs

+44(0)20 7060 1234

www.mfsuk.com

info@mfsuk.com

NACFB | cover story

CFE 2018: A real game changer The NACFB continues to champion the commercial finance community at its record-breaking Expo

T

he 2018 NACFB Commercial Finance Expo was quite simply the biggest, busiest and best event the NACFB has ever staged.

Wednesday June 20th saw 136 exhibitors joined by 1,350 delegates – up 26% on last year – under one roof for the flagship event of the year. A total of 2,377 visitors joined us at the NEC – a record-breaking achievement.

With stands ranging from the traditional to the extravagant, lenders from across the UK came together

8 | NACFB Magazine

to demonstrate their product range to attending brokers, investors and other finance professionals. Exhibitors included a wide range of firms, from traditional high street banks through P2P lenders and smaller, niche players.

The event’s record-breaking popularity is testament to the growing commercial lending community. The NACFB continues to hold a privileged position in that, from our vantage point, we get to see the very best and most dynamic brokers engaging and working with some of the UK’s most innovative and pioneering lenders.

Industry leaders Paul Goodman, NACFB chairman, welcomed delegates to the conference theatre by sharing his view on the role commercial brokers have to play in guiding SMEs through any uncertainty by ensuring they have access to the right kind of growth capital.

Graham Toy, CEO at the NACFB, updated attendees on the work the trade body has been doing to support our Members. Graham used the event to formally launch the NACFB Patrons Charter, which seeks to promote the advancement of professional standards throughout the industry. He also spoke of the work the Association has undertaken to ensure a collaborative approach to GDPR, as well as success in helping shape introducer agreements through collaboration with our Patrons.

Andy Bishop, of headline sponsor Lloyds Bank, reminded delegates why they were in attendance – to help fund UK business – and the synergies between the NACFB’s mission and Lloyds’ own Help Britain Prosper campaign. Andy was followed by Rhys Herbert, senior economist at Lloyds Bank, who shared his insight and cautious optimism as he dared to look at the commercial lending landscape beyond Brexit.

Triumph through adversity The guest speaker for this year’s event was former Royal Marine veteran and double amputee, Ben McBean. Breaking with tradition, the event benefited from insight from outside the industry. Ben shared his motivating and inspiring life story of how he overcame the greatest adversity to become a leading property developer – a sobering reminder for all those who looked on

NACFB Magazine | 9

NACFB | cover story

CFE 2018: A real game changer The NACFB continues to champion the commercial finance community at its record-breaking Expo

T

he 2018 NACFB Commercial Finance Expo was quite simply the biggest, busiest and best event the NACFB has ever staged.

Wednesday June 20th saw 136 exhibitors joined by 1,350 delegates – up 26% on last year – under one roof for the flagship event of the year. A total of 2,377 visitors joined us at the NEC – a record-breaking achievement.

With stands ranging from the traditional to the extravagant, lenders from across the UK came together

8 | NACFB Magazine

to demonstrate their product range to attending brokers, investors and other finance professionals. Exhibitors included a wide range of firms, from traditional high street banks through P2P lenders and smaller, niche players.

The event’s record-breaking popularity is testament to the growing commercial lending community. The NACFB continues to hold a privileged position in that, from our vantage point, we get to see the very best and most dynamic brokers engaging and working with some of the UK’s most innovative and pioneering lenders.

Industry leaders Paul Goodman, NACFB chairman, welcomed delegates to the conference theatre by sharing his view on the role commercial brokers have to play in guiding SMEs through any uncertainty by ensuring they have access to the right kind of growth capital.

Graham Toy, CEO at the NACFB, updated attendees on the work the trade body has been doing to support our Members. Graham used the event to formally launch the NACFB Patrons Charter, which seeks to promote the advancement of professional standards throughout the industry. He also spoke of the work the Association has undertaken to ensure a collaborative approach to GDPR, as well as success in helping shape introducer agreements through collaboration with our Patrons.

Andy Bishop, of headline sponsor Lloyds Bank, reminded delegates why they were in attendance – to help fund UK business – and the synergies between the NACFB’s mission and Lloyds’ own Help Britain Prosper campaign. Andy was followed by Rhys Herbert, senior economist at Lloyds Bank, who shared his insight and cautious optimism as he dared to look at the commercial lending landscape beyond Brexit.

Triumph through adversity The guest speaker for this year’s event was former Royal Marine veteran and double amputee, Ben McBean. Breaking with tradition, the event benefited from insight from outside the industry. Ben shared his motivating and inspiring life story of how he overcame the greatest adversity to become a leading property developer – a sobering reminder for all those who looked on

NACFB Magazine | 9

NACFB NEWS

“CFE 2018 was the biggest, best and most successful yet, creating new relationships, generating new opportunities and providing an excellent thought-leadership platform to enhance broker and funder propositions – a truly inspirational event bringing the industry together and showcasing the importance of a strong, independent trade association in the NACFB.”

Why join the NACFB? The National Association of Commercial Finance Brokers (NACFB) is the flagship trade body for UK commercial finance brokers. Our Association comprises over 1600 commercial finance brokers covering the whole of the UK. Our Members are required to have FCA Permissions, Professional

Andy Bishop B.A. UK Director business development, SME Banking at Lloyds Bank

CODE OF PRACTICE

“The CFE is very important to us and represents a unique opportunity to build new relationships and catch up with the brokers we currently work with. This year’s show was the biggest we have ever attended and we were delighted to see so many of our introducers on the day.”

COLLABORATIVE EVENTS

“Congratulations to the NACFB and all those who attended this year’s CFE at the NEC in making it the largest event yet, with record numbers of registrations and exhibitors. From the seminars, panel debates and expert sessions to walking the floor, you could feel that there was a real buzz which reflects the current and growing strength of the UK’s commercial finance community.”

Joining the debate The NACFB Expo also provides the ideal platform for brokers and lenders alike to debate the key issues and matters that impact the industry. For the very first time, delegates could join the debate and pose their own questions to the panel via the event app, CFE2018.

The first panel session looked at the reshaping of the modern buy-to-let market. Leading figures from across the sector, including John Heron from Paragon Bank, David Whittaker from Mortgages for Business, Adrian

10 | NACFB Magazine

Moloney from OneSavings Bank/ InterBay Commercial, Karen Bennett from Shawbrook Bank and D’mitri Zaprzala from Octopus made up the panel, and shared their views and insight on the future of the market. One topic that prompted some debate was the potential reshaping of the buy-to-let sector.

The panel shared opinions on how concerned parties can position themselves most effectively to support landlords through new processes.

The second panel session sought to mythbust P2P finance. Chaired

by Suzie Neuwirth, editor of P2P Finance News, the panel shared their views on how the sector can

Helping all our Members adhere to a consistent set of principles assuring both lenders and SMEs.

COMPLIANCE & REGULATION Delivering a comprehensive and bespoke compliance support package for all Members.

Hosting the Commercial Finance Expo and CPD accredited workshops alongside regional training and educational roadshows.

James Lovett Broker proposition manager at Funding Circle

in awe that few of life’s obstacles are truly insurmountable.

Indemnity Insurance and a Data Protection Licence.

The Association partners with all Members to foster professional expertise, embracing the highest industry and regulatory standards to help your business prosper.

PI INSURANCE Competitively priced Professional Indemnity Cover helps keep Members’ costs down and mitigates risk.

BROKER & LENDER ENGAGEMENT Enabling a closer working lender relationship – making processes easier and more time efficient.

Adrian Moloney Sales director at One Savings Bank

INDUSTRY VOICE

BRAND & REPUTATION

“The Expo was a great opportunity to mingle with brokers from all over the UK and to tell them more about our fully unsecured offering.

Promoting a kitemark of quality and trust with clients and lenders, maintaining sector confidence.

Maintaining an authoritative dialogue on behalf of Members before lenders, regulators and the Government.

“Overall, the atmosphere was great and both brokers and lenders really seemed to enjoy the day. We will be sure to attend next year!”

Kevin Vendel Head of sales at Spotcap

w. t. e. a.

nacfb.org 02071010359 admin@nacfb.org.uk 33 Eastcheap, London, EC3M 1DT

@NACFB linkedin.com/in/nacfb

NACFB NEWS

“CFE 2018 was the biggest, best and most successful yet, creating new relationships, generating new opportunities and providing an excellent thought-leadership platform to enhance broker and funder propositions – a truly inspirational event bringing the industry together and showcasing the importance of a strong, independent trade association in the NACFB.”

Why join the NACFB? The National Association of Commercial Finance Brokers (NACFB) is the flagship trade body for UK commercial finance brokers. Our Association comprises over 1600 commercial finance brokers covering the whole of the UK. Our Members are required to have FCA Permissions, Professional

Andy Bishop B.A. UK Director business development, SME Banking at Lloyds Bank

CODE OF PRACTICE

“The CFE is very important to us and represents a unique opportunity to build new relationships and catch up with the brokers we currently work with. This year’s show was the biggest we have ever attended and we were delighted to see so many of our introducers on the day.”

COLLABORATIVE EVENTS

“Congratulations to the NACFB and all those who attended this year’s CFE at the NEC in making it the largest event yet, with record numbers of registrations and exhibitors. From the seminars, panel debates and expert sessions to walking the floor, you could feel that there was a real buzz which reflects the current and growing strength of the UK’s commercial finance community.”

Joining the debate The NACFB Expo also provides the ideal platform for brokers and lenders alike to debate the key issues and matters that impact the industry. For the very first time, delegates could join the debate and pose their own questions to the panel via the event app, CFE2018.

The first panel session looked at the reshaping of the modern buy-to-let market. Leading figures from across the sector, including John Heron from Paragon Bank, David Whittaker from Mortgages for Business, Adrian

10 | NACFB Magazine

Moloney from OneSavings Bank/ InterBay Commercial, Karen Bennett from Shawbrook Bank and D’mitri Zaprzala from Octopus made up the panel, and shared their views and insight on the future of the market. One topic that prompted some debate was the potential reshaping of the buy-to-let sector.

The panel shared opinions on how concerned parties can position themselves most effectively to support landlords through new processes.

The second panel session sought to mythbust P2P finance. Chaired

by Suzie Neuwirth, editor of P2P Finance News, the panel shared their views on how the sector can

Helping all our Members adhere to a consistent set of principles assuring both lenders and SMEs.

COMPLIANCE & REGULATION Delivering a comprehensive and bespoke compliance support package for all Members.

Hosting the Commercial Finance Expo and CPD accredited workshops alongside regional training and educational roadshows.

James Lovett Broker proposition manager at Funding Circle

in awe that few of life’s obstacles are truly insurmountable.

Indemnity Insurance and a Data Protection Licence.

The Association partners with all Members to foster professional expertise, embracing the highest industry and regulatory standards to help your business prosper.

PI INSURANCE Competitively priced Professional Indemnity Cover helps keep Members’ costs down and mitigates risk.

BROKER & LENDER ENGAGEMENT Enabling a closer working lender relationship – making processes easier and more time efficient.

Adrian Moloney Sales director at One Savings Bank

INDUSTRY VOICE

BRAND & REPUTATION

“The Expo was a great opportunity to mingle with brokers from all over the UK and to tell them more about our fully unsecured offering.

Promoting a kitemark of quality and trust with clients and lenders, maintaining sector confidence.

Maintaining an authoritative dialogue on behalf of Members before lenders, regulators and the Government.

“Overall, the atmosphere was great and both brokers and lenders really seemed to enjoy the day. We will be sure to attend next year!”

Kevin Vendel Head of sales at Spotcap

w. t. e. a.

nacfb.org 02071010359 admin@nacfb.org.uk 33 Eastcheap, London, EC3M 1DT

@NACFB linkedin.com/in/nacfb

NACFB NEWS

“The Commercial Finance Expo this year was the busiest we’ve attended. The sheer number of exhibitors underlined the heightened levels of competition in commercial lending, with intermediaries spoiled for choice in all but the most obscure lending niches. The talks and expert sessions where well pitched and there was a buzz on the floor all day.”

Matthew Tooth Chief commercial officer at LendInvest

Furnival from NatWest, Greg Carter from Growth Street, Paul Goodman from Goodman Corporate Finance, Mathew Kind from Kind Commercial, and Phil Gray from Watts Commercial made up the panel, which shared its views on the future of the broking community. A key topic was how modern finance professionals can balance the increasing use of technology while safeguarding traditional personal relationships.

Looking to 2019 As the largest independent trade body in the sector, the NACFB’s Commercial Finance Expo provided the ideal forum for brokers to enhance their knowledge of the market and of the latest products available to them.

This year’s event set a very high bar, both in the number of delegates and in the quality of the debate – but the event will return stronger in 2019 and continue to fly the flag for commercial finance brokers. combat longstanding P2P sceptics.

Leading figures from across the space, including Damien Druce from Assetz Capital, James Lovett from Funding Circle, John Goodall from Landbay, Adrian Innes from Lending Crowd and John Davies from Just Cashflow made up the panel.

The third and final session of the NACFB Expo discussed the changing dynamic of the broker/ lender relationship. Leading figures from across the sector, including Niels Turfboer from Spotcap, Dave

12 | NACFB Magazine

The UK’s economy is built on the hard work and innovation of small businesses. The NACB Expo is just one way of increasing awareness of alternative financing solutions and access to growth capital.

Brokers were able to leave our Expo empowered and better prepared to help fund UK business.

“This was by far the biggest NACFB Expo we have ever attended. It was fantastic to engage with faces old and new and demonstrate to them how we make buy-to-let simple.

The Expo serves as a timely reminder that our industry is growing at pace. The team and I remain proud to be part of that community and we look forward to growing alongside it.”

Marc Goldberg Commercial CEO at Together We were delighted to support the NACFB Commercial Finance Expo. The benefits of exhibiting at this well attended event enables us to engage with a number of trusted partners all under one roof, while having the opportunity to meet new ones. Running a ‘Meet the Expert’ session gave us the added benefit of introducing Aldermore to different audiences.”

Simon Knowles Head of property development at Aldermore

SPEED MEETS CLARITY 020 7655 3388

FAST PROPERTY FINANCE At Commercial Acceptances speed alone is not enough.

Speak straight to decision makers: a quick & personal service. No arrangement fees, no extension fees and no end fees.

Interest charged from only 0.75% per calendar month.

Your property may be repossessed if you do not keep up on your mortgage repayments or any other debt secured on it. A rate from 0.75% will be chargeable on the amount borrowed every calendar month. However rates are subject to change and will increase or decrease in line with movements in 3m LIBOR (The London Inter-Bank Offered Rate For Three Month Sterling Deposits). Rates will be adjusted on each calendar month anniversary of the facility. The overall cost for comparison is 10.6% APR.

NACFB NEWS

“The Commercial Finance Expo this year was the busiest we’ve attended. The sheer number of exhibitors underlined the heightened levels of competition in commercial lending, with intermediaries spoiled for choice in all but the most obscure lending niches. The talks and expert sessions where well pitched and there was a buzz on the floor all day.”

Matthew Tooth Chief commercial officer at LendInvest

Furnival from NatWest, Greg Carter from Growth Street, Paul Goodman from Goodman Corporate Finance, Mathew Kind from Kind Commercial, and Phil Gray from Watts Commercial made up the panel, which shared its views on the future of the broking community. A key topic was how modern finance professionals can balance the increasing use of technology while safeguarding traditional personal relationships.

Looking to 2019 As the largest independent trade body in the sector, the NACFB’s Commercial Finance Expo provided the ideal forum for brokers to enhance their knowledge of the market and of the latest products available to them.

This year’s event set a very high bar, both in the number of delegates and in the quality of the debate – but the event will return stronger in 2019 and continue to fly the flag for commercial finance brokers. combat longstanding P2P sceptics.

Leading figures from across the space, including Damien Druce from Assetz Capital, James Lovett from Funding Circle, John Goodall from Landbay, Adrian Innes from Lending Crowd and John Davies from Just Cashflow made up the panel.

The third and final session of the NACFB Expo discussed the changing dynamic of the broker/ lender relationship. Leading figures from across the sector, including Niels Turfboer from Spotcap, Dave

12 | NACFB Magazine

The UK’s economy is built on the hard work and innovation of small businesses. The NACB Expo is just one way of increasing awareness of alternative financing solutions and access to growth capital.

Brokers were able to leave our Expo empowered and better prepared to help fund UK business.

“This was by far the biggest NACFB Expo we have ever attended. It was fantastic to engage with faces old and new and demonstrate to them how we make buy-to-let simple.

The Expo serves as a timely reminder that our industry is growing at pace. The team and I remain proud to be part of that community and we look forward to growing alongside it.”

Marc Goldberg Commercial CEO at Together We were delighted to support the NACFB Commercial Finance Expo. The benefits of exhibiting at this well attended event enables us to engage with a number of trusted partners all under one roof, while having the opportunity to meet new ones. Running a ‘Meet the Expert’ session gave us the added benefit of introducing Aldermore to different audiences.”

Simon Knowles Head of property development at Aldermore

SPEED MEETS CLARITY 020 7655 3388

FAST PROPERTY FINANCE At Commercial Acceptances speed alone is not enough.

Speak straight to decision makers: a quick & personal service. No arrangement fees, no extension fees and no end fees.

Interest charged from only 0.75% per calendar month.

Your property may be repossessed if you do not keep up on your mortgage repayments or any other debt secured on it. A rate from 0.75% will be chargeable on the amount borrowed every calendar month. However rates are subject to change and will increase or decrease in line with movements in 3m LIBOR (The London Inter-Bank Offered Rate For Three Month Sterling Deposits). Rates will be adjusted on each calendar month anniversary of the facility. The overall cost for comparison is 10.6% APR.

Compliance | update The latest from our in-house compliance team

Step inside James Hinch (AICA) Adv. CERT (Comp) Compliance consultant NACFB Compliance

NACFB Compliance support has been operational for nearly two years and is now available to all NACFB Members.

