NACFB Magazine - June 2018

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Issue 59 June 2018

E

The magazine for the National Association of Commercial Finance Brokers

The decline of bridging LTVs Sustaining or shackling the market?

Client

Broker

In this issue

Rising interest rates

The potential impact on small businesses

Funding the North

What could Manchester do with ÂŁ100m?

GDPR and broking The NACFB’s view on how the process is changing

Welcome | NACFB Bank rates, non-bank speeds We’re not a bank, which allows us to deploy discretionary capital at the speed of a specialist lender. Speed, certainty and flexibility; it’s what we do best.

Commercial term product • Loans from £0.5m • 1.0x interest cover • Interest only • No ERCs after 24 months • Up to 65% • 2 to 5 year terms

0800 294 6850 | sales@octopusproperty.com | octopusproperty.com For use by mortgage intermediaries only

Octopus Property is the trading name of Bridgeco Ltd (Reg No 6629989), Fern Trading Ltd (Reg No 6447318), Nino Ltd (Reg No 9015082), Octopus Property Lending Ltd (Reg No 7531926) and Octopus Co-Lend Ltd (Reg No 8913299), Registered Office: 33 Holborn, London EC1N 2HT, registered in England and Wales and Dragonfly Finance S.ar.l. (Reg No B189290) Registered Office: Parc d’Activité Syrdall, 6 Rue Gabriel Lippmann, L-5365, Munsbach, Luxembourg registered in Luxembourg. Octopus Property Lending Ltd and Octopus Co-Lend Ltd are authorised and regulated by the Financial Conduct Authority.

W

e’re halfway through the year and here at the NACFB, we have wind in our sails. Since my last introductory note, the biggest regulatory change of the year has entered into force – namely, GDPR. We believe that our brokers are some of the best prepared in the country and I hope you have taken advantage of the all the support materials available to you, either through attending any one of our regional GDPR workshops or by downloading the document templates from the online Compliance subscriber area. We have also provided a GDPR briefing for NACFB Patrons, sharing our view of how the new regime impacts the broking process. You can also read more on this on page 14.

On the subject of big changes, I am also pleased to announce that the NACFB head office is moving from Hamilton House to Eastcheap in the City of London. This move, although geographically slight, represents a sea change for the Association. The new headquarters represent the journey that we have undertaken in the last 12 months and also reflects the ambition we have to move your trade body forward. You can read more on the reasoning and rationale behind the head office move on page 4.

The most immediate task I have is to ensure this year’s Commercial Finance Expo – my first as CEO – is the most successful yet. A quick glance at the figures fills me we with real optimism that it will exceed all expectations.

We have sold out of all exhibition space and delegate registrations have consistently outperformed any previous year. So, if you haven’t yet, take the time to register – and if you’re still unsure, have a look at this year’s agenda on page 8.

These are the headline items on my agenda this month, but the whole Hamilton House team is working incredibly hard to better serve you, our Members.

I look forward to seeing you at the NEC. Graham Toy, CEO, NACFB

Graham Toy CEO NACFB

In this June issue NACFB News 4 6

In the news Invitation to join the NACFB board directors 8-9 Notes from our sponsor 10 Life after GDPR? 10-13 A look ahead to CFE 2018

Compliance Update 14-15 GDPR and the broking process – the NACFB’s view

Commercial Finance 16-17 Essential news bites

Top Story 18

Growth in bridging applications back on track

Introducing 20

UK Agricultural Finance expands its product offering

Case Studies 22

A look behind poor credit for business cash advance 24 Exit funding supports portfolio diversification 26-27 Tailored package helps ramp up pharma production 28 Broker focal point for £4m development 30-32 The decline of bridging LTVs

Patron Profile 34-35 Spotcap

Ask the Expert 36

Martin McTague

Special Features 38-40 Why BDMs still play a key role in the specialist market 42-44 Rising interest rates: the next big concern for SMEs? 46-48 What can the North do with £100m?

Industry Guides 50

Five traits of pensionled funding you may not know about 52-53 2018 Cash flow calendar

Opinion & Commentary 54-55 Lenders: get your ducks in a row 56-57 The online sector needs you 58 Best interest should be first, alternative or not

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

NACFB Magazine | 3

Welcome | NACFB Bank rates, non-bank speeds We’re not a bank, which allows us to deploy discretionary capital at the speed of a specialist lender. Speed, certainty and flexibility; it’s what we do best.