T

he team and its service provide you and your business with guidance, training and support necessary to remain fully compliant with both regulatory requirements and the NACFB minimum standards.

One of the core aspects of your compliance support is our bespoke model office. The online document repository hosts a full suite of customisable template documents designed specifically for use by the commercial finance broker.

Initially, this document repository contained 30 templates, covering the full framework of business practices.

These documents included the compliance monitoring process, a regulatory business plan, a privacy notice, a terms of business document and a financial promotions policy.

Today, NACFB Compliance boasts over 60 template documents, ready for tailoring. For brokers just starting in the industry, these templates provide everything you would need to become operational in a compliant manner.

Even if you are a more established broker, the model office offers an opportunity for you to compare and contrast your existing documents with those from NACFB Compliance.

What follows is an analysis of some of the key documents we offer, documents that we believe all modern finance professionals should have within their arsenal.

14 | NACFB Magazine

Terms of business A terms of business (ToB) sets out the terms with a client as to the service the broker will provide. Written contracts and terms which are agreed by both parties provide individuals and businesses with a legal document stating the expectations of both parties, and how negative situations will be resolved. Generally, with a ToB, you would be expected to see areas such as fee arrangements, duties of the broker and terms of cancellation or refunds – where applicable – covered, and an overview of the complaints procedure.

GDPR controller/processor template One of the newest additions to the document repository is our GDPR controller/processor template. GDPR contains explicit provisions about documenting your processing activities. You must maintain records on several things such as processing purposes, data sharing and retention, and this may be required as evidence to the ICO on request.

Under the new regime, you must document the name and contact details of your organisation, the purposes of your processing, a description of the categories of individuals and of personal data, and the categories of recipients of personal data. Brokers can use this document to record processing activities as required under GDPR. The template has an example and notes section which aids brokers in completing this form.

>> Privacy notices This is one of our most recently updated documents. A privacy notice tells customers what to expect from a business regarding how personal information is handled when you make contact with them or they use your service. Notices can come in many guises, including layered approaches. This means individuals can easily select the reason data is processed and see what is done with it. The template that NACFB Compliance provides can be fully adapted and tailored to suit your business. Modern privacy notices should contain, among other aspects, the name and contact details of your organisation, your representative and your assigned data protection officer.

Data protection policy The purpose of a data protection policy is to explain the approach of your business to ensure that you and any staff comply with the updated Data Protection Act 2018 while conducting business. It describes the duties of everyone working at your firm and the rights of access by individuals to their personal data.

Some main topics that are outlined within the NACFB Compliance policy are an overview of the Data Protection Act itself, an outline of people, risks and responsibilities, general staff guidelines, as well as providing clarity on the storage, use and accuracy of any data held.

The documents within the model office are regularly revised, and the team will update all Members when key updates and changes occur.

NACFB Magazine | 15

Compliance | update The latest from our in-house compliance team

Step inside James Hinch (AICA) Adv. CERT (Comp) Compliance consultant NACFB Compliance

NACFB Compliance support has been operational for nearly two years and is now available to all NACFB Members.

T

he team and its service provide you and your business with guidance, training and support necessary to remain fully compliant with both regulatory requirements and the NACFB minimum standards.

One of the core aspects of your compliance support is our bespoke model office. The online document repository hosts a full suite of customisable template documents designed specifically for use by the commercial finance broker.

Initially, this document repository contained 30 templates, covering the full framework of business practices.

These documents included the compliance monitoring process, a regulatory business plan, a privacy notice, a terms of business document and a financial promotions policy.

Today, NACFB Compliance boasts over 60 template documents, ready for tailoring. For brokers just starting in the industry, these templates provide everything you would need to become operational in a compliant manner.

Even if you are a more established broker, the model office offers an opportunity for you to compare and contrast your existing documents with those from NACFB Compliance.

What follows is an analysis of some of the key documents we offer, documents that we believe all modern finance professionals should have within their arsenal.

14 | NACFB Magazine

Terms of business A terms of business (ToB) sets out the terms with a client as to the service the broker will provide. Written contracts and terms which are agreed by both parties provide individuals and businesses with a legal document stating the expectations of both parties, and how negative situations will be resolved. Generally, with a ToB, you would be expected to see areas such as fee arrangements, duties of the broker and terms of cancellation or refunds – where applicable – covered, and an overview of the complaints procedure.

GDPR controller/processor template One of the newest additions to the document repository is our GDPR controller/processor template. GDPR contains explicit provisions about documenting your processing activities. You must maintain records on several things such as processing purposes, data sharing and retention, and this may be required as evidence to the ICO on request.

Under the new regime, you must document the name and contact details of your organisation, the purposes of your processing, a description of the categories of individuals and of personal data, and the categories of recipients of personal data. Brokers can use this document to record processing activities as required under GDPR. The template has an example and notes section which aids brokers in completing this form.

>> Privacy notices This is one of our most recently updated documents. A privacy notice tells customers what to expect from a business regarding how personal information is handled when you make contact with them or they use your service. Notices can come in many guises, including layered approaches. This means individuals can easily select the reason data is processed and see what is done with it. The template that NACFB Compliance provides can be fully adapted and tailored to suit your business. Modern privacy notices should contain, among other aspects, the name and contact details of your organisation, your representative and your assigned data protection officer.

Data protection policy The purpose of a data protection policy is to explain the approach of your business to ensure that you and any staff comply with the updated Data Protection Act 2018 while conducting business. It describes the duties of everyone working at your firm and the rights of access by individuals to their personal data.

Some main topics that are outlined within the NACFB Compliance policy are an overview of the Data Protection Act itself, an outline of people, risks and responsibilities, general staff guidelines, as well as providing clarity on the storage, use and accuracy of any data held.

The documents within the model office are regularly revised, and the team will update all Members when key updates and changes occur.

NACFB Magazine | 15

Ashley Finance to merge into Ultimate Finance Ultimate Finance has announced that it is absorbing all products and services currently sitting under Ashley Finance.

Ultimate confirmed that the brand consolidation will not change the breadth of products and services offered to Ashley customers.

Ashley’s bridging, loans and invoice finance products will continue to operate under the parent brand of Ultimate Finance Group.

Commercial Finance

Reward Finance reports record year Reward Finance Group has posted a record set of yearend figures, revealing a loan book had increase of 29% to £53m in the 12 months to the end of February 2018.

Over the same period, the alternative finance provider delivered over 120 new deals, an increase of 32%.

Profit before tax hit £4m in Reward’s sixth full year of operation.

BBB announces £2.5bn British Patient Capital programme

Snowball reports £70m deal pipeline Snowball Alternative Finance has announced that it has a deal pipeline worth in excess of £70m.

The alternative finance brokerage is currently on track to exceed its first-year target of £100m in deals.

Snowball launched in January 2018 after obtaining approval from the FCA.

16 | NACFB Magazine

77% of financial services firms expect prospects to improve

New specialist brokerage launches

Over three-quarters of financial services firms (77%) believe their prospects will improve in the next year, according to recent research.

The report from Smith & Williamson – Dream bigger: The scale-up moment – revealed that 46% of firms said that performance would “improve significantly” in the next 12 months.

Over half (55%) said that they would increase their borrowing in the next 12 months.

The Mortgage Lender teams up with L&G Mortgage Club The Mortgage Lender and Legal & General Mortgage Club have announced that they will be working together to distribute products for ‘real life’ borrowers, including those in Scotland.

The mortgage club works with over 80 lenders and offers intermediaries access to mainstream and niche products.

The partnership is the first the Mortgage Lender has announced since its change in brand identity.

The British Business Bank is launching a £2.5bn British Patient Capital programme designed to enable long-term investment in high-growth potential companies in the UK. British Patient Capital will support such businesses to access the long-term finance required to scale up.

The launch of the new programme was one of the key outcomes of the Patient Capital Review.

Shawbrook makes changes to shortterm range

Precise offers limited edition BTL range Precise Mortgages has launched its new five-year fixed rate buy-to-let range with reduced rates and product fees.

The limited-edition products are available at 3.49% with a 1.5% product fee and 3.59% with a 1% product fee on LTVs of up to 75%.

The range is available to individual landlords or limited companies and can be used on portfolios comprising HMOs.

Shawbrook’s commercial team has revamped its short-term lending product range as it recognises the increasing demand for such lending in the property investment market.

The specialist bank has reduced the range from nine products down to five, with price reductions of up to 0.26% per month across the board The changes affected both semi-commercial and commercial securities that require no work, light or heavy refurbishment.

VAS Group and edozo partner for better valuation standards

Valuation panel and audit services business VAS Group has entered an exclusive partnership with proptech start-up edozo, to guarantee strong commercial property valuation standards throughout the UK. VAS Group will recommend the use of edozo data and maps in valuations produced through VAS panel members, and edozo will create an online product for VAS for the direct benefit of its lender clients.

Octopus names new head of London sales Octopus Property has appointed Daniel Murray to head of London sales, targeting £1bn of lending over the next 12 months across its commercial, development and residential segments.

Daniel joined Octopus in March 2015 and was previously BDM for the east region.

In his new role, Daniel will manage the London BDMs and help grow Octopus’s broker network in the region.

New brokerage VIBE Finance has entered the specialist market.

VIBE Finance covers buy-to-let, commercial, semi-commercial, HMOs and student lets, and also sources funding for bridging, development, refurbishment and auction purchases.

Former Hampshire Trust Bank commercial lending manager Kim McGinley launched the brokerage with the aim of adding real value to its clients and to get their cases completed quickly and seamlessly.

We know that no two projects are the same, so we identify the unique features of each project and offer a bespoke solution.

Downing’s development loans can be used to:

Downing can offer:

ff fund ff fund

ff first-charge

the acquisition and development of residential property for resale; the acquisition and development of new sites for trading businesses such as care homes, data centres, pubs and children’s nurseries; and ff fund the construction of renewable energy and other infrastructure projects.

Downing’s bridging loans can be used for: ff site

acquisitions; and exit loans.

ff development

Find out more: Phone: 020 7416 7780 Email: investment@downing.co.uk

secured loans up to 70% loan-to-value ranging from £1 million to £10 million; ff introducer fees paid on the first drawdown of the loan facility; ff interest rates typically ranging from 8% - 11% p.a.; and ff terms typically ranging from 6-36 months.

Follow us on Twitter and LinkedIn: @downingllp

Downing LLP

Downing LLP, St Magnus House, 3 Lower Thames Street, London EC3R 6HD, is authorised and regulated by the Financial Conduct Authority (Firm Reference Number 545025).

Information correct as at 23 April 2018.

NACFB Magazine | 17

Ashley Finance to merge into Ultimate Finance Ultimate Finance has announced that it is absorbing all products and services currently sitting under Ashley Finance.

Ultimate confirmed that the brand consolidation will not change the breadth of products and services offered to Ashley customers.

Ashley’s bridging, loans and invoice finance products will continue to operate under the parent brand of Ultimate Finance Group.

Commercial Finance

Reward Finance reports record year Reward Finance Group has posted a record set of yearend figures, revealing a loan book had increase of 29% to £53m in the 12 months to the end of February 2018.

Over the same period, the alternative finance provider delivered over 120 new deals, an increase of 32%.

Profit before tax hit £4m in Reward’s sixth full year of operation.

BBB announces £2.5bn British Patient Capital programme

Snowball reports £70m deal pipeline Snowball Alternative Finance has announced that it has a deal pipeline worth in excess of £70m.

The alternative finance brokerage is currently on track to exceed its first-year target of £100m in deals.

Snowball launched in January 2018 after obtaining approval from the FCA.

16 | NACFB Magazine

77% of financial services firms expect prospects to improve

New specialist brokerage launches

Over three-quarters of financial services firms (77%) believe their prospects will improve in the next year, according to recent research.

The report from Smith & Williamson – Dream bigger: The scale-up moment – revealed that 46% of firms said that performance would “improve significantly” in the next 12 months.

Over half (55%) said that they would increase their borrowing in the next 12 months.

The Mortgage Lender teams up with L&G Mortgage Club The Mortgage Lender and Legal & General Mortgage Club have announced that they will be working together to distribute products for ‘real life’ borrowers, including those in Scotland.

The mortgage club works with over 80 lenders and offers intermediaries access to mainstream and niche products.

The partnership is the first the Mortgage Lender has announced since its change in brand identity.

The British Business Bank is launching a £2.5bn British Patient Capital programme designed to enable long-term investment in high-growth potential companies in the UK. British Patient Capital will support such businesses to access the long-term finance required to scale up.

The launch of the new programme was one of the key outcomes of the Patient Capital Review.

Shawbrook makes changes to shortterm range

Precise offers limited edition BTL range Precise Mortgages has launched its new five-year fixed rate buy-to-let range with reduced rates and product fees.

The limited-edition products are available at 3.49% with a 1.5% product fee and 3.59% with a 1% product fee on LTVs of up to 75%.

The range is available to individual landlords or limited companies and can be used on portfolios comprising HMOs.

Shawbrook’s commercial team has revamped its short-term lending product range as it recognises the increasing demand for such lending in the property investment market.

The specialist bank has reduced the range from nine products down to five, with price reductions of up to 0.26% per month across the board The changes affected both semi-commercial and commercial securities that require no work, light or heavy refurbishment.

VAS Group and edozo partner for better valuation standards

Valuation panel and audit services business VAS Group has entered an exclusive partnership with proptech start-up edozo, to guarantee strong commercial property valuation standards throughout the UK. VAS Group will recommend the use of edozo data and maps in valuations produced through VAS panel members, and edozo will create an online product for VAS for the direct benefit of its lender clients.

Octopus names new head of London sales Octopus Property has appointed Daniel Murray to head of London sales, targeting £1bn of lending over the next 12 months across its commercial, development and residential segments.

Daniel joined Octopus in March 2015 and was previously BDM for the east region.

In his new role, Daniel will manage the London BDMs and help grow Octopus’s broker network in the region.

New brokerage VIBE Finance has entered the specialist market.

VIBE Finance covers buy-to-let, commercial, semi-commercial, HMOs and student lets, and also sources funding for bridging, development, refurbishment and auction purchases.

Former Hampshire Trust Bank commercial lending manager Kim McGinley launched the brokerage with the aim of adding real value to its clients and to get their cases completed quickly and seamlessly.

We know that no two projects are the same, so we identify the unique features of each project and offer a bespoke solution.

Downing’s development loans can be used to:

Downing can offer:

ff fund ff fund

ff first-charge

the acquisition and development of residential property for resale; the acquisition and development of new sites for trading businesses such as care homes, data centres, pubs and children’s nurseries; and ff fund the construction of renewable energy and other infrastructure projects.

Downing’s bridging loans can be used for: ff site

acquisitions; and exit loans.

ff development

Find out more: Phone: 020 7416 7780 Email: investment@downing.co.uk

secured loans up to 70% loan-to-value ranging from £1 million to £10 million; ff introducer fees paid on the first drawdown of the loan facility; ff interest rates typically ranging from 8% - 11% p.a.; and ff terms typically ranging from 6-36 months.

Follow us on Twitter and LinkedIn: @downingllp

Downing LLP

Downing LLP, St Magnus House, 3 Lower Thames Street, London EC3R 6HD, is authorised and regulated by the Financial Conduct Authority (Firm Reference Number 545025).

Information correct as at 23 April 2018.

NACFB Magazine | 17

Top | story Our pick of the latest Patron news

Funding Circle helped unlock 45,000 UK jobs in 2017 James Meekings Co-founder and MD Funding Circle UK

A new report published

by Oxford Economics revealed that lending through Funding Circle, the global small business loans platform, unlocked 45,000 jobs in the UK in 2017.

L

aunched in 2010, Funding Circle facilitates lending from a wide range of investors to small businesses in the UK, US, Germany and the Netherlands.

In 2017, investors lent £1.7bn through the platform to small businesses across all four markets, contributing £4bn to the global economy (measured in gross value added), unlocking 75,000 jobs.

For every £1 lent through the platform, an additional £2 was contributed to GDP across these four countries.

A detailed look at Funding Circle’s impact in the UK: lending through the platform contributed £2.4bn to the economy and generated £730m in annual tax receipts for the HM Treasury in 2017 the report also found that these loans had a significant impact on the UK labour market, with almost 45,000 jobs found to be powered by lending through Funding Circle in 2017 92% of businesses believed that the Funding Circle application process was faster than through a traditional route.

Small and medium-sized businesses make up approximately half of the UK’s turnover and half of all employment, yet continue to face difficulties accessing finance through traditional channels. In the last quarter of 2017, the combined net lending (total minus repayments) of the major high street banks to SMEs in the UK was negative (-£75m). These difficulties have been compounded with the closure of some 423 bank and building society branches across the UK in 2017.

At the same time, the number of small businesses has grown, and the report suggests an increasing number is turning to

18 | NACFB Magazine

Funding Circle’s platform for finance. In the same quarter of 2017 that bank net lending was negative, investors lent £156m through the platform to UK small businesses on a net basis alone. This strong growth means Funding Circle is set to hire 400 people in 2018, 200 of which will be based in the UK and bringing the total number of employees to 1,200 worldwide.

Commenting on the news, John Glen, economic secretary to the Treasury, said: “The way people and businesses access borrowing is evolving, and with this, new players like Funding Circle are making great contributions to our world-class financial services industry. The success of peer-to-peer lending has brought about real benefits, not only for the businesses of Britain, but as this report shows, our economy at large too.”

The measurable effect that lending through Funding Circle is having on the UK economy and employment is particularly gratifying. In the UK alone, the activity stimulated by small businesses generated £730m in annual tax revenues for HM Treasury in 2017. Small business isn’t small – it accounts for around half of the UK’s turnover and half of all employment.

That’s why we’ve put their needs at the forefront of our mission, because when they grow, so does our economy.

Less in your way Up to 100% of the purchase price (subject to LTV) with no additional security* Nothing should stand between you and helping your professional property clients achieve their goals. With Amicus, your client could get up to 100% of the purchase price without the need for additional security. Spot on.

*Unregulated products only.

Fees and interest added to the loan amount.

All loans subject to underwriting criteria.

Residential

Commercial

Refurbishment

Development

Auction

London 020 3540 5120 Manchester 0161 696 6670 Discover more at amicuspropertyfinance.co.uk/lessinyourway For professional intermediary use only.

Loans offered subject to underwriting criteria.

Amicus Property Finance is a trading name of Amicus Finance Plc which is registered for anti-money laundering purposes, our FCA Registration Number is 735544. You can confirm our registration on the FCA’s website www.fca.org.uk or by contacting the FCA on 0800 111 6768. Registered in England & Wales, no. 06994954. Registered office: 7 Air Street, London W1B 5AD.

Top | story Our pick of the latest Patron news

Funding Circle helped unlock 45,000 UK jobs in 2017 James Meekings Co-founder and MD Funding Circle UK

A new report published

by Oxford Economics revealed that lending through Funding Circle, the global small business loans platform, unlocked 45,000 jobs in the UK in 2017.

L

aunched in 2010, Funding Circle facilitates lending from a wide range of investors to small businesses in the UK, US, Germany and the Netherlands.

In 2017, investors lent £1.7bn through the platform to small businesses across all four markets, contributing £4bn to the global economy (measured in gross value added), unlocking 75,000 jobs.

For every £1 lent through the platform, an additional £2 was contributed to GDP across these four countries.

A detailed look at Funding Circle’s impact in the UK: lending through the platform contributed £2.4bn to the economy and generated £730m in annual tax receipts for the HM Treasury in 2017 the report also found that these loans had a significant impact on the UK labour market, with almost 45,000 jobs found to be powered by lending through Funding Circle in 2017 92% of businesses believed that the Funding Circle application process was faster than through a traditional route.

Small and medium-sized businesses make up approximately half of the UK’s turnover and half of all employment, yet continue to face difficulties accessing finance through traditional channels. In the last quarter of 2017, the combined net lending (total minus repayments) of the major high street banks to SMEs in the UK was negative (-£75m). These difficulties have been compounded with the closure of some 423 bank and building society branches across the UK in 2017.

At the same time, the number of small businesses has grown, and the report suggests an increasing number is turning to

18 | NACFB Magazine

Funding Circle’s platform for finance. In the same quarter of 2017 that bank net lending was negative, investors lent £156m through the platform to UK small businesses on a net basis alone. This strong growth means Funding Circle is set to hire 400 people in 2018, 200 of which will be based in the UK and bringing the total number of employees to 1,200 worldwide.

Commenting on the news, John Glen, economic secretary to the Treasury, said: “The way people and businesses access borrowing is evolving, and with this, new players like Funding Circle are making great contributions to our world-class financial services industry. The success of peer-to-peer lending has brought about real benefits, not only for the businesses of Britain, but as this report shows, our economy at large too.”

The measurable effect that lending through Funding Circle is having on the UK economy and employment is particularly gratifying. In the UK alone, the activity stimulated by small businesses generated £730m in annual tax revenues for HM Treasury in 2017. Small business isn’t small – it accounts for around half of the UK’s turnover and half of all employment.

That’s why we’ve put their needs at the forefront of our mission, because when they grow, so does our economy.

Less in your way Up to 100% of the purchase price (subject to LTV) with no additional security* Nothing should stand between you and helping your professional property clients achieve their goals. With Amicus, your client could get up to 100% of the purchase price without the need for additional security. Spot on.

*Unregulated products only.

Fees and interest added to the loan amount.

All loans subject to underwriting criteria.

Residential

Commercial

Refurbishment

Development

Auction

London 020 3540 5120 Manchester 0161 696 6670 Discover more at amicuspropertyfinance.co.uk/lessinyourway For professional intermediary use only.

Loans offered subject to underwriting criteria.

Amicus Property Finance is a trading name of Amicus Finance Plc which is registered for anti-money laundering purposes, our FCA Registration Number is 735544. You can confirm our registration on the FCA’s website www.fca.org.uk or by contacting the FCA on 0800 111 6768. Registered in England & Wales, no. 06994954. Registered office: 7 Air Street, London W1B 5AD.

Introducing New and refreshed offerings for NACFB brokers on behalf of Patrons and Members

CUTTING THROUGH COMPLEXITY

Pivot launches new fund management platform A new online property crowdfunding platform has launched, offering returns of up to 20%.

Shahil Kotecha CEO Pivot

P

ropio, developed by the founders of Pivot and Fruition, offers a range of debt and equity opportunities, all linked to development, with a minimum investment of just £1,000. The company’s founders hope to attract investors of all types, from high-net-worth individuals to pensioners and millennials.

The platform focuses on developments that have already obtained planning permission, thereby aiming to reduce delays and make returns more predictable.

Users can log into the platform to allocate their money, either to specific projects or to a selection of pooled bonds, which invest in

20 | NACFB Magazine

multiple opportunities. The platform also provides in-depth information about the opportunities, complete with independent valuation information and an explanation of the project’s timeline.

as Propio, can step in to provide that crucial finance required to get smaller developments off the ground.

Meanwhile, for lenders, the platform can help them refinance their loans to release capital to pursue other deals.

Taking an equity stake in a project could potentially earn a return of up to 15-20% per year, while debt investments typically return around 8%.

“Propio has been road-tested over the past year by an expert team of developers responsible for more than half a billion pounds worth of property. All of our directors put their money where their mouth is and, to date, we have invested our own cash into every opportunity listed on the platform.”

Shahil Kotecha, CEO and principal at Pivot, said: “Our new fintech platform opens up exciting new avenues of funding for small and medium-sized developers keen to share equity with others, or whose schemes may not be big enough to excite the major banks – which have far less capacity and willingness to support smaller developers today than they did in the past.

“This is where a fully FCA-regulated alternative investment firm, such

Tom Buttress, co-founder at Propio, added: “Our ambition is to democratise property investment, demystifying the development process so that retail investors of all backgrounds can access the sorts of returns previously only available to the financial elite.”

We’re more than just a principal lender.

Combining our deep property expertise with diverse institutional and private funding arrangements means that we can consider even the most complex cases whilst remaining competitive.

RATES FROM 0.74% PM

At Pivot we are passionate about providing our clients with the financial independence they require to meet the business objectives they desire –providing finance to enable progress. For more information please contact +44 (0)20 3695 5511 or visit pivotfinance.co.uk *This is an indication of the rate that can be offered for residential cases. Commercial cases considered from 0.84% pm. Development cases from 0.89% pm.

FI N AN C E TO E N AB L E PR O G R E SS

Introducing New and refreshed offerings for NACFB brokers on behalf of Patrons and Members

CUTTING THROUGH COMPLEXITY

Pivot launches new fund management platform A new online property crowdfunding platform has launched, offering returns of up to 20%.

Shahil Kotecha CEO Pivot

P

ropio, developed by the founders of Pivot and Fruition, offers a range of debt and equity opportunities, all linked to development, with a minimum investment of just £1,000. The company’s founders hope to attract investors of all types, from high-net-worth individuals to pensioners and millennials.

The platform focuses on developments that have already obtained planning permission, thereby aiming to reduce delays and make returns more predictable.

Users can log into the platform to allocate their money, either to specific projects or to a selection of pooled bonds, which invest in

20 | NACFB Magazine

multiple opportunities. The platform also provides in-depth information about the opportunities, complete with independent valuation information and an explanation of the project’s timeline.

as Propio, can step in to provide that crucial finance required to get smaller developments off the ground.

Meanwhile, for lenders, the platform can help them refinance their loans to release capital to pursue other deals.

Taking an equity stake in a project could potentially earn a return of up to 15-20% per year, while debt investments typically return around 8%.

“Propio has been road-tested over the past year by an expert team of developers responsible for more than half a billion pounds worth of property. All of our directors put their money where their mouth is and, to date, we have invested our own cash into every opportunity listed on the platform.”

Shahil Kotecha, CEO and principal at Pivot, said: “Our new fintech platform opens up exciting new avenues of funding for small and medium-sized developers keen to share equity with others, or whose schemes may not be big enough to excite the major banks – which have far less capacity and willingness to support smaller developers today than they did in the past.

“This is where a fully FCA-regulated alternative investment firm, such

Tom Buttress, co-founder at Propio, added: “Our ambition is to democratise property investment, demystifying the development process so that retail investors of all backgrounds can access the sorts of returns previously only available to the financial elite.”

We’re more than just a principal lender.

Combining our deep property expertise with diverse institutional and private funding arrangements means that we can consider even the most complex cases whilst remaining competitive.

RATES FROM 0.74% PM

At Pivot we are passionate about providing our clients with the financial independence they require to meet the business objectives they desire –providing finance to enable progress. For more information please contact +44 (0)20 3695 5511 or visit pivotfinance.co.uk *This is an indication of the rate that can be offered for residential cases. Commercial cases considered from 0.84% pm. Development cases from 0.89% pm.

FI N AN C E TO E N AB L E PR O G R E SS

Case Studies

Assetz Capital, more than a partnership

Completion highlights from a selection of our Patrons and Members

£1.3m invoice finance facility turns into long-term solution Alex Kourti Head of partnerships Satago

T

he past decade has seen invoice finance grow in popularity as a simple solution to satisfy a variety of working capital needs, yet many business owners still struggle to find a lending partner that can cater to the specific needs of their business.

Here at Satago, we recognise that cash flow – particularly a lack of it – impacts businesses of all sizes and restricts their growth. Our ability to quickly understand our clients’ business and their individual requirements enables us to help unlock capital tied up in unpaid invoices with our flexible finance solutions, allowing them to focus on running their business.

Earlier this year, Goodman Corporate Finance - one of our most trusted business introducers - identified an exciting opportunity for us to collaborate on. It was a chance to assist a business in bridging a cash flow need to enable them to purchase new plant and machinery required to realise growth aspirations.

The opportunity was with a business that is part of one of the largest engineering groups in the UK, which has been trading for over 65 years.

Benefiting from significant financial strength, an abundance of traditional finance options was available to the business. With a number of blue-chip customers, longstanding trading relationships and a sizeable debtor book, invoice finance was identified as an optimal solution to source the required funds quickly.

The broker introduced the business to Satago as provider of flexible invoice

22 | NACFB Magazine

finance solutions that consistently delivers to their clients’ needs.

Satago immediately engaged with the business to ensure we had a comprehensive understanding of not only their immediate finance requirement, but also their normal operating rhythm with customers from point of order through to receipt of payment. This was critical in identifying how we could provide them with a solution that integrated seamlessly into their existing practices, avoiding the creation of additional effort without compromising necessary controls.

Following initial engagement, Satago proposed a £1.3m invoice finance solution specific to one of their largest customers, which could be quickly implemented, would effortlessly cope with significant invoice volume and provide sufficient liquidity at a price unmatched by any other offering, without the need for personal guarantees or other collateral. We are delighted to have secured the business.

Since the initial funding, the client continues to regularly finance invoices with Satago, benefiting from the built-in flexibility to selectively finance, allowing them to pursue opportunities that have emerged and secure in the knowledge that they have a working capital facility that works with and for them. Our client is now leveraging our broad alternative finance expertise across multiple sectors as they continue to seek expansion opportunities.

The broker continues to recommend Satago across its network and particularly to business owners with similar requirements. Stefan Radymski, sales director at Goodman, said: “We found Satago to be flexible in their approach, commercially

Our fast and flexible approach to lending will enable you to support existing borrowers and identify new clients

minded and quick with making decisions. We were kept up to date throughout the whole process and had access to key decision makers.

Overall, a very positive experience and we are delighted that our clients have access to Satago’s offering via our funding panel.”

Satago’s invoice finance is designed to meet the diverse needs of UK businesses – it’s a simple solution that has far-reaching impact. We take a pragmatic approach to lending and are focused on delivering positive outcomes that help businesses grow and stretch their potential. We provide a professional and personal service to both our partners and clients, allowing us to fully understand and structure each deal in a way that maximises value and benefit.

Over £500m lent to date

Our lending solutions include SME business term loans, commercial mortgages, development finance, bridging finance, buy-to-let for landlords, property investor hunting licence and residential refurbishment.

Find out more at assetzcapital.co.uk/borrow or call 0800 470 0432 Assetz SME Capital Ltd is a company registered in England and Wales with company number 08007287. Assetz SME Capital Ltd is authorised and regulated by the Financial Conduct Authority (Reg No: 724996). ‘Assetz Capital’ is a trading name of Assetz SME Capital Ltd. Assetz SME Capital Ltd is registered with the Office of the Information Commissioner (Reg No: Z3338899) for data protection purposes.

Case Studies

Assetz Capital, more than a partnership

Completion highlights from a selection of our Patrons and Members

£1.3m invoice finance facility turns into long-term solution Alex Kourti Head of partnerships Satago

T

he past decade has seen invoice finance grow in popularity as a simple solution to satisfy a variety of working capital needs, yet many business owners still struggle to find a lending partner that can cater to the specific needs of their business.

Here at Satago, we recognise that cash flow – particularly a lack of it – impacts businesses of all sizes and restricts their growth. Our ability to quickly understand our clients’ business and their individual requirements enables us to help unlock capital tied up in unpaid invoices with our flexible finance solutions, allowing them to focus on running their business.

Earlier this year, Goodman Corporate Finance - one of our most trusted business introducers - identified an exciting opportunity for us to collaborate on. It was a chance to assist a business in bridging a cash flow need to enable them to purchase new plant and machinery required to realise growth aspirations.

The opportunity was with a business that is part of one of the largest engineering groups in the UK, which has been trading for over 65 years.

Benefiting from significant financial strength, an abundance of traditional finance options was available to the business. With a number of blue-chip customers, longstanding trading relationships and a sizeable debtor book, invoice finance was identified as an optimal solution to source the required funds quickly.

The broker introduced the business to Satago as provider of flexible invoice

22 | NACFB Magazine

finance solutions that consistently delivers to their clients’ needs.

Satago immediately engaged with the business to ensure we had a comprehensive understanding of not only their immediate finance requirement, but also their normal operating rhythm with customers from point of order through to receipt of payment. This was critical in identifying how we could provide them with a solution that integrated seamlessly into their existing practices, avoiding the creation of additional effort without compromising necessary controls.

Following initial engagement, Satago proposed a £1.3m invoice finance solution specific to one of their largest customers, which could be quickly implemented, would effortlessly cope with significant invoice volume and provide sufficient liquidity at a price unmatched by any other offering, without the need for personal guarantees or other collateral. We are delighted to have secured the business.

Since the initial funding, the client continues to regularly finance invoices with Satago, benefiting from the built-in flexibility to selectively finance, allowing them to pursue opportunities that have emerged and secure in the knowledge that they have a working capital facility that works with and for them. Our client is now leveraging our broad alternative finance expertise across multiple sectors as they continue to seek expansion opportunities.

The broker continues to recommend Satago across its network and particularly to business owners with similar requirements. Stefan Radymski, sales director at Goodman, said: “We found Satago to be flexible in their approach, commercially

Our fast and flexible approach to lending will enable you to support existing borrowers and identify new clients

minded and quick with making decisions. We were kept up to date throughout the whole process and had access to key decision makers.

Overall, a very positive experience and we are delighted that our clients have access to Satago’s offering via our funding panel.”

Satago’s invoice finance is designed to meet the diverse needs of UK businesses – it’s a simple solution that has far-reaching impact. We take a pragmatic approach to lending and are focused on delivering positive outcomes that help businesses grow and stretch their potential. We provide a professional and personal service to both our partners and clients, allowing us to fully understand and structure each deal in a way that maximises value and benefit.

Over £500m lent to date

Our lending solutions include SME business term loans, commercial mortgages, development finance, bridging finance, buy-to-let for landlords, property investor hunting licence and residential refurbishment.

Find out more at assetzcapital.co.uk/borrow or call 0800 470 0432 Assetz SME Capital Ltd is a company registered in England and Wales with company number 08007287. Assetz SME Capital Ltd is authorised and regulated by the Financial Conduct Authority (Reg No: 724996). ‘Assetz Capital’ is a trading name of Assetz SME Capital Ltd. Assetz SME Capital Ltd is registered with the Office of the Information Commissioner (Reg No: Z3338899) for data protection purposes.

CASE STUDIES

CASE STUDIES

Fast funding for off-market transaction Before

After

Our client was a husband-and-wife team who had the opportunity to purchase a dilapidated bungalow at a below market value price before it reached the open market.

Sonia Shortland Director Apex Bridging

24 | NACFB Magazine

W

e hadn’t worked with these borrowers before, but after speaking with them about their plans and experience, it was clear that they would be a great fit for Apex. Our product is perfect for clients who are buying below market value, mirroring how House Buyer Bureau – Apex Bridging’s sister company – operates. We are happy to net our customers 100% of purchase price.

The property in question was exactly the type of security that we love: a three-bedroom detached bungalow that was being sold by the trustees of a deceased estate and was in a poor state of repair. It was an off-market transaction where the buyer was made aware of the sale via a mutual friend. As the purchase price was not in the public domain and there was

no marketing history, we were unable to obtain a true valuation figure. The clients negotiated a price of £300,000 and we lent against the open market value of £330,000.

Although these clients were fairly new to property development, we were happy to work with them as they were well organised and had heavily researched the market, aware of all the risks of a short-term loan. This has given us the confidence to lend on value rather than purchase price.

Our process is fairly simple, with a short application form and minimal paperwork. Our confidence in a deal is from meeting our borrowers face to face to enable us to gain a full understanding of what the clients wish to do, and how realistic they are.

In turn, we find that our borrowers have trust in us as a lender who will hold their hand through the purchase, refurbishment and sale.