Commercial term product • Loans from £0.5m • 1.0x interest cover • Interest only • No ERCs after 24 months • Up to 65% • 2 to 5 year terms

0800 294 6850 | sales@octopusproperty.com | octopusproperty.com For use by mortgage intermediaries only

Octopus Property is the trading name of Bridgeco Ltd (Reg No 6629989), Fern Trading Ltd (Reg No 6447318), Nino Ltd (Reg No 9015082), Octopus Property Lending Ltd (Reg No 7531926) and Octopus Co-Lend Ltd (Reg No 8913299), Registered Office: 33 Holborn, London EC1N 2HT, registered in England and Wales and Dragonfly Finance S.ar.l. (Reg No B189290) Registered Office: Parc d’Activité Syrdall, 6 Rue Gabriel Lippmann, L-5365, Munsbach, Luxembourg registered in Luxembourg. Octopus Property Lending Ltd and Octopus Co-Lend Ltd are authorised and regulated by the Financial Conduct Authority.

W

e’re halfway through the year and here at the NACFB, we have wind in our sails. Since my last introductory note, the biggest regulatory change of the year has entered into force – namely, GDPR. We believe that our brokers are some of the best prepared in the country and I hope you have taken advantage of the all the support materials available to you, either through attending any one of our regional GDPR workshops or by downloading the document templates from the online Compliance subscriber area. We have also provided a GDPR briefing for NACFB Patrons, sharing our view of how the new regime impacts the broking process. You can also read more on this on page 14.

On the subject of big changes, I am also pleased to announce that the NACFB head office is moving from Hamilton House to Eastcheap in the City of London. This move, although geographically slight, represents a sea change for the Association. The new headquarters represent the journey that we have undertaken in the last 12 months and also reflects the ambition we have to move your trade body forward. You can read more on the reasoning and rationale behind the head office move on page 4.

The most immediate task I have is to ensure this year’s Commercial Finance Expo – my first as CEO – is the most successful yet. A quick glance at the figures fills me we with real optimism that it will exceed all expectations.

We have sold out of all exhibition space and delegate registrations have consistently outperformed any previous year. So, if you haven’t yet, take the time to register – and if you’re still unsure, have a look at this year’s agenda on page 8.

These are the headline items on my agenda this month, but the whole Hamilton House team is working incredibly hard to better serve you, our Members.

I look forward to seeing you at the NEC. Graham Toy, CEO, NACFB

Graham Toy CEO NACFB

In this June issue NACFB News 4 6

In the news Invitation to join the NACFB board directors 8-9 Notes from our sponsor 10 Life after GDPR? 10-13 A look ahead to CFE 2018

Compliance Update 14-15 GDPR and the broking process – the NACFB’s view

Commercial Finance 16-17 Essential news bites

Top Story 18

Growth in bridging applications back on track

Introducing 20

UK Agricultural Finance expands its product offering

Case Studies 22

A look behind poor credit for business cash advance 24 Exit funding supports portfolio diversification 26-27 Tailored package helps ramp up pharma production 28 Broker focal point for £4m development 30-32 The decline of bridging LTVs

Patron Profile 34-35 Spotcap

Ask the Expert 36

Martin McTague

Special Features 38-40 Why BDMs still play a key role in the specialist market 42-44 Rising interest rates: the next big concern for SMEs? 46-48 What can the North do with £100m?

Industry Guides 50

Five traits of pensionled funding you may not know about 52-53 2018 Cash flow calendar

Opinion & Commentary 54-55 Lenders: get your ducks in a row 56-57 The online sector needs you 58 Best interest should be first, alternative or not

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

NACFB Magazine | 3

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

NACFB expands into new offices Graham Toy CEO NACFB

A full house.

T

he NACFB HQ is on the move after seven years at Hamilton House. On 26th June we are moving to 33 Eastcheap. Not a dramatic move geographically, but an important one nevertheless.

I want you to know why we have made this decision and how this will benefit the Association.

Hamilton House is a serviced office, located in a building of some external charm on the Embankment – but inside, the premises do not stand up well to scrutiny and are really not fit for our purpose. They certainly do not contribute to our plans of running an efficient Member association with the best people in a pleasant and safe environment which is conducive to team work and stakeholder engagement. In addition, a planned sale of the building by the current landlords accentuated the potential operational risk of having only two months’ security of tenure. So, it was time to look for somewhere new.