For most of our customers and for this case in particular, it was important that the customers could use as little of their own cash as possible for the purchase, to be able to use their own money for the refurbishment work. Our clients completed a full refurbishment of the property with a small team of contractors that they had used on a previous project to carry out all the works.

out of their deal within six months, they took an eight-month term, as everyone wanted to work based on a worst-case scenario. They managed to complete the project under budget and before the loan expired. Once works were completed, the bungalow was sold very quickly, at £475,000 – higher than the predicted GDV. Due to the early redemption, the clients were able to benefit from our discounted rate of interest, and we rebated the remaining retained interest owed to them, releasing more profit for the deal.

Our clients had budgeted a total of £25,000 for the project with a GDV of £450,000. As with most projects, they had their fair share of problems, and although were originally hoping to be

NACFB Magazine | 25

CASE STUDIES

CASE STUDIES

Fast funding for off-market transaction Before

After

Our client was a husband-and-wife team who had the opportunity to purchase a dilapidated bungalow at a below market value price before it reached the open market.

Sonia Shortland Director Apex Bridging

24 | NACFB Magazine

W

e hadn’t worked with these borrowers before, but after speaking with them about their plans and experience, it was clear that they would be a great fit for Apex. Our product is perfect for clients who are buying below market value, mirroring how House Buyer Bureau – Apex Bridging’s sister company – operates. We are happy to net our customers 100% of purchase price.

The property in question was exactly the type of security that we love: a three-bedroom detached bungalow that was being sold by the trustees of a deceased estate and was in a poor state of repair. It was an off-market transaction where the buyer was made aware of the sale via a mutual friend. As the purchase price was not in the public domain and there was

no marketing history, we were unable to obtain a true valuation figure. The clients negotiated a price of £300,000 and we lent against the open market value of £330,000.

Although these clients were fairly new to property development, we were happy to work with them as they were well organised and had heavily researched the market, aware of all the risks of a short-term loan. This has given us the confidence to lend on value rather than purchase price.

Our process is fairly simple, with a short application form and minimal paperwork. Our confidence in a deal is from meeting our borrowers face to face to enable us to gain a full understanding of what the clients wish to do, and how realistic they are.

In turn, we find that our borrowers have trust in us as a lender who will hold their hand through the purchase, refurbishment and sale.

For most of our customers and for this case in particular, it was important that the customers could use as little of their own cash as possible for the purchase, to be able to use their own money for the refurbishment work. Our clients completed a full refurbishment of the property with a small team of contractors that they had used on a previous project to carry out all the works.

out of their deal within six months, they took an eight-month term, as everyone wanted to work based on a worst-case scenario. They managed to complete the project under budget and before the loan expired. Once works were completed, the bungalow was sold very quickly, at £475,000 – higher than the predicted GDV. Due to the early redemption, the clients were able to benefit from our discounted rate of interest, and we rebated the remaining retained interest owed to them, releasing more profit for the deal.

Our clients had budgeted a total of £25,000 for the project with a GDV of £450,000. As with most projects, they had their fair share of problems, and although were originally hoping to be

NACFB Magazine | 25

CASE STUDIES

Portfolio refinance boosts selfmade landlord business Marc Goldberg Commercial CEO Together

I

t’s been a tough few years for buy-to-let property investors.

The latest wave of cuts to tax relief on landlords’ mortgage interest was ushered in just recently and reports have been rife that landlords are exiting the buy-to-let sector in their droves.

However, many believe the death of buy-to-let has been greatly exaggerated. Analysis by research consultancy BDRC – on behalf of specialist buy-to-let mortgage lender Together – revealed profitability remains high, with 85% of landlords surveyed saying they were making money, while the average yield remained stable at 5.9%.

We have seen a raft of changes over the past few years, but what is obvious is that there’s a continuing demand for buy-to-let investors looking to make gains in the long term. It’s an exciting time for the market as it evolves and we are seeing landlords – particularly those with larger portfolios – adapt to the changes.

However, some buy-to-let landlords are finding they can no longer finance their property portfolios with mainstream lenders when it comes to remortgaging because of some banks’ stricter underwriting rules, and they are looking to specialist lenders that have more knowledge and expertise of this niche section of the mortgage market.

Scottish landlord Victor Singh has built up a portfolio of nearly 60 properties, which he started by snapping up cheaper properties at auction before renovating them and letting them to tenants within weeks.

The savvy landlord followed his entrepreneurial father who moved from India in the 60s, selling goods out of a suitcase before successfully turning his hand to

Bungalow or entire row?

No matter who your clients are, our common sense approach makes Buy-to-Let simple.

(L-R): Victor Singh, VE Properties, and Steven Clark, regional development director for Scotland at Together property, buying up buy-to-let homes and factories in Glasgow.

Victor initially joined the family business working for his father but decided to go it alone 20 years ago, and today works with his daughter, Brooke, who manages the lettings side from the company’s newly opened offices in Dumfries.

“I started off having just enough money to get the ball rolling on my own and it just grew from there,” said Victor. “It would be a four-week turnaround, no matter what the state of the property, and we worked like that day and night for 12 years.”

Like thousands of other landlords up and down the UK, he has raised money through remortgaging his current portfolio, using the cash to buy up more residential houses, flats and commercial property, as well as land.

In the past, he’d always secured funding through high street lenders to buy properties around Dumfries and Carlisle in Cumbria. However, more stringent underwriting rules have meant bank finance has been harder to come by in recent years.

Victor added: “It is obviously harder to obtain finance now, and that’s one of the key issues for people starting up as professional landlords.

We had a good bit of business with the mainstream lenders over the years but they lost their appetite for lending after the crash of 2008 and, since then, funding just dried up.”

After being unable to release £2.7m through a remortgage to invest in more properties, Victor started doing his own research online and contacted Together. We looked closely at his previous experience as a landlord. Our regional development director for Scotland, Steve Clark, visited Victor’s new offices and agreed to refinance the portfolio.

“Everything ran very smoothly and Together was able to provide the funds I needed to refinance the business,” said Victor. “Now we are looking to grow in the future.”

Experts have predicted that a more professional buy-to-let sector will involve more ‘dinner party’ landlords quitting the market – who maybe own a single property – leaving portfolio investors able to capitalise on buying properties sold off by individuals.

Victor said: “There are a lot of hurdles and it is not going to be as easy as it has in the past, but I’m keeping an open mind about the future. There will be more properties coming on to the market and more options available for professional portfolio landlords.”

It doesn’t matter to us if your client has one or one hundred properties, our process keeps everything nice and simple. In fact, with our new lowest ever rate, our award-winning Buy-to-Let mortgages have never been easier.

Call us on 0161 933 7046 or visit togethermoney.com/btl For professional intermediary use only.

26 | NACFB Magazine

No limit on volume or value of properties

CASE STUDIES

Portfolio refinance boosts selfmade landlord business Marc Goldberg Commercial CEO Together

I

t’s been a tough few years for buy-to-let property investors.

The latest wave of cuts to tax relief on landlords’ mortgage interest was ushered in just recently and reports have been rife that landlords are exiting the buy-to-let sector in their droves.

However, many believe the death of buy-to-let has been greatly exaggerated. Analysis by research consultancy BDRC – on behalf of specialist buy-to-let mortgage lender Together – revealed profitability remains high, with 85% of landlords surveyed saying they were making money, while the average yield remained stable at 5.9%.

We have seen a raft of changes over the past few years, but what is obvious is that there’s a continuing demand for buy-to-let investors looking to make gains in the long term. It’s an exciting time for the market as it evolves and we are seeing landlords – particularly those with larger portfolios – adapt to the changes.

However, some buy-to-let landlords are finding they can no longer finance their property portfolios with mainstream lenders when it comes to remortgaging because of some banks’ stricter underwriting rules, and they are looking to specialist lenders that have more knowledge and expertise of this niche section of the mortgage market.

Scottish landlord Victor Singh has built up a portfolio of nearly 60 properties, which he started by snapping up cheaper properties at auction before renovating them and letting them to tenants within weeks.

The savvy landlord followed his entrepreneurial father who moved from India in the 60s, selling goods out of a suitcase before successfully turning his hand to

Bungalow or entire row?

No matter who your clients are, our common sense approach makes Buy-to-Let simple.

(L-R): Victor Singh, VE Properties, and Steven Clark, regional development director for Scotland at Together property, buying up buy-to-let homes and factories in Glasgow.

Victor initially joined the family business working for his father but decided to go it alone 20 years ago, and today works with his daughter, Brooke, who manages the lettings side from the company’s newly opened offices in Dumfries.

“I started off having just enough money to get the ball rolling on my own and it just grew from there,” said Victor. “It would be a four-week turnaround, no matter what the state of the property, and we worked like that day and night for 12 years.”

Like thousands of other landlords up and down the UK, he has raised money through remortgaging his current portfolio, using the cash to buy up more residential houses, flats and commercial property, as well as land.

In the past, he’d always secured funding through high street lenders to buy properties around Dumfries and Carlisle in Cumbria. However, more stringent underwriting rules have meant bank finance has been harder to come by in recent years.

Victor added: “It is obviously harder to obtain finance now, and that’s one of the key issues for people starting up as professional landlords.

We had a good bit of business with the mainstream lenders over the years but they lost their appetite for lending after the crash of 2008 and, since then, funding just dried up.”

After being unable to release £2.7m through a remortgage to invest in more properties, Victor started doing his own research online and contacted Together. We looked closely at his previous experience as a landlord. Our regional development director for Scotland, Steve Clark, visited Victor’s new offices and agreed to refinance the portfolio.

“Everything ran very smoothly and Together was able to provide the funds I needed to refinance the business,” said Victor. “Now we are looking to grow in the future.”

Experts have predicted that a more professional buy-to-let sector will involve more ‘dinner party’ landlords quitting the market – who maybe own a single property – leaving portfolio investors able to capitalise on buying properties sold off by individuals.

Victor said: “There are a lot of hurdles and it is not going to be as easy as it has in the past, but I’m keeping an open mind about the future. There will be more properties coming on to the market and more options available for professional portfolio landlords.”

It doesn’t matter to us if your client has one or one hundred properties, our process keeps everything nice and simple. In fact, with our new lowest ever rate, our award-winning Buy-to-Let mortgages have never been easier.

Call us on 0161 933 7046 or visit togethermoney.com/btl For professional intermediary use only.

26 | NACFB Magazine

No limit on volume or value of properties

Patron | profile

Pivot’s roots lie deep in property Shahil Kotecha CEO & principal Pivot

With ever increasing competition in the property finance marketplace, new and established lenders are vying for market share by offering the lowest rates seen for years, increasing leverage and providing broker incentives, often larger than the margins made by the lenders themselves.

28 | NACFB Magazine

B

ut is it all about the numbers?

Pivot has spent the last five years leveraging its wider property experience to deliver a competitive, yet customer-centric proposition.

The alternate property lending space – bridging and development – has become crowded. According to a recent market study, there are over 40 lenders, and given the unregulated nature of much of the lending in this space, in reality, it is presumably much higher.

Yet data collected by industry stalwarts suggests that the loan volumes in Q1 2018 were the highest recorded since 2015 – almost double the £80.47m of lending recorded during Q1 2015 – and this comes against a backdrop of reductions in traditional mortgage lending. A report by Trading Economics stated that 62,914 mortgages were approved in March 2018, compared with an average of 85,050 from 1986 until 2018.

The likelihood is, therefore, that while the property market continues

to soften and traditional mortgage lending declines, the alternate lending space will continue to grow.

As lenders continue to grapple for market share, competitive pressures are likely to heighten, resulting in continued downward pressure on rates, increased leverage being offered and more lenders moving into the development market.

While borrowers are benefiting from the cheapest lending rates seen in years, there are significant risks that may come to pass. Some of these have already come to fruition – a recent article published by Bridging & Commercial, for example, shone light on the apparent skills shortage in the industry. There has also been talk of the lack of decision makers in the credit process, as the finite pool of experienced talent is spread across a wider number of lenders.

What is even more worrying is that there are lenders moving into development lending that aren’t experienced in offering these types of facilities. We’ve seen this

before and only a decade ago, similar market factors led to some lenders ending up with large land banks and SME developers left with partially completed sites.

It is harder than ever for readers of the NACFB Magazine to differentiate between lenders and ensure they are partnering their clients with a provider that is not only competitive but has the right expertise when times get tough.

Pivot’s team of cross-industry experts has financed, built and managed more than £500m of UK property assets across hundreds of projects. Established over five years ago, we have only recently launched our proposition to market, using the time to hone our customer-centric approach.

We are not just a lender but part of a wider real estate group that has been operating for almost 20 years.

Our group includes and awardwinning property developer (Fruition

Properties), a digital fund manager (Propio.com) and a construction company (Area 29). Our expertise in the property market is well established and enables us to conduct business with a clear and complete understanding of our clients’ requirements. We have experienced the challenges of raising finance first-hand - Pivot was launched with the mission of making the borrowing process simple yet supportive.

Technological innovation is at the heart of our offering.

Most lenders will talk about the speed and flexibility of their offering.

We believe these statements should be grounded by operational capabilities, such as technology. We use technological solutions from enquiry to redemption. We integrate with third parties and generate documents from our end-to-end loan management system. Our claims of being able to offer speed are tangible and credit-backed: terms are typically issued within 24 hours.

We have diverse institutional and private funding arrangements.

We are funded by three well-known institutions – two banks and a global asset manager – and we even issue our own bonds via our associated fund management business.

What this means is that we are not hamstrung by one funder, assess every transaction on its own merits and price risk accordingly - offering rates from 0.74% per month.

We offer products and services that others in the market often cannot.

Our multi-disciplinary team has skills across finance, business design, asset management planning and development. This means we can assess a wide range of transactions and are happy to consider complex cases and uncommon assets.

We even leverage our planning expertise to offer a unique product, where we can lend against the hope value associated with a site.

NACFB Magazine | 29

Patron | profile

Pivot’s roots lie deep in property Shahil Kotecha CEO & principal Pivot

With ever increasing competition in the property finance marketplace, new and established lenders are vying for market share by offering the lowest rates seen for years, increasing leverage and providing broker incentives, often larger than the margins made by the lenders themselves.

28 | NACFB Magazine

B

ut is it all about the numbers?

Pivot has spent the last five years leveraging its wider property experience to deliver a competitive, yet customer-centric proposition.

The alternate property lending space – bridging and development – has become crowded. According to a recent market study, there are over 40 lenders, and given the unregulated nature of much of the lending in this space, in reality, it is presumably much higher.

Yet data collected by industry stalwarts suggests that the loan volumes in Q1 2018 were the highest recorded since 2015 – almost double the £80.47m of lending recorded during Q1 2015 – and this comes against a backdrop of reductions in traditional mortgage lending. A report by Trading Economics stated that 62,914 mortgages were approved in March 2018, compared with an average of 85,050 from 1986 until 2018.

The likelihood is, therefore, that while the property market continues

to soften and traditional mortgage lending declines, the alternate lending space will continue to grow.

As lenders continue to grapple for market share, competitive pressures are likely to heighten, resulting in continued downward pressure on rates, increased leverage being offered and more lenders moving into the development market.

While borrowers are benefiting from the cheapest lending rates seen in years, there are significant risks that may come to pass. Some of these have already come to fruition – a recent article published by Bridging & Commercial, for example, shone light on the apparent skills shortage in the industry. There has also been talk of the lack of decision makers in the credit process, as the finite pool of experienced talent is spread across a wider number of lenders.

What is even more worrying is that there are lenders moving into development lending that aren’t experienced in offering these types of facilities. We’ve seen this

before and only a decade ago, similar market factors led to some lenders ending up with large land banks and SME developers left with partially completed sites.

It is harder than ever for readers of the NACFB Magazine to differentiate between lenders and ensure they are partnering their clients with a provider that is not only competitive but has the right expertise when times get tough.

Pivot’s team of cross-industry experts has financed, built and managed more than £500m of UK property assets across hundreds of projects. Established over five years ago, we have only recently launched our proposition to market, using the time to hone our customer-centric approach.

We are not just a lender but part of a wider real estate group that has been operating for almost 20 years.

Our group includes and awardwinning property developer (Fruition

Properties), a digital fund manager (Propio.com) and a construction company (Area 29). Our expertise in the property market is well established and enables us to conduct business with a clear and complete understanding of our clients’ requirements. We have experienced the challenges of raising finance first-hand - Pivot was launched with the mission of making the borrowing process simple yet supportive.

Technological innovation is at the heart of our offering.

Most lenders will talk about the speed and flexibility of their offering.

We believe these statements should be grounded by operational capabilities, such as technology. We use technological solutions from enquiry to redemption. We integrate with third parties and generate documents from our end-to-end loan management system. Our claims of being able to offer speed are tangible and credit-backed: terms are typically issued within 24 hours.

We have diverse institutional and private funding arrangements.

We are funded by three well-known institutions – two banks and a global asset manager – and we even issue our own bonds via our associated fund management business.

What this means is that we are not hamstrung by one funder, assess every transaction on its own merits and price risk accordingly - offering rates from 0.74% per month.

We offer products and services that others in the market often cannot.

Our multi-disciplinary team has skills across finance, business design, asset management planning and development. This means we can assess a wide range of transactions and are happy to consider complex cases and uncommon assets.

We even leverage our planning expertise to offer a unique product, where we can lend against the hope value associated with a site.

NACFB Magazine | 29

Ask | the expert Your questions answered by the most knowledgeable industry insiders

Apparent values Stephen Todd, co-founder and managing director at VAS Group, on what the right valuer can do for the specialist lending process

Q A

It’s just a valuation, right?

Wrong. While a residential valuation can be a relatively straightforward affair, the requirements of the specialist finance market are completely different, and by nature more complicated.

I was in a meeting recently where I described commercial/development and residential valuations as rugby union and rugby league respectively: while there are plenty of similarities, swapping between the codes is not a straightforward affair. Many players have successfully transitioned from union to league, but those going in the opposite direction are far less prevalent. In effect, commercial and development work has a far larger and more complex set of rules and requires a completely different skill set. (If I’ve offended any rugby fans from either side of the sport, I apologise unreservedly!)

Q A

Sport analogies aside, explain?

Customers can pay a lot of money for their valuations and they want to ensure the advice that has been provided is accurate and correct.

Here is the acid test. If a lender repossesses a commercial property and puts it on the market, what would they get for it?

A valuer who operates in the residential sector would look at the building, its location and condition, but a commercial

30 | NACFB Magazine

valuer would also consider other potential variables such as tenancies, planning status, appropriate valuation methodology and other important analytical data.

Correct valuation is critical. It has to protect the client and the lender and, as such, the person doing the valuing has to be 100% comfortable in their role.

Q

What are the other benefits besides the valuation figure?

A Speed and experience is of the essence for clients, therefore, finding the right valuation company in the right location and with the correct experience is critical to the specialist finance chain.

Let’s say we have a commercial property above a retail unit. Why go to a large, multi-disciplined practice for the work, when a local company can do the job far more efficiently? On the reverse, we would not advise giving a local practice a large-scale development site when a multinational practice with an array of internal departments with different property sector disciplines would be best placed for the job. This clearly contributes to achieving the correct valuation with robust methodology and justification.

Q A

It’s not easy to always find the right valuer for every specialist job, is it?

In my previous roles as a chartered surveyor and valuer, I could see that most lenders’ biggest frustration

was trying to build a valuation panel that covers every property sector and specialist finance application across the country.

With most lenders’ product ranges varying from £25,000 up to tens of millions, the panel variety and depth needed to find the right valuers was proving immensely difficult. This is why we created the VAS Group – the acronym originally standing for Valuation Audit Services.

VAS Group consists of three separate divisions, all of which are designed to simplify the entire valuations process.

VAS Panel provides a full valuation panel management service, which ensures the most relevant companies are instructed based on location, deal type and value; VAS Software is a cloud-based panel management system, which allows lenders to effectively build and manage their own panels; and VAS Audit provides live and retrospective auditing to reduce propertyspecific lending risks and ensure high standards. The service is backed up by an experienced processing and audit team.

Q A

Any more rugby analogies?

In the scrum, don’t get caught on the blindside – know your best options.

Ask | the expert Your questions answered by the most knowledgeable industry insiders

Apparent values Stephen Todd, co-founder and managing director at VAS Group, on what the right valuer can do for the specialist lending process

Q A

It’s just a valuation, right?

Wrong. While a residential valuation can be a relatively straightforward affair, the requirements of the specialist finance market are completely different, and by nature more complicated.

I was in a meeting recently where I described commercial/development and residential valuations as rugby union and rugby league respectively: while there are plenty of similarities, swapping between the codes is not a straightforward affair. Many players have successfully transitioned from union to league, but those going in the opposite direction are far less prevalent. In effect, commercial and development work has a far larger and more complex set of rules and requires a completely different skill set. (If I’ve offended any rugby fans from either side of the sport, I apologise unreservedly!)

Q A

Sport analogies aside, explain?

Customers can pay a lot of money for their valuations and they want to ensure the advice that has been provided is accurate and correct.

Here is the acid test. If a lender repossesses a commercial property and puts it on the market, what would they get for it?

A valuer who operates in the residential sector would look at the building, its location and condition, but a commercial

30 | NACFB Magazine

valuer would also consider other potential variables such as tenancies, planning status, appropriate valuation methodology and other important analytical data.

Correct valuation is critical. It has to protect the client and the lender and, as such, the person doing the valuing has to be 100% comfortable in their role.

Q

What are the other benefits besides the valuation figure?

A Speed and experience is of the essence for clients, therefore, finding the right valuation company in the right location and with the correct experience is critical to the specialist finance chain.

Let’s say we have a commercial property above a retail unit. Why go to a large, multi-disciplined practice for the work, when a local company can do the job far more efficiently? On the reverse, we would not advise giving a local practice a large-scale development site when a multinational practice with an array of internal departments with different property sector disciplines would be best placed for the job. This clearly contributes to achieving the correct valuation with robust methodology and justification.

Q A

It’s not easy to always find the right valuer for every specialist job, is it?

In my previous roles as a chartered surveyor and valuer, I could see that most lenders’ biggest frustration

was trying to build a valuation panel that covers every property sector and specialist finance application across the country.

With most lenders’ product ranges varying from £25,000 up to tens of millions, the panel variety and depth needed to find the right valuers was proving immensely difficult. This is why we created the VAS Group – the acronym originally standing for Valuation Audit Services.

VAS Group consists of three separate divisions, all of which are designed to simplify the entire valuations process.

VAS Panel provides a full valuation panel management service, which ensures the most relevant companies are instructed based on location, deal type and value; VAS Software is a cloud-based panel management system, which allows lenders to effectively build and manage their own panels; and VAS Audit provides live and retrospective auditing to reduce propertyspecific lending risks and ensure high standards. The service is backed up by an experienced processing and audit team.

Q A

Any more rugby analogies?

In the scrum, don’t get caught on the blindside – know your best options.

Special | features An up-to-date insight into the industry Benjamin Smith UK corporate sales director Bibby Financial Services

SMEs to seize opportunities in the Midlands

A

ccording to the Office for National Statistics, the Midlands – home to 27,000 businesses – is the second fastest growing region in the UK. While its manufacturing heritage is well known, in recent years the Midlands has fast emerged as one of the leading services hubs in the UK. Findings of Bibby Financial Services’ SME confidence tracker for Q1 2018 reflect strong business optimism in the region. Over half of SMEs (57%) across the East and West Midlands expected sales to increase between April and July, up from 36% in the previous quarter. This is the most significant quarter-on-quarter jump across all regions.

Findings correlate with wider indicators of the region’s confidence. The EEF/BDO Manufacturing Outlook 2018 Q1 reports that Midlands manufacturers expected a 37% increase in orders in the next quarter as investment and global appeal continue to drive the region forward.

But it isn’t only manufacturers in the Midlands that are reaping the rewards of inward investment. Earlier this year, Sajid Javid – then the secretary of state for housing, communities and local government – proposed a further £100m equity fund for

WEST MIDLANDS

SMEs, bringing the total outlined investment for the Midlands Engine up to £250m.

The region’s SMEs are also investing.

Outside of London, West Midlands businesses planned to invest more than those in other areas over the coming months, with plans to invest an average of £169,441. In contrast, however, SMEs in the East Midlands planned to invest less than the tracker average, with £43,178 earmarked for investment in Q2.

In line with wider investment trends, more than two-fifths of West Midlands firms (41%) and nearly half of those in the East Midlands (49%) planned to invest in training and upskilling existing staff. Over a third of SMEs in the East Midlands (35%) expected to also invest in digital technology.

SME Confidence Tracker Q1 2018

SME confidence rose by six basis points from 58 in Q4 2017 to 6 4 in Q1 2018

13 50% of SMEs expect sales to increase in Q2 2018, up 13 per cent on Q1 2018

While it is positive that the region’s businesses are looking to invest, opportunities for further economic growth remain. Two-thirds of West Midlands SMEs (64%) and 69% of those in the East Midlands focus on domestic trade only. This represents an opportunity for Midlands businesses to expand their horizons and to look overseas for future growth.

Overall, businesses in the Midlands were positive about sales performance, investing for future growth and both recruiting and training staff. If the Midlands Engine initiative can deliver on its promise to bring economic prosperity to the region, it is likely that we will see a

47%

of SMEs saw a sales increase in Q1

73 Over two thirds (73%) of SMEs expect to invest in Q2 2018

43 Over two-fifths (43%) of SMEs say uncertain economic environment and Brexit are holding back investment

EAST MIDLANDS

36%

of SMEs saw a sales increase in Q1

58%

57%

£169, 441

£43, 178

of SMEs expect a sales increase in Q2

Average amount SMEs plan to invest in Q2

32 | NACFB Magazine

KEY FINDINGS IN Q1 2018

of SMEs expect a sales increase in Q2

Average amount SMEs plan to invest in Q2

NACFB Magazine | 33

Special | features An up-to-date insight into the industry Benjamin Smith UK corporate sales director Bibby Financial Services

SMEs to seize opportunities in the Midlands

A

ccording to the Office for National Statistics, the Midlands – home to 27,000 businesses – is the second fastest growing region in the UK. While its manufacturing heritage is well known, in recent years the Midlands has fast emerged as one of the leading services hubs in the UK. Findings of Bibby Financial Services’ SME confidence tracker for Q1 2018 reflect strong business optimism in the region. Over half of SMEs (57%) across the East and West Midlands expected sales to increase between April and July, up from 36% in the previous quarter. This is the most significant quarter-on-quarter jump across all regions.

Findings correlate with wider indicators of the region’s confidence. The EEF/BDO Manufacturing Outlook 2018 Q1 reports that Midlands manufacturers expected a 37% increase in orders in the next quarter as investment and global appeal continue to drive the region forward.

But it isn’t only manufacturers in the Midlands that are reaping the rewards of inward investment. Earlier this year, Sajid Javid – then the secretary of state for housing, communities and local government – proposed a further £100m equity fund for

WEST MIDLANDS

SMEs, bringing the total outlined investment for the Midlands Engine up to £250m.

The region’s SMEs are also investing.

Outside of London, West Midlands businesses planned to invest more than those in other areas over the coming months, with plans to invest an average of £169,441. In contrast, however, SMEs in the East Midlands planned to invest less than the tracker average, with £43,178 earmarked for investment in Q2.

In line with wider investment trends, more than two-fifths of West Midlands firms (41%) and nearly half of those in the East Midlands (49%) planned to invest in training and upskilling existing staff. Over a third of SMEs in the East Midlands (35%) expected to also invest in digital technology.

SME Confidence Tracker Q1 2018

SME confidence rose by six basis points from 58 in Q4 2017 to 6 4 in Q1 2018

13 50% of SMEs expect sales to increase in Q2 2018, up 13 per cent on Q1 2018

While it is positive that the region’s businesses are looking to invest, opportunities for further economic growth remain. Two-thirds of West Midlands SMEs (64%) and 69% of those in the East Midlands focus on domestic trade only. This represents an opportunity for Midlands businesses to expand their horizons and to look overseas for future growth.

Overall, businesses in the Midlands were positive about sales performance, investing for future growth and both recruiting and training staff. If the Midlands Engine initiative can deliver on its promise to bring economic prosperity to the region, it is likely that we will see a

47%

of SMEs saw a sales increase in Q1

73 Over two thirds (73%) of SMEs expect to invest in Q2 2018

43 Over two-fifths (43%) of SMEs say uncertain economic environment and Brexit are holding back investment

EAST MIDLANDS

36%

of SMEs saw a sales increase in Q1

58%

57%

£169, 441

£43, 178

of SMEs expect a sales increase in Q2

Average amount SMEs plan to invest in Q2

32 | NACFB Magazine

KEY FINDINGS IN Q1 2018

of SMEs expect a sales increase in Q2

Average amount SMEs plan to invest in Q2

NACFB Magazine | 33

IN Q1 2018 SPECIAL FEATURES

SME confidence rose by six basis points from 58 in Q4 2017 to 64 in Q1 2018

13 50% of SMEs expect sales to increase in Q2 2018, up 13 per cent on Q1 2018

73 WEST MIDLANDS

47%

EAST MIDLANDS

58%

of SMEs expect a sales – such as the £94m Lincoln Eastern inBypass Q2 and rail station renovations in

further uptick in confidence throughout the spring and summer months. increase

Birmingham and the East Midlands – There have been encouraging signs of will also help to improve connectivity growth among Midlands SMEs in the first throughout the region and beyond. quarter of the year, with rising confidence Average amount SMEs and increasing investment, particularly Furthermore, with Coventry named as the in the west of the region. Seemingly, the City of Culture plan to invest in Q2 2021, Birmingham set to host Midlands Engine is now beginning to the Commonwealth Games in 2022 and provide real opportunity for businesses three key Midlands cities bidding to become both big and small throughout the region. the new home of national broadcaster Channel 4, things are surely set to get Long-term infrastructure projects such even better for businesses throughout as HS2 will help to increase regional the Midlands over the coming years. output and draw out commercial opportunities from private investors.

Further large-scale infrastructure projects

£169, 441

42%

of SMEs saw a sales increase in Q1

36%

of SMEs saw43 a sales increase in Q1

of SMEs saw a sales increase in Q1

MIDLANDS OVERALL

Over two thirds (73%) of SMEs expect to invest in Q2 2018

UK OVERALL

57%

Over two-fifths (43%) of SMEs say uncertain economic environment and Brexit are holding back investment

of SMEs expect a sales increase in Q2 36

£43, 178

Over a third (36%) of SMEs wish to remain in the Single Market Average SMEs and Customs amount Union

plan to invest in Q2

53 Over half (53%) of SMEs have experienced issues when hiring

39%

of SMEs saw a sales increase in Q1

57%

50%

£106, 310

£103, 648

of SMEs expect a sales increase in Q2

Average amount SMEs plan to invest in Q2

We’re redefining standard

We’ve put a lot of thought into our newly extended suite of short-term lending products.

In an increasingly diverse world we know brokers need maximum flexibility to handle the widest possible range of client scenarios.

Standard bridging that’s anything but standard • • • • •

Prime Bridging Standard Bridging Light Development Development Commercial

Are you ready to rethink what standard means?

of SMEs expect a sales increase in Q2

Average amount SMEs plan to invest in Q2

masthaven.co.uk Masthaven Bank Limited is a company registered in England & Wales with registration number 09660012 and whose registered office is at: 11 Soho Street, London W1D 3AD. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority (Firm reference number 719354).

34 | NACFB Magazine

The “Masthaven” name and logos and all other brands, names, logos, marks and slogans on this document are the trademarks or service marks of us or our licensors.

IN Q1 2018 SPECIAL FEATURES

SME confidence rose by six basis points from 58 in Q4 2017 to 64 in Q1 2018

13 50% of SMEs expect sales to increase in Q2 2018, up 13 per cent on Q1 2018

73 WEST MIDLANDS

47%

EAST MIDLANDS

58%

of SMEs expect a sales – such as the £94m Lincoln Eastern inBypass Q2 and rail station renovations in

further uptick in confidence throughout the spring and summer months. increase

Birmingham and the East Midlands – There have been encouraging signs of will also help to improve connectivity growth among Midlands SMEs in the first throughout the region and beyond. quarter of the year, with rising confidence Average amount SMEs and increasing investment, particularly Furthermore, with Coventry named as the in the west of the region. Seemingly, the City of Culture plan to invest in Q2 2021, Birmingham set to host Midlands Engine is now beginning to the Commonwealth Games in 2022 and provide real opportunity for businesses three key Midlands cities bidding to become both big and small throughout the region. the new home of national broadcaster Channel 4, things are surely set to get Long-term infrastructure projects such even better for businesses throughout as HS2 will help to increase regional the Midlands over the coming years. output and draw out commercial opportunities from private investors.

Further large-scale infrastructure projects

£169, 441

42%

of SMEs saw a sales increase in Q1

36%

of SMEs saw43 a sales increase in Q1

of SMEs saw a sales increase in Q1

MIDLANDS OVERALL

Over two thirds (73%) of SMEs expect to invest in Q2 2018

UK OVERALL

57%

Over two-fifths (43%) of SMEs say uncertain economic environment and Brexit are holding back investment

of SMEs expect a sales increase in Q2 36

£43, 178

Over a third (36%) of SMEs wish to remain in the Single Market Average SMEs and Customs amount Union

plan to invest in Q2

53 Over half (53%) of SMEs have experienced issues when hiring

39%

of SMEs saw a sales increase in Q1

57%

50%

£106, 310

£103, 648

of SMEs expect a sales increase in Q2

Average amount SMEs plan to invest in Q2

We’re redefining standard

We’ve put a lot of thought into our newly extended suite of short-term lending products.

In an increasingly diverse world we know brokers need maximum flexibility to handle the widest possible range of client scenarios.

Standard bridging that’s anything but standard • • • • •

Prime Bridging Standard Bridging Light Development Development Commercial

Are you ready to rethink what standard means?

of SMEs expect a sales increase in Q2

Average amount SMEs plan to invest in Q2

masthaven.co.uk Masthaven Bank Limited is a company registered in England & Wales with registration number 09660012 and whose registered office is at: 11 Soho Street, London W1D 3AD. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority (Firm reference number 719354).

34 | NACFB Magazine

The “Masthaven” name and logos and all other brands, names, logos, marks and slogans on this document are the trademarks or service marks of us or our licensors.

SPECIAL FEATURES

A second string

Christopher Adamou Director at Lendhub

What professional background is best suited for lending?

I

n a constantly growing alternative finance space, it can be hard to find a true USP for new lenders entering the market.

However, having a solid background and years’ worth of experience can truly add value to the services provided.

Christopher Adamou, director at Lendhub, launched the business in 2016. As a chartered accountant, he has previously worked in several fields, including real estate and banking, before moving on to launching a new lender. We spoke to Christopher to find out how his various experiences help him today in running a successful business.

You’ve transitioned from accountancy and financial advisory for one of the UK’s big four to running a property lender. Is that a natural transition?

The transition felt very natural to me. Of course, being a chartered accountant is a really solid platform for anyone involved in finance.

I started my career working with ownermanaged businesses including real estate investment companies, hotel groups and care homes. I then moved on to working in the banking and capital markets team at Deloitte – a really different environment again. The clients you are dealing with are incredibly large and complex.

I was involved in the analysis of loan books and running risk tests on portfolios. I was also responsible for challenging the quantum of loan loss provision across a major UK bank and assessing the future recoverability of the exposures. As expected, most were secured by real estate, but I did experience a number of weird and wonderful variations, to say the least. A key part of the role was to understand the true value of the underlying assets – pretty much what I do now.

But property lending does require a second string. Accountants are not always

36 | NACFB Magazine

brilliant at seeing a vision of the future; when lending, you really do need to be able to do that. So that’s an area that really comes from my professional and my family background in property development, and an area that I foster at Lendhub. We keep an open mind and really enjoy some unusual challenges.