At 33 Eastcheap, we have secured office space that enables the whole team to work together in one room with some capacity to grow. We have a separate meeting room where we can run events, rather than hiring external facilities.

The building has been newly refurbished and so it is a modern environment, demonstrating our passion to invest in our people. We have a 10-year lease, so we have the security of knowing we can focus on our objectives without worrying about a roof over our head.

4 | NACFB Magazine

From bridging to buy-to-let, play your best hand with our broad range of property finance.

New address: NACFB, 33 Eastcheap, London, EC3M 1DT And for those who are interested in the origins of the building, it is Grade II-listed and designed

by Robert Lewis Roumieu in 1868 as a vinegar warehouse for Hill

& Evans, built at a cost of £8,170.

It was described at the time as “crazy and dazzling” and remains one of the City of London’s most original commercial façades.

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.

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

NACFB expands into new offices Graham Toy CEO NACFB

A full house.

T

he NACFB HQ is on the move after seven years at Hamilton House. On 26th June we are moving to 33 Eastcheap. Not a dramatic move geographically, but an important one nevertheless.

I want you to know why we have made this decision and how this will benefit the Association.

Hamilton House is a serviced office, located in a building of some external charm on the Embankment – but inside, the premises do not stand up well to scrutiny and are really not fit for our purpose. They certainly do not contribute to our plans of running an efficient Member association with the best people in a pleasant and safe environment which is conducive to team work and stakeholder engagement. In addition, a planned sale of the building by the current landlords accentuated the potential operational risk of having only two months’ security of tenure. So, it was time to look for somewhere new.

At 33 Eastcheap, we have secured office space that enables the whole team to work together in one room with some capacity to grow. We have a separate meeting room where we can run events, rather than hiring external facilities.

The building has been newly refurbished and so it is a modern environment, demonstrating our passion to invest in our people. We have a 10-year lease, so we have the security of knowing we can focus on our objectives without worrying about a roof over our head.

4 | NACFB Magazine

From bridging to buy-to-let, play your best hand with our broad range of property finance.

New address: NACFB, 33 Eastcheap, London, EC3M 1DT And for those who are interested in the origins of the building, it is Grade II-listed and designed

by Robert Lewis Roumieu in 1868 as a vinegar warehouse for Hill

& Evans, built at a cost of £8,170.

It was described at the time as “crazy and dazzling” and remains one of the City of London’s most original commercial façades.

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.

NACFB NEWS

NACFB NEWS

Re: Invitation to join the NACFB board directors

Dear Members, As many of you will know, at our AGM in November 2017, the membership approved a change to our constitution in relation to directors of the advisory board.

To refresh your memory, from January 2019 the advisory board will be made up of eight full Member directors, two Patron directors and two directors drawn from a complementary profession. While we have a full complement of directors at present, some directors have indicated that they will be retiring from their role at the AGM – which will generate a number of vacancies.

The reason for writing is to extend a general invitation to all full Members to consider whether they would like to put themselves forward for a seat on the board.

To help put some colour around these appointments, you should know what is required. The advisory board meets at least six times a year and the meetings, which tend to be held in London, take half a day. Some board directors accept additional responsibilities, such as chair of committees, including attendance at the operations board, together with attendance at the CFE, AGM and gala dinner, and Patron/Member events throughout the year.

If you are interested in finding out more, can I suggest that in the first instance you speak to either myself, Graham Toy or Norman Chambers. Any one of us will be able to discuss the role in more detail. This should then help you determine whether this is a position that is right for you, and whether you can add value to the direction and strategy of the Association – and, most importantly, have the time required to commit to this vital role.

All Member appointments are subject to approval at the AGM, and if there are more candidates than vacancies, a vote by the membership is required.

Please think carefully about whether you can help. The Association is embracing a number of changes at present and has its Members at its heart, so this is an exciting time to join and help steer the organisation to fulfil its vision and mission.

Your chairman,

Paul Goodman

6 | NACFB Magazine

NACFB Magazine | 7

NACFB NEWS

NACFB NEWS

Re: Invitation to join the NACFB board directors

Dear Members, As many of you will know, at our AGM in November 2017, the membership approved a change to our constitution in relation to directors of the advisory board.

To refresh your memory, from January 2019 the advisory board will be made up of eight full Member directors, two Patron directors and two directors drawn from a complementary profession. While we have a full complement of directors at present, some directors have indicated that they will be retiring from their role at the AGM – which will generate a number of vacancies.