I think that, when you put these two aspects together, you have a pretty strong package… well, hopefully.

Do you bring a lot of that experience to bear in running Lendhub?

Having had exposure to a number of businesses during my early career, I’ve had a chance to observe what works well and what doesn’t in all sorts of different situations. Of course, my experience of working in banking and capital markets is directly applicable.

Certainly, the analytical skills I’ve developed help in managing our funds, which is

something that flows naturally from my previous roles. Unsurprisingly, the focus has sharpened somewhat now that it’s our own funds, but the skills are the same.

In large organisations, financial control is clearly an absolute necessity, but layers and layers of controls can also really slow a business down and mean that it simply loses out to more nimble rivals. At Lendhub, we keep it as simple as we can. I take an active interest in each case and always try to keep things moving quickly if I can.

The never-ending bridge Our commercial mortgages are underwritten like a bridge, are entirely non-status, but have no fixed repayment date. Rates from 0.9%pm.

Devon and Cornwall Securities Limited non status lenders since 1983

One of the things that I believe makes a huge difference is the ability to harness technology for the good of the business and its clients. We have some exciting developments coming in this space to help things move quickly. For our clients, days make a difference. We can’t control the other side of any deal, but people working with us expect us to be on the ball and to save those crucial days for them.

devonandcornwallsecurities.co.uk | 01840 212832 | lj@devonandcornwallsecurities.co.uk

SPECIAL FEATURES

A second string

Christopher Adamou Director at Lendhub

What professional background is best suited for lending?

I

n a constantly growing alternative finance space, it can be hard to find a true USP for new lenders entering the market.

However, having a solid background and years’ worth of experience can truly add value to the services provided.

Christopher Adamou, director at Lendhub, launched the business in 2016. As a chartered accountant, he has previously worked in several fields, including real estate and banking, before moving on to launching a new lender. We spoke to Christopher to find out how his various experiences help him today in running a successful business.

You’ve transitioned from accountancy and financial advisory for one of the UK’s big four to running a property lender. Is that a natural transition?

The transition felt very natural to me. Of course, being a chartered accountant is a really solid platform for anyone involved in finance.

I started my career working with ownermanaged businesses including real estate investment companies, hotel groups and care homes. I then moved on to working in the banking and capital markets team at Deloitte – a really different environment again. The clients you are dealing with are incredibly large and complex.

I was involved in the analysis of loan books and running risk tests on portfolios. I was also responsible for challenging the quantum of loan loss provision across a major UK bank and assessing the future recoverability of the exposures. As expected, most were secured by real estate, but I did experience a number of weird and wonderful variations, to say the least. A key part of the role was to understand the true value of the underlying assets – pretty much what I do now.

But property lending does require a second string. Accountants are not always

36 | NACFB Magazine

brilliant at seeing a vision of the future; when lending, you really do need to be able to do that. So that’s an area that really comes from my professional and my family background in property development, and an area that I foster at Lendhub. We keep an open mind and really enjoy some unusual challenges.

I think that, when you put these two aspects together, you have a pretty strong package… well, hopefully.

Do you bring a lot of that experience to bear in running Lendhub?

Having had exposure to a number of businesses during my early career, I’ve had a chance to observe what works well and what doesn’t in all sorts of different situations. Of course, my experience of working in banking and capital markets is directly applicable.

Certainly, the analytical skills I’ve developed help in managing our funds, which is

something that flows naturally from my previous roles. Unsurprisingly, the focus has sharpened somewhat now that it’s our own funds, but the skills are the same.

In large organisations, financial control is clearly an absolute necessity, but layers and layers of controls can also really slow a business down and mean that it simply loses out to more nimble rivals. At Lendhub, we keep it as simple as we can. I take an active interest in each case and always try to keep things moving quickly if I can.

The never-ending bridge Our commercial mortgages are underwritten like a bridge, are entirely non-status, but have no fixed repayment date. Rates from 0.9%pm.

Devon and Cornwall Securities Limited non status lenders since 1983

One of the things that I believe makes a huge difference is the ability to harness technology for the good of the business and its clients. We have some exciting developments coming in this space to help things move quickly. For our clients, days make a difference. We can’t control the other side of any deal, but people working with us expect us to be on the ball and to save those crucial days for them.

devonandcornwallsecurities.co.uk | 01840 212832 | lj@devonandcornwallsecurities.co.uk

SPECIAL FEATURES

Professional indemnity insurance: what could go wrong?

SPECIAL FEATURES

Richard Senior Managing director NACFB Insurance Services

A question I often hear asked is “why do I need to have professional indemnity insurance?”.

T

here are a number of reasons. First, there is a contractual requirement as many lenders include the need to have professional indemnity insurance in their terms of business agreements with brokers. Lenders want to know that their brokers have sufficient financial resilience to be able to deal with any claims brought by their clients and having professional indemnity insurance cover in place gives them that necessary assurance.

Second, as a broker in a professional industry and as part of a professional trade association, clients expect their brokers to be professional and that includes being financially able to respond to any compensation claims following negligent advice.

Finally, professional indemnity insurance protects your business finances if you are sued by your client for making a mistake.

We all make mistakes and, even if you don’t think you do, it doesn’t stop someone suing you for alleged negligence and proving you are right still costs money.

So, what can go wrong? I have seen a number of claims over the years and, most commonly, the problems arise when the client is faced with something they didn’t expect. That may result from something not having been explained to them; it may result from them not understanding something that was explained to them, or from the broker misunderstanding what it was that the client needed. And the problem is that, as part of a professional industry, the burden of proof often sits with the broker.

Good quality records with full details of all meetings and discussions help prove what was discussed and ultimately help to defend allegations and claims. The FCA has a simple view of such situations and it is succinctly summarised in the maxim ‘if it isn’t written down, it didn’t happen’.

One professional indemnity claim I saw related to a leasing agreement which a

38 | NACFB Magazine

NACFB Magazine | 39

SPECIAL FEATURES

Professional indemnity insurance: what could go wrong?

SPECIAL FEATURES

Richard Senior Managing director NACFB Insurance Services

A question I often hear asked is “why do I need to have professional indemnity insurance?”.

T

here are a number of reasons. First, there is a contractual requirement as many lenders include the need to have professional indemnity insurance in their terms of business agreements with brokers. Lenders want to know that their brokers have sufficient financial resilience to be able to deal with any claims brought by their clients and having professional indemnity insurance cover in place gives them that necessary assurance.

Second, as a broker in a professional industry and as part of a professional trade association, clients expect their brokers to be professional and that includes being financially able to respond to any compensation claims following negligent advice.

Finally, professional indemnity insurance protects your business finances if you are sued by your client for making a mistake.

We all make mistakes and, even if you don’t think you do, it doesn’t stop someone suing you for alleged negligence and proving you are right still costs money.

So, what can go wrong? I have seen a number of claims over the years and, most commonly, the problems arise when the client is faced with something they didn’t expect. That may result from something not having been explained to them; it may result from them not understanding something that was explained to them, or from the broker misunderstanding what it was that the client needed. And the problem is that, as part of a professional industry, the burden of proof often sits with the broker.

Good quality records with full details of all meetings and discussions help prove what was discussed and ultimately help to defend allegations and claims. The FCA has a simple view of such situations and it is succinctly summarised in the maxim ‘if it isn’t written down, it didn’t happen’.

One professional indemnity claim I saw related to a leasing agreement which a

38 | NACFB Magazine

NACFB Magazine | 39

THE TEAM FOR COMMERCIAL LOANS

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broker arranged for a client in relation to a large piece of plant. All was fine until the agreement reached term and it became apparent the client thought it was a hire purchase agreement and was expecting to now own the plant. Ambiguity on the part of the broker and inadequacy in their document keeping meant a claim against them for £35,000 was successful.

Similar problems can exist where lease agreements require large deposits that weren’t clearly explained to (or understood by) the client, or where agreements have early termination fees which are seemingly unknown by the client. Also, hire purchase agreements that have large balloon payments at the end can cause problems if the client denies knowledge and demands compensation.

Other claims can come from the client considering they have simply had poor advice, such as entering into finance on fixed interest terms just as the interest rates start to reduce, or finding out they have signed a personal guarantee and claiming they didn’t really understand the significance of what they were being told to sign. In fact, if you complete any forms on behalf of your clients, you are putting yourself in the firing line; clients

40 | NACFB Magazine

will often claim they were simply told to sign a form and trusted that their broker had completed the form correctly during their meeting, if the information on the form is at the heart of the problem.

The other big risk that all finance brokers face is the one we don’t yet know. When IFAs were selling endowment mortgages and when financial services companies where selling PPI, they were all following normal and acceptable market practice at that time; it was deemed to be the right thing to do. However, changes in circumstances and evolving views from the FCA meant such practices were later deemed to be toxic and/or difficult to defend. And, with claims for financial losses only being time-barred after six years, the ‘no win, no fee’ solicitors had a lot of opportunity to fan the flames of our ever increasing claim culture.

So, even if you are confident you are currently doing everything right, you could still be exposed to whatever mis-selling scandal is set to follow on from PPI and, with any number of clients potentially seeking six years’ worth of compensation, you’ll be glad you were advised to buy professional indemnity insurance.

MY

CY

CMY

K

The problems arise when the client is faced with something they didn’t expect

Let’s Talk!

COM M ERCIAL

•

020 8349 5190 finance@alternativebridging.co.uk @ABC_Bridging Alternative Bridging Corporation

RESIDENT I AL

•

A PRINCIPAL LENDER

DEVELOP ME N T

THE TEAM FOR COMMERCIAL LOANS

SPECIAL FEATURES

WE

COMMERCIAL

RETAIL

INDUSTRIAL

SHOPS

DO

AST’S

INVESTMENT

RESIDENTIAL

HOTELS

IT

OFFICES

FACTORIES

OWNER OCCUPIERS

INVESTORS

ALL!

C

M

Y

CM

broker arranged for a client in relation to a large piece of plant. All was fine until the agreement reached term and it became apparent the client thought it was a hire purchase agreement and was expecting to now own the plant. Ambiguity on the part of the broker and inadequacy in their document keeping meant a claim against them for £35,000 was successful.

Similar problems can exist where lease agreements require large deposits that weren’t clearly explained to (or understood by) the client, or where agreements have early termination fees which are seemingly unknown by the client. Also, hire purchase agreements that have large balloon payments at the end can cause problems if the client denies knowledge and demands compensation.

Other claims can come from the client considering they have simply had poor advice, such as entering into finance on fixed interest terms just as the interest rates start to reduce, or finding out they have signed a personal guarantee and claiming they didn’t really understand the significance of what they were being told to sign. In fact, if you complete any forms on behalf of your clients, you are putting yourself in the firing line; clients

40 | NACFB Magazine

will often claim they were simply told to sign a form and trusted that their broker had completed the form correctly during their meeting, if the information on the form is at the heart of the problem.

The other big risk that all finance brokers face is the one we don’t yet know. When IFAs were selling endowment mortgages and when financial services companies where selling PPI, they were all following normal and acceptable market practice at that time; it was deemed to be the right thing to do. However, changes in circumstances and evolving views from the FCA meant such practices were later deemed to be toxic and/or difficult to defend. And, with claims for financial losses only being time-barred after six years, the ‘no win, no fee’ solicitors had a lot of opportunity to fan the flames of our ever increasing claim culture.

So, even if you are confident you are currently doing everything right, you could still be exposed to whatever mis-selling scandal is set to follow on from PPI and, with any number of clients potentially seeking six years’ worth of compensation, you’ll be glad you were advised to buy professional indemnity insurance.

MY

CY

CMY

K

The problems arise when the client is faced with something they didn’t expect

Let’s Talk!

COM M ERCIAL

•

020 8349 5190 finance@alternativebridging.co.uk @ABC_Bridging Alternative Bridging Corporation

RESIDENT I AL

•

A PRINCIPAL LENDER

DEVELOP ME N T

Industry | guides Insider tips from the Association’s Patrons and Members

We believe we’ve got the strongest hand to help you win!

We provide fast finance for the small to the very big, and from the ordinary to the extraordinary

Richard King Business development manager Ortus Secured Finance

M

arketing bridges are a crucial part of development finance. These loans give a developer time to negotiate the sale of new-build units at the best possible price and maximise their return on investment. However, before taking out a marketing bridge, there are several questions borrowers – and their brokers – need to ask themselves.

Why is a marketing bridge needed?

There can be various reasons for taking out a marketing bridge.

For example, the project may have overrun and the facility expired before the developer had a chance to market the property.

Another, perhaps more common, reason may be that the market has proven slower than expected and an offer has fallen through.

Does a marketing bridge make sense?

This is an important question and applies particularly in cases where the loan is being requested because the borrower wants more time to achieve a good sale price on the property. In this case, the higher price obtained for the property must justify the cost of taking out the loan.

Borrowing should only be done if necessary – simply buying time in order to obtain higher prices is a risky option if the borrower fails to achieve this.

Is the proposed marketing strategy likely to work?

A developer needs to be on top of the sales process in order to understand why a property may not be selling as fast as expected.

For example, is the borrower marketing the property at a level close to the valuation or are they holding out for an unrealistically high price? If the latter, then taking on a marketing bridge may not be wise as it will add to the debt pile and the property may remain unsold.

An effective and realistic marketing strategy is important to ensure a property is sold and loans are held for no longer than they strictly need to be.

Are the terms of the loan suitable?

Timing is important to ensure that the term of the marketing bridge does not end before the sale of the property is completed.

For a higher-end residential or commercial property, the sales process can be relatively lengthy, so a six-month term might not be long enough. In this case, it may be better to structure a facility with

a certain period of time to secure a sale, which then automatically extends to allow for the completion process, as this can take a while.

Therefore, when taking out a marketing bridge loan, it’s important borrowers factor in how long the entire sales process may take. Marketing bridges are easy to plan around as they often have the fees and interest added into repayments on the loan.

Is the borrower being realistic?

Marketing bridges are unlikely to come with a plan B in terms of repayment, as this very much depends on the sale occurring. Therefore, if demand is poor and the target price cannot be achieved, will the borrower reduce the price or sell the property through auction if necessary?

A sense of realism from the borrower effectively acts as a plan B because the lender can be comfortable the borrower will not push for unrealistic prices and, as result, may be more likely to repay the loan.

In summary, marketing bridges can be vital for developers to ensure they have time to obtain the best possible price for a property. However, borrowers must ensure loans are taken out for logical reasons and are planned for – failure to do so could be costly.

Call us to register your interest in joining us at Lendy Cowes Week 2018

Build on sound foundations with certainty of funding and rates from 0.7%

75% LTV

Lendy offers a complete range of property finance solutions for every type and stage of project.

Flexible rates to match individual requirements

Loans from £50,000 to £5m Potentially unlimited funds from new funding line Over £392m lent to date

Get a quote today.

Contact Lendy on 0800 779 7706 or go to lendy.co.uk/borrow We always look for a reason to say yes!

Regulated by the FCA The AWARDS 2018

BETTER SERVICE | FEWER RESTRICTIONS | SAME DAY OFFERS Lendy Ltd is authorised and regulated by the Financial Conduct Authority. This advertisement is intended for intermediary use only and must not be used with potential clients.

42 | NACFB Magazine

70% LGDV

SHORTLISTED

Industry | guides Insider tips from the Association’s Patrons and Members

We believe we’ve got the strongest hand to help you win!

We provide fast finance for the small to the very big, and from the ordinary to the extraordinary

Richard King Business development manager Ortus Secured Finance

M

arketing bridges are a crucial part of development finance. These loans give a developer time to negotiate the sale of new-build units at the best possible price and maximise their return on investment. However, before taking out a marketing bridge, there are several questions borrowers – and their brokers – need to ask themselves.

Why is a marketing bridge needed?

There can be various reasons for taking out a marketing bridge.

For example, the project may have overrun and the facility expired before the developer had a chance to market the property.

Another, perhaps more common, reason may be that the market has proven slower than expected and an offer has fallen through.

Does a marketing bridge make sense?

This is an important question and applies particularly in cases where the loan is being requested because the borrower wants more time to achieve a good sale price on the property. In this case, the higher price obtained for the property must justify the cost of taking out the loan.

Borrowing should only be done if necessary – simply buying time in order to obtain higher prices is a risky option if the borrower fails to achieve this.

Is the proposed marketing strategy likely to work?

A developer needs to be on top of the sales process in order to understand why a property may not be selling as fast as expected.

For example, is the borrower marketing the property at a level close to the valuation or are they holding out for an unrealistically high price? If the latter, then taking on a marketing bridge may not be wise as it will add to the debt pile and the property may remain unsold.

An effective and realistic marketing strategy is important to ensure a property is sold and loans are held for no longer than they strictly need to be.

Are the terms of the loan suitable?

Timing is important to ensure that the term of the marketing bridge does not end before the sale of the property is completed.

For a higher-end residential or commercial property, the sales process can be relatively lengthy, so a six-month term might not be long enough. In this case, it may be better to structure a facility with

a certain period of time to secure a sale, which then automatically extends to allow for the completion process, as this can take a while.

Therefore, when taking out a marketing bridge loan, it’s important borrowers factor in how long the entire sales process may take. Marketing bridges are easy to plan around as they often have the fees and interest added into repayments on the loan.

Is the borrower being realistic?

Marketing bridges are unlikely to come with a plan B in terms of repayment, as this very much depends on the sale occurring. Therefore, if demand is poor and the target price cannot be achieved, will the borrower reduce the price or sell the property through auction if necessary?

A sense of realism from the borrower effectively acts as a plan B because the lender can be comfortable the borrower will not push for unrealistic prices and, as result, may be more likely to repay the loan.

In summary, marketing bridges can be vital for developers to ensure they have time to obtain the best possible price for a property. However, borrowers must ensure loans are taken out for logical reasons and are planned for – failure to do so could be costly.

Call us to register your interest in joining us at Lendy Cowes Week 2018

Build on sound foundations with certainty of funding and rates from 0.7%

75% LTV

Lendy offers a complete range of property finance solutions for every type and stage of project.

Flexible rates to match individual requirements

Loans from £50,000 to £5m Potentially unlimited funds from new funding line Over £392m lent to date

Get a quote today.

Contact Lendy on 0800 779 7706 or go to lendy.co.uk/borrow We always look for a reason to say yes!

Regulated by the FCA The AWARDS 2018

BETTER SERVICE | FEWER RESTRICTIONS | SAME DAY OFFERS Lendy Ltd is authorised and regulated by the Financial Conduct Authority. This advertisement is intended for intermediary use only and must not be used with potential clients.

42 | NACFB Magazine

70% LGDV

SHORTLISTED

GUIDES

How a short-term loan can help with MEES

What can Conister do for you...

Wholesale Funding Asset Finance

Tracey North BDM relationship manager Hope Capital

T

here has been much talk about the effect on landlords of the new standards around energy efficiency, known as the minimum energy efficiency standard (MEES).

Any property in England or Wales (the rules are different in Scotland) that now achieves an F or G rating can no longer be let to new tenants.

Although it can still be let to existing tenants for the next couple of years – until April 2020 for residential property, with an extra three years for commercial – at that point in time it will need to hit the new standards in order to continue hosting tenants.

The challenge for many landlords is the capital costs they need to incur to get the property to the standard it needs to be. This applies whether it is a residential or commercial property. Arguably, landlords of commercial property have a much tougher target to hit if they own a building with a number of different offices, all let to different companies.

Upgrading such a property will usually require any works to be carried out during evenings and weekends, in all likelihood incurring a higher cost than would be the case if the work could take place in the day.

For residential properties that now cannot be re-let until they meet the required standards, landlords are also hit with a loss of rental income.

Non-compliance is not an option, however; the penalties start at £2,000

44 | NACFB Magazine

if a landlord has sublet a property in breach of the regulations for less than three months, rising to £4,000 for a breach of three months or more with a maximum fine of £5,000. But this is a maximum of £5,000 per property, so the local authority may decide to fine a landlord on more than one; and if, after previously being fined, the landlord proceeds to let again and fails to meet the regulations, they may be fined up to £5,000 in relation to the new tenancy.

Non-compliance could also result in increased void rates and difficulty in attracting good quality tenants.

It seems that the key solution is to get any work done as quickly as possible in order to enable the landlord to re-let the property and start reclaiming any money spent.

Unfortunately, not every landlord can lay their hands on the funds required, which in some cases will run into many thousands of pounds.

Of course, the bigger or older the property, the higher the costs are likely to be. Landlords are usually looking at works encompassing anything from double glazing to roof or cavity wall insulation, or even a new heating system. In one example, a landlord was quoted £30,000 to get all the work done that their property needed. For a commercial property, it can be many times this.

The challenge is that many long-term lenders now won’t provide a buy-tolet or a commercial mortgage if the property does not achieve a rating of E or above, even if the borrower has had the property for some time and just needs a remortgage. As a result, we are starting to see an upsurge in borrowers taking out bridging loans

in order to fund the work, and then remortgaging back on to a longerterm mortgage once the building achieves the required rating.

Arguably, bridging can be the perfect solution in this scenario.

The funding can be put in place incredibly quickly – usually in just days – helping to minimise any void period that the landlord suffers while the work is being carried out.

Depending on the amount of work required, the loan can also be taken usually for as little as three months, minimising the loan costs, while if the work is completed quicker than expected, the borrower can sometimes pay the loan back early.

Block Discounting Commercial Loans Premium Finance Personal Loans

This is likely to be a growing issue over the next two years as every landlord will need to assess their property and ensure it meets the standards required in order to continue to let it out. What’s more, just because a property has achieved an E rating in the past does not mean that it will now. Standards have got tougher, methods of assessment are more sophisticated now than they were previously and research by building energy simulation company arbnco indicates that one in five commercial properties would have a lower EPC rating if newly assessed, with many of those possibly achieving an F or G rating. A new EPC will also revoke an earlier EPC. It is clear that there is no time to waste for landlords whose properties may not meet the necessary standards. Instead of the next remortgage, a bridging loan may well be the answer to raise capital and get the work done first.

Competitive rates - Quick Decisions For further details: telephone 01624 694694 email info@conisterbank.co.im or visit www.conisterbank.co.im Conister Bank Limited. Registered in the Isle of Man No. 000738C. Registered Office: Clarendon House, Victoria Street, Douglas, Isle of Man, IM1 2LN. Conister Bank Limited is licensed by the Isle of Man Financial Services Authority for its deposit taking activities and is authorised and regulated in the United Kingdom by the Financial Conduct Authority for its consumer credit activities and mortgage lending administration, firm registration number 619002.

GUIDES

How a short-term loan can help with MEES

What can Conister do for you...

Wholesale Funding Asset Finance

Tracey North BDM relationship manager Hope Capital

T

here has been much talk about the effect on landlords of the new standards around energy efficiency, known as the minimum energy efficiency standard (MEES).

Any property in England or Wales (the rules are different in Scotland) that now achieves an F or G rating can no longer be let to new tenants.

Although it can still be let to existing tenants for the next couple of years – until April 2020 for residential property, with an extra three years for commercial – at that point in time it will need to hit the new standards in order to continue hosting tenants.

The challenge for many landlords is the capital costs they need to incur to get the property to the standard it needs to be. This applies whether it is a residential or commercial property. Arguably, landlords of commercial property have a much tougher target to hit if they own a building with a number of different offices, all let to different companies.

Upgrading such a property will usually require any works to be carried out during evenings and weekends, in all likelihood incurring a higher cost than would be the case if the work could take place in the day.

For residential properties that now cannot be re-let until they meet the required standards, landlords are also hit with a loss of rental income.

Non-compliance is not an option, however; the penalties start at £2,000

44 | NACFB Magazine

if a landlord has sublet a property in breach of the regulations for less than three months, rising to £4,000 for a breach of three months or more with a maximum fine of £5,000. But this is a maximum of £5,000 per property, so the local authority may decide to fine a landlord on more than one; and if, after previously being fined, the landlord proceeds to let again and fails to meet the regulations, they may be fined up to £5,000 in relation to the new tenancy.

Non-compliance could also result in increased void rates and difficulty in attracting good quality tenants.

It seems that the key solution is to get any work done as quickly as possible in order to enable the landlord to re-let the property and start reclaiming any money spent.

Unfortunately, not every landlord can lay their hands on the funds required, which in some cases will run into many thousands of pounds.

Of course, the bigger or older the property, the higher the costs are likely to be. Landlords are usually looking at works encompassing anything from double glazing to roof or cavity wall insulation, or even a new heating system. In one example, a landlord was quoted £30,000 to get all the work done that their property needed. For a commercial property, it can be many times this.

The challenge is that many long-term lenders now won’t provide a buy-tolet or a commercial mortgage if the property does not achieve a rating of E or above, even if the borrower has had the property for some time and just needs a remortgage. As a result, we are starting to see an upsurge in borrowers taking out bridging loans

in order to fund the work, and then remortgaging back on to a longerterm mortgage once the building achieves the required rating.

Arguably, bridging can be the perfect solution in this scenario.

The funding can be put in place incredibly quickly – usually in just days – helping to minimise any void period that the landlord suffers while the work is being carried out.

Depending on the amount of work required, the loan can also be taken usually for as little as three months, minimising the loan costs, while if the work is completed quicker than expected, the borrower can sometimes pay the loan back early.

Block Discounting Commercial Loans Premium Finance Personal Loans

This is likely to be a growing issue over the next two years as every landlord will need to assess their property and ensure it meets the standards required in order to continue to let it out. What’s more, just because a property has achieved an E rating in the past does not mean that it will now. Standards have got tougher, methods of assessment are more sophisticated now than they were previously and research by building energy simulation company arbnco indicates that one in five commercial properties would have a lower EPC rating if newly assessed, with many of those possibly achieving an F or G rating. A new EPC will also revoke an earlier EPC. It is clear that there is no time to waste for landlords whose properties may not meet the necessary standards. Instead of the next remortgage, a bridging loan may well be the answer to raise capital and get the work done first.

Competitive rates - Quick Decisions For further details: telephone 01624 694694 email info@conisterbank.co.im or visit www.conisterbank.co.im Conister Bank Limited. Registered in the Isle of Man No. 000738C. Registered Office: Clarendon House, Victoria Street, Douglas, Isle of Man, IM1 2LN. Conister Bank Limited is licensed by the Isle of Man Financial Services Authority for its deposit taking activities and is authorised and regulated in the United Kingdom by the Financial Conduct Authority for its consumer credit activities and mortgage lending administration, firm registration number 619002.

Opinion | & commentary Thought leadership from our Patrons and Members

S

ocial media has become a critical marketing tool for our sector – as it has across almost every sector worldwide, financial or otherwise.

There is an ever greater need to deliver slick messages in the fastest possible way to the widest available audience, and social media is an incredibly effective communication tool offering users access to millions almost instantaneously, in a way no other medium can.

One of the key differences in our sector to others, however, is that there are so many facets and dimensions to how lending propositions can be structured and tailored.

In addition, there is a huge amount of technical jargon present, which can quickly confuse or mislead the end user; therefore, more caution around particular content and target audience is required, which sets us apart from other industries.

Having worked in the financial services industry and banking for over 30 years, I am a traditionalist and will always believe

46 | NACFB Magazine

that face-to-face contact is the strongest method of communication. It is where all the best working relationships begin, and over time provides great understanding and loyalty between lender and client/ intermediary. Clearly there is a need to support this with modern communication forms in order to reach a wider audience very quickly, but I see this as purely a support tool to human engagement.

In recent months, Bridging Finance Solutions (BFS) has ramped up its online presence, launching a new website and increasing its social media presence, while MD Steve Barber is a new alumni of Oxford University’s fintech programme.

Our profile at BFS has been developed and harvested over many late nights and long days spent at trade shows, exhibitions and professional networking events. We employ a sales team that is dedicated to the professional sector, as well as brokers and intermediaries, so there is rarely an event of any note in any calendar year where we don’t have a presence – particularly across the North and Midlands. Both before and after our attendance at any such event, we routinely use a slick marketing team to ensure our presence there is felt across the social media platforms, such as Twitter and LinkedIn – which,

The Business Opportunity and the Just Cashflow solution Matthew Ryde, Managing Director, explained that Graham John was originally established to offer a unique service to those looking to sell their house. Whilst having many properties on their books, Matthew explained that it was very difficult to project cash flow as it is extremely difficult to predict when a property will sell. Matthew also explained that there are seasonal cycles which impact on cash flow.

It was for this reason he approached the team at Just Cashflow. After discussing his needs with the customer team, Matthew applied for the Revolving Credit Facility (RCF) which enabled him to dip in and out as and when required and to assist with the day to day financial commitments of running his business.

As the business continued to grow, Matthew had an opportunity grow his business further by working with a corporate client. This meant that the business had to operate in a different market and with this came additional costs. Funding was required to develop a new marketing strategy. Matthew again approached Just Cashflow to discuss the change in direction of the business and the additional funding needs. It was agreed that at this stage in

Many NACFB members will already know that Just Cashflow works hard to support ambitious businesses grow and develop. They also work with brokers and intermediaries to help them meet their clients funding needs.

Here is the story of how Just Cashflow worked with Matthew Ryde, Managing Director of Graham John Limited, an estate agency specialising in selling unique homes, to provide flexible funding solutions to support the differing needs of the business at different stages of growth.

Graham John Limited is the brainchild of long-established estate agent Matthew Ryde. It is named in honour of his father Graham John Ryde, who died when Matthew was seventeen. It was his father who instilled in Matthew the idea that it was important to find work that he loved, and for him that became estate agency.

Graham John’s philosophy is to take each property as an individual case with its own unique quirks and charms.

They match these to their buyers to make sure everyone is happy, long-term. That’s because they want their clients to be for life, not just a sale. And because they care deeply about homes and what they can do for people’s lives.

Should we be more sociable?

John Hardman Head of sales Bridging Finance Solutions

Just Cashflow – helping businesses develop and grow.

of course, complements the people we physically engage with on the day.

We have recently completed an overhaul of our website and our online broker portal too. This is designed to give more tech-savvy users instant access to case submissions, relevant forms and downloads.

We have already embraced the growing presence of fintech in our industry and have positioned the business as a pioneer of the concept which, perhaps, sets us apart from many others operating in our sector. While this doesn’t link directly to social media, it does demonstrate our commitment to utilising modern technologies, be they communication or process-driven.

The influence of this type of media and, of course, all forms of electronic marketing and communication is growing all the time.

There has to be a plateau at some stage, because this industry needs people. As any consumer seeks commercial finance, there will always be a cut-off point, after which the internet and social media cease to be useful and real people take over. At BFS, we pride ourselves in having a dedicated professional team with over 125 years of lending experience to ensure clear, concise and consistent advice is given whenever we provide bridging or development finance.

his business lifecycle he would benefit from the Business Builder solution. Because of its malleable nature, Business Builder offers features such as payment holidays, early repayment without penalties and loan extensions can be worked into the design.

It also allows customers to vary their payment terms and work their finances in line with their business needs.

As a result of the corporate opportunity and the benefits of Business Builder, Matthew explained he has doubled the number of sales compared to the same time the previous year. He said “Business Builder has allowed us to expand our business without cutting standards and levels of service – these have been maintained.

This is important to us as we have grown the business organically and our business is based on recommendation.”

He went on to say “I would definitely continue to work with Just Cashflow.

Both the RCF and Business Builder were flexible solutions that worked well with our business requirements. All the team at Just Cashflow have been professional and helpful and I receive a service that I simply don’t get from my bank.”

Just Cashflow can help you get your clients funding deals across the finishing line – call them today on 0121 227 6450

Get your clients across the finishing line As a professional broker or intermediary you’ll be used to seeking fast and flexible funding for your clients.

Just Cashflow knows that every business is different and we are able to offer you tailored financial solutions to meet the requirements of your clients.

Our Revolving Credit Facility gives you access to funds from £10,000 to £500,000, for ambitious businesses, to support their continued growth.

You will find the application process really simple and straightforward and our underwriting team will support you, to help ensure you get even more clients across the finishing line.

Just call us now

0121 418 5037

Alternatively, find out more

justcashflow.com/partner

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BCMS668054

Just Cash Flow PLC is registered at 1 Charterhouse Mews, Farringdon, London EC1M 6BB under Company number 08508165 © Just Cash Flow PLC 2018

Opinion | & commentary Thought leadership from our Patrons and Members

S

ocial media has become a critical marketing tool for our sector – as it has across almost every sector worldwide, financial or otherwise.

There is an ever greater need to deliver slick messages in the fastest possible way to the widest available audience, and social media is an incredibly effective communication tool offering users access to millions almost instantaneously, in a way no other medium can.

One of the key differences in our sector to others, however, is that there are so many facets and dimensions to how lending propositions can be structured and tailored.

In addition, there is a huge amount of technical jargon present, which can quickly confuse or mislead the end user; therefore, more caution around particular content and target audience is required, which sets us apart from other industries.

Having worked in the financial services industry and banking for over 30 years, I am a traditionalist and will always believe

46 | NACFB Magazine

that face-to-face contact is the strongest method of communication. It is where all the best working relationships begin, and over time provides great understanding and loyalty between lender and client/ intermediary. Clearly there is a need to support this with modern communication forms in order to reach a wider audience very quickly, but I see this as purely a support tool to human engagement.

In recent months, Bridging Finance Solutions (BFS) has ramped up its online presence, launching a new website and increasing its social media presence, while MD Steve Barber is a new alumni of Oxford University’s fintech programme.

Our profile at BFS has been developed and harvested over many late nights and long days spent at trade shows, exhibitions and professional networking events. We employ a sales team that is dedicated to the professional sector, as well as brokers and intermediaries, so there is rarely an event of any note in any calendar year where we don’t have a presence – particularly across the North and Midlands. Both before and after our attendance at any such event, we routinely use a slick marketing team to ensure our presence there is felt across the social media platforms, such as Twitter and LinkedIn – which,

The Business Opportunity and the Just Cashflow solution Matthew Ryde, Managing Director, explained that Graham John was originally established to offer a unique service to those looking to sell their house. Whilst having many properties on their books, Matthew explained that it was very difficult to project cash flow as it is extremely difficult to predict when a property will sell. Matthew also explained that there are seasonal cycles which impact on cash flow.

It was for this reason he approached the team at Just Cashflow. After discussing his needs with the customer team, Matthew applied for the Revolving Credit Facility (RCF) which enabled him to dip in and out as and when required and to assist with the day to day financial commitments of running his business.

As the business continued to grow, Matthew had an opportunity grow his business further by working with a corporate client. This meant that the business had to operate in a different market and with this came additional costs. Funding was required to develop a new marketing strategy. Matthew again approached Just Cashflow to discuss the change in direction of the business and the additional funding needs. It was agreed that at this stage in

Many NACFB members will already know that Just Cashflow works hard to support ambitious businesses grow and develop. They also work with brokers and intermediaries to help them meet their clients funding needs.

Here is the story of how Just Cashflow worked with Matthew Ryde, Managing Director of Graham John Limited, an estate agency specialising in selling unique homes, to provide flexible funding solutions to support the differing needs of the business at different stages of growth.

Graham John Limited is the brainchild of long-established estate agent Matthew Ryde. It is named in honour of his father Graham John Ryde, who died when Matthew was seventeen. It was his father who instilled in Matthew the idea that it was important to find work that he loved, and for him that became estate agency.

Graham John’s philosophy is to take each property as an individual case with its own unique quirks and charms.

They match these to their buyers to make sure everyone is happy, long-term. That’s because they want their clients to be for life, not just a sale. And because they care deeply about homes and what they can do for people’s lives.

Should we be more sociable?

John Hardman Head of sales Bridging Finance Solutions

Just Cashflow – helping businesses develop and grow.

of course, complements the people we physically engage with on the day.

We have recently completed an overhaul of our website and our online broker portal too. This is designed to give more tech-savvy users instant access to case submissions, relevant forms and downloads.

We have already embraced the growing presence of fintech in our industry and have positioned the business as a pioneer of the concept which, perhaps, sets us apart from many others operating in our sector. While this doesn’t link directly to social media, it does demonstrate our commitment to utilising modern technologies, be they communication or process-driven.

The influence of this type of media and, of course, all forms of electronic marketing and communication is growing all the time.

There has to be a plateau at some stage, because this industry needs people. As any consumer seeks commercial finance, there will always be a cut-off point, after which the internet and social media cease to be useful and real people take over. At BFS, we pride ourselves in having a dedicated professional team with over 125 years of lending experience to ensure clear, concise and consistent advice is given whenever we provide bridging or development finance.

his business lifecycle he would benefit from the Business Builder solution. Because of its malleable nature, Business Builder offers features such as payment holidays, early repayment without penalties and loan extensions can be worked into the design.

It also allows customers to vary their payment terms and work their finances in line with their business needs.

As a result of the corporate opportunity and the benefits of Business Builder, Matthew explained he has doubled the number of sales compared to the same time the previous year. He said “Business Builder has allowed us to expand our business without cutting standards and levels of service – these have been maintained.

This is important to us as we have grown the business organically and our business is based on recommendation.”

He went on to say “I would definitely continue to work with Just Cashflow.

Both the RCF and Business Builder were flexible solutions that worked well with our business requirements. All the team at Just Cashflow have been professional and helpful and I receive a service that I simply don’t get from my bank.”

Just Cashflow can help you get your clients funding deals across the finishing line – call them today on 0121 227 6450

Get your clients across the finishing line As a professional broker or intermediary you’ll be used to seeking fast and flexible funding for your clients.

Just Cashflow knows that every business is different and we are able to offer you tailored financial solutions to meet the requirements of your clients.

Our Revolving Credit Facility gives you access to funds from £10,000 to £500,000, for ambitious businesses, to support their continued growth.

You will find the application process really simple and straightforward and our underwriting team will support you, to help ensure you get even more clients across the finishing line.

Just call us now

0121 418 5037

Alternatively, find out more

justcashflow.com/partner

Patron Member FS668057

BCMS668054

Just Cash Flow PLC is registered at 1 Charterhouse Mews, Farringdon, London EC1M 6BB under Company number 08508165 © Just Cash Flow PLC 2018

OPINION & COMMENTARY

Altfi is meeting the requirements of event-driven finance Kash Moghul Loan originator ThinCats

S

ME event-driven finance is fast becoming the natural terrain of the alternative finance industry.

Before the financial crisis, banks dominated all areas of business lending. Alternative finance meant getting some money from your mum. But things have changed.

Regulation over the past decade has forced banks to retrench. In the years immediately after the crisis, net lending to SMEs fell heavily into negative territory. Now, while banks have re-entered the market to a degree, they remain cautious around what their credit measures tell them are ‘riskier’ loans to businesses. Business default rates haven’t changed – other than is normal over the course of the cycle – but banks’ attitudes to risk have.

Business owners complain that banks are reluctant to lend against anything but

conventional lenders when it comes to business lending. One of these simply stems from it being new. That sounds a trivial point, but while the fact that most high street lenders have been around since the days when a computer was someone with an abacus may be of comfort in these volatile times, so has much of their existing business – and that determines what new business they write.

Alternative lenders don’t have this legacy back book, so can focus on supporting a client in the here and now, not using new business to prop up their back book.

business development team, but to have that understanding shared throughout the business. Event-driven finance is not just about the numbers. Companies benefit from having someone with the expertise to structure a deal working alongside them. It’s about understanding what the management team is about.

Conventional lenders increasingly have a tick-box approach: ebitda says ‘x’, so you must do ‘y’. But it’s about understanding the story behind the numbers and being creative in the solutions you can offer a management team.

Another advantage of newness is that you can configure business processes to specific and simpler requirements than a large banking organisation, which is of necessity complex. On the other hand, at ThinCats, we’re able to make a decision quickly. I sit two desks away from the head of credit. That has a lot of benefits, not least speed of both decision and transaction.

If this sounds like traditional business banking to you, you would be right.

The paradox is that it’s increasingly difficult for traditional banks to service, through a combination of restrictive regulations and how new lending is conditioned by legacy business.

More importantly over the long term, however, is the bespoke service alternative lenders are able to offer businesses. In the first instance, this is about the basic

On the other hand, some alternative lenders are combining the skills of professionals who have had decades of experience working alongside SMEs with business models that are specifically designed to service this sector. Rather than the

SME event-driven finance is fast becoming the natural terrain of the alternative finance industry bricks and mortar. That’s particularly true of event-driven deals such as M&A, MBO, MBI, BIMBO and growth finance, because while such deals can be asset-backed, cash flow or a mixture, in practice they are predominantly cash flow-based.

Alternative finance providers are filling the vacuum left by the banks. In 2016, the last full year for which data is available, about 72% of UK altfi lending (£3.3bn) was to start-ups and SMEs – up 50% on the previous year – as 33,000 businesses used alternative finance channels.

While the term ‘altfi’ conjures a picture of high-tech hipsters running funky software platforms, the reality can be more down to earth. First, alternative finance has significant structural advantages over

48 | NACFB Magazine

structure of a loan. Banks will typically offer a loan that fully amortised over three or four years, but the nature of a particular business may dictate interest only, or a bullet payment. Altfi has more freedom to tailor the loans to the specific needs of the business. Again, this is linked to the understanding of risk. Formally, a fully amortised loan will be lower risk, because the lender’s capital at risk will decline to zero over the loan’s lifetime. But the implications of servicing this for a corporate borrower transitioning to a different management structure may mean more risk for the firm, and so greater potential to default.

In order to ascertain this, the lender needs to know how specific businesses function – and not just at the level of the

nippy little altfi mammals outcompeting the traditional banking dinosaurs, it’s likely some sort of equilibrium will be reached, with banks dealing with plain vanilla refinancing needs, with more of an emphasis on large caps, and altfi servicing event-driven and other non-standard loans.

Event-driven SME finance will almost always need financing structured in a way that is unique to the business.

That is where the benefits of alternative finance are clearest.

A bank of knowledge not simply a bank of money Our support for your broker business goes beyond finance.

We can connect you with the right people, with the right knowledge, to boost your clients’ businesses and help them grow.

Search: NatWest Brokers

OPINION & COMMENTARY

Altfi is meeting the requirements of event-driven finance Kash Moghul Loan originator ThinCats

S

ME event-driven finance is fast becoming the natural terrain of the alternative finance industry.

Before the financial crisis, banks dominated all areas of business lending. Alternative finance meant getting some money from your mum. But things have changed.

Regulation over the past decade has forced banks to retrench. In the years immediately after the crisis, net lending to SMEs fell heavily into negative territory. Now, while banks have re-entered the market to a degree, they remain cautious around what their credit measures tell them are ‘riskier’ loans to businesses. Business default rates haven’t changed – other than is normal over the course of the cycle – but banks’ attitudes to risk have.

Business owners complain that banks are reluctant to lend against anything but

conventional lenders when it comes to business lending. One of these simply stems from it being new. That sounds a trivial point, but while the fact that most high street lenders have been around since the days when a computer was someone with an abacus may be of comfort in these volatile times, so has much of their existing business – and that determines what new business they write.

Alternative lenders don’t have this legacy back book, so can focus on supporting a client in the here and now, not using new business to prop up their back book.

business development team, but to have that understanding shared throughout the business. Event-driven finance is not just about the numbers. Companies benefit from having someone with the expertise to structure a deal working alongside them. It’s about understanding what the management team is about.

Conventional lenders increasingly have a tick-box approach: ebitda says ‘x’, so you must do ‘y’. But it’s about understanding the story behind the numbers and being creative in the solutions you can offer a management team.

Another advantage of newness is that you can configure business processes to specific and simpler requirements than a large banking organisation, which is of necessity complex. On the other hand, at ThinCats, we’re able to make a decision quickly. I sit two desks away from the head of credit. That has a lot of benefits, not least speed of both decision and transaction.

If this sounds like traditional business banking to you, you would be right.

The paradox is that it’s increasingly difficult for traditional banks to service, through a combination of restrictive regulations and how new lending is conditioned by legacy business.

More importantly over the long term, however, is the bespoke service alternative lenders are able to offer businesses. In the first instance, this is about the basic

On the other hand, some alternative lenders are combining the skills of professionals who have had decades of experience working alongside SMEs with business models that are specifically designed to service this sector. Rather than the

SME event-driven finance is fast becoming the natural terrain of the alternative finance industry bricks and mortar. That’s particularly true of event-driven deals such as M&A, MBO, MBI, BIMBO and growth finance, because while such deals can be asset-backed, cash flow or a mixture, in practice they are predominantly cash flow-based.

Alternative finance providers are filling the vacuum left by the banks. In 2016, the last full year for which data is available, about 72% of UK altfi lending (£3.3bn) was to start-ups and SMEs – up 50% on the previous year – as 33,000 businesses used alternative finance channels.

While the term ‘altfi’ conjures a picture of high-tech hipsters running funky software platforms, the reality can be more down to earth. First, alternative finance has significant structural advantages over

48 | NACFB Magazine

structure of a loan. Banks will typically offer a loan that fully amortised over three or four years, but the nature of a particular business may dictate interest only, or a bullet payment. Altfi has more freedom to tailor the loans to the specific needs of the business. Again, this is linked to the understanding of risk. Formally, a fully amortised loan will be lower risk, because the lender’s capital at risk will decline to zero over the loan’s lifetime. But the implications of servicing this for a corporate borrower transitioning to a different management structure may mean more risk for the firm, and so greater potential to default.

In order to ascertain this, the lender needs to know how specific businesses function – and not just at the level of the

nippy little altfi mammals outcompeting the traditional banking dinosaurs, it’s likely some sort of equilibrium will be reached, with banks dealing with plain vanilla refinancing needs, with more of an emphasis on large caps, and altfi servicing event-driven and other non-standard loans.

Event-driven SME finance will almost always need financing structured in a way that is unique to the business.

That is where the benefits of alternative finance are clearest.

A bank of knowledge not simply a bank of money Our support for your broker business goes beyond finance.

We can connect you with the right people, with the right knowledge, to boost your clients’ businesses and help them grow.

Search: NatWest Brokers

OPINION & COMMENTARY

SPECIALIST LENDING SOLUTIONS BRIDGING FINANCE

This year, consider collaborating Martin Stewart Director London Money

S

top! Collaborate and listen! Ah, they don’t write them like that any more – thank goodness. Vanilla Ice may no longer be considered the great white hope of rap, but you can’t deny he had a good ear for a catchy lyric.

It is hard to think that we are almost halfway through 2018. Milestones are always good places to stop, pause and consider how far you have come. Or, alternatively, how little you have travelled, depending on how your year has been.

Our mid-year report so far at London Money would probably be something along the lines of “good effort; with a bit more luck and continued hard work we should soon see vast improvement”. But let’s not kid ourselves, business is a constant battle.

It is a bit like when you set your goals to become fit (or so I’ve been told). The fact of the matter is, once you start getting fit you have to stay at getting fit and then spend the rest of your life trying to keep fit. So, the reality is, you never really arrive at your destination and, to me at least, that is a little like being in business.

When you start out, you generally do so with the end in mind but commerce, life and

the regulator sometimes have a habit of getting in the way, knocking you off course or simply just stopping you in your tracks.

It is one of the reasons why I think so many businesses fail or just don’t grow to achieve their full potential – it’s just so darned exhausting. Becoming a millionaire will never be easy, unless of course you ignored my advice to avoid bitcoin like the plague in the early days. But in general – and as a rule – creating, establishing, consolidating and then growing a business is as tiring a proposition as starting a game of peek-aboo with the small child seated in front of you on a long-haul flight to Australia.

But psssst! There’s a shortcut. It’s a secret so, for goodness’ sake, don’t tell anyone, otherwise they’ll all start doing it and we’ll have lost our advantage. You see, Vanilla Ice was on to something back in the early ’90s, just before he lost the plot and went on that reality programme to milk a cow.

Collaboration. If there is one word, and one word only, that sums up what we do at London Money it would be collaborate.

To me, if there is some heavy lifting involved, the first thing I am going to do is look around to see who can help me with it. This is not out of laziness on my part, because the first thing I’ll do if I see someone with a workload in front of them is to offer to pitch in.

Why? Well, why not? The most creative place in the world and one full of billionpound ideas is the graveyard. That is because people failed to start, failed to continue or failed to finish off what was probably a great idea. It can be lonely, being in business. The creative process is the one thing that keeps me going and after giving birth to an idea, I want to do whatever I can to ensure it makes it to adulthood.

So, regardless of cost, I will seek to share revenue, equity, results and whatever it takes with anyone if they sign up to achieving what I want to achieve.

So, maybe we can rewrite Ice Ice Baby to read: “Stop, listen and collaborate”? (Mind you, I’d take this analogy with a pinch of salt, because Vanilla Ice also wrote the lyric: “Cooking MCs like a pound of bacon.”)

I was always told early on that if you want something, you should give something up first. That has stayed with me and I still try to follow that philosophy today wherever possible. If London Money is to be the success I know it can be, it won’t be because of me. It will be because I shared the idea and the workload with like-minded people, and I let them do the things I find difficult, while they delegate the things to me that I find easy. That sounds like a good foundation for any business to me.

Our lowest Bridging Finance range from only 0.49%pm Available for standard and light refurbishment Automated valuations and Joint Legal Representation for faster completions Dedicated underwriter from DIP to completion

Contact your local BDM 0800 116 4385 precisemortgages.co.uk

FOR INTERMEDIARY USE ONLY. 50 | NACFB Magazine

Precise Mortgages is a trading name of Charter Court Financial Services Limited which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority (Financial Services Register Firm Reference Number 494549). Registered in England and Wales (company number 06749498).

Registered office: 2 Charter Court, Broadlands, Wolverhampton WV10 6TD.

01848 (3)

Get in touch

Available through all distribution channels

OPINION & COMMENTARY

SPECIALIST LENDING SOLUTIONS BRIDGING FINANCE

This year, consider collaborating Martin Stewart Director London Money

S

top! Collaborate and listen! Ah, they don’t write them like that any more – thank goodness. Vanilla Ice may no longer be considered the great white hope of rap, but you can’t deny he had a good ear for a catchy lyric.

It is hard to think that we are almost halfway through 2018. Milestones are always good places to stop, pause and consider how far you have come. Or, alternatively, how little you have travelled, depending on how your year has been.

Our mid-year report so far at London Money would probably be something along the lines of “good effort; with a bit more luck and continued hard work we should soon see vast improvement”. But let’s not kid ourselves, business is a constant battle.

It is a bit like when you set your goals to become fit (or so I’ve been told). The fact of the matter is, once you start getting fit you have to stay at getting fit and then spend the rest of your life trying to keep fit. So, the reality is, you never really arrive at your destination and, to me at least, that is a little like being in business.

When you start out, you generally do so with the end in mind but commerce, life and

the regulator sometimes have a habit of getting in the way, knocking you off course or simply just stopping you in your tracks.

It is one of the reasons why I think so many businesses fail or just don’t grow to achieve their full potential – it’s just so darned exhausting. Becoming a millionaire will never be easy, unless of course you ignored my advice to avoid bitcoin like the plague in the early days. But in general – and as a rule – creating, establishing, consolidating and then growing a business is as tiring a proposition as starting a game of peek-aboo with the small child seated in front of you on a long-haul flight to Australia.

But psssst! There’s a shortcut. It’s a secret so, for goodness’ sake, don’t tell anyone, otherwise they’ll all start doing it and we’ll have lost our advantage. You see, Vanilla Ice was on to something back in the early ’90s, just before he lost the plot and went on that reality programme to milk a cow.

Collaboration. If there is one word, and one word only, that sums up what we do at London Money it would be collaborate.

To me, if there is some heavy lifting involved, the first thing I am going to do is look around to see who can help me with it. This is not out of laziness on my part, because the first thing I’ll do if I see someone with a workload in front of them is to offer to pitch in.

Why? Well, why not? The most creative place in the world and one full of billionpound ideas is the graveyard. That is because people failed to start, failed to continue or failed to finish off what was probably a great idea. It can be lonely, being in business. The creative process is the one thing that keeps me going and after giving birth to an idea, I want to do whatever I can to ensure it makes it to adulthood.

So, regardless of cost, I will seek to share revenue, equity, results and whatever it takes with anyone if they sign up to achieving what I want to achieve.

So, maybe we can rewrite Ice Ice Baby to read: “Stop, listen and collaborate”? (Mind you, I’d take this analogy with a pinch of salt, because Vanilla Ice also wrote the lyric: “Cooking MCs like a pound of bacon.”)

I was always told early on that if you want something, you should give something up first. That has stayed with me and I still try to follow that philosophy today wherever possible. If London Money is to be the success I know it can be, it won’t be because of me. It will be because I shared the idea and the workload with like-minded people, and I let them do the things I find difficult, while they delegate the things to me that I find easy. That sounds like a good foundation for any business to me.

Our lowest Bridging Finance range from only 0.49%pm Available for standard and light refurbishment Automated valuations and Joint Legal Representation for faster completions Dedicated underwriter from DIP to completion

Contact your local BDM 0800 116 4385 precisemortgages.co.uk

FOR INTERMEDIARY USE ONLY. 50 | NACFB Magazine

Precise Mortgages is a trading name of Charter Court Financial Services Limited which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority (Financial Services Register Firm Reference Number 494549). Registered in England and Wales (company number 06749498).

Registered office: 2 Charter Court, Broadlands, Wolverhampton WV10 6TD.

01848 (3)

Get in touch

Available through all distribution channels

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