The reason for writing is to extend a general invitation to all full Members to consider whether they would like to put themselves forward for a seat on the board.

To help put some colour around these appointments, you should know what is required. The advisory board meets at least six times a year and the meetings, which tend to be held in London, take half a day. Some board directors accept additional responsibilities, such as chair of committees, including attendance at the operations board, together with attendance at the CFE, AGM and gala dinner, and Patron/Member events throughout the year.

If you are interested in finding out more, can I suggest that in the first instance you speak to either myself, Graham Toy or Norman Chambers. Any one of us will be able to discuss the role in more detail. This should then help you determine whether this is a position that is right for you, and whether you can add value to the direction and strategy of the Association – and, most importantly, have the time required to commit to this vital role.

All Member appointments are subject to approval at the AGM, and if there are more candidates than vacancies, a vote by the membership is required.

Please think carefully about whether you can help. The Association is embracing a number of changes at present and has its Members at its heart, so this is an exciting time to join and help steer the organisation to fulfil its vision and mission.

Your chairman,

Paul Goodman

6 | NACFB Magazine

NACFB Magazine | 7

NACFB NEWS

NACFB NEWS

Notes from our sponsor Andy Bishop National director of business development Lloyds Bank

Since 2002, the Lloyds Bank Business Barometer has provided early signals about UK economic trends.

P

ublished monthly, it surveys approximately 1,200 companies from all sectors and regions of the UK – including manufacturing, transport, retail, financial, property and business services, education and healthcare – to understand their views on business prospects and optimism on the UK economy.

The most recent barometer showed that optimism regarding the wider economy increased by four points to 32% in April, with overall business confidence unchanged at 32%, in line with the long-term average.

Beneath the headline reading, however, were some differing pictures. The net balance of firms expecting stronger trading prospects in the coming year fell by five points to 31% and was below the Q1 average of 37%. Some 44% of firms (down from 48% in March) expected their trading prospects to improve, while 13% (up from 12%) anticipated lower business activity.

The fall in business prospects, however, was offset by an improvement in economic optimism. The net balance of firms reporting greater optimism for the wider economy increased by four points to 32% and was above the Q1 average of 30%. Just over half of firms (51%) – up from 48% last month – said that they were more optimistic about the economy than three months ago, while 19% (down from 20%) were less optimistic.

Hann-Ju Ho, senior economist at Lloyds Bank Commercial Banking, said: “The uplift in economic optimism this month, against a backdrop of slightly eroding business prospects, is a positive move and may well be reflected in sterling briefly returning to preBrexit levels against the US dollar.

“With over half of firms more optimistic about the economy than

8 | NACFB Magazine

Overall business confidence has been broadly steady this year % net balance % net balance

they were at the start of the year, it will be interesting to see if that trend continues to grow as we approach the halfway point in 2018.”

There was also little change in firms’ assessment of the impact of Brexit on their business prospects.

The net balance remained slightly positive at 4% compared with 5% in March. Some 31% of firms – down from 33% – anticipated a positive impact, while 27% (down from 28%) expected a negative impact.

Rhys Herbert, senior economist at Lloyds Bank Commercial Banking, will be speaking at the NACFB Commercial Finance Expo, sharing his thoughts regarding specific issues that brokers should be aware of following the UK’s separation from the EU. Through Lloyds Bank, brokers are able to access up to date economic insight and analysis on a range of topics and issues that affect trading conditions and business confidence.

To subscribe to economic and business insight updates, please visit lloydsbank.com/business.

20 20

Source: BDRC Continental, Lloyds Bank Commercial Banking analytics as of 30/04/18 Source: BDRC Continental, Lloyds Bank Commercial Banking analytics as of 30/04/18

Overall business confidence by region 60 60

Overall confidence, % net balance Overall confidence, % net balance

Latest Latest

Prev 3m avg Prev 3m avg

50 50 40 40 30 30 20 20 10 10 0 0

UK UK

NE NE

NW NW

YH YH

WM WM

EM EM

WA WA

ET ET

LN LN

Source: BDRC Continental, Lloyds Bank Commercial Banking analytics as of 30/04/18 Source: BDRC Continental, Lloyds Bank Commercial Banking analytics as of 30/04/18

SE SE

SW SW

SC SC

NI NI

NACFB Magazine | 9

NACFB NEWS

NACFB NEWS

Notes from our sponsor Andy Bishop National director of business development Lloyds Bank

Since 2002, the Lloyds Bank Business Barometer has provided early signals about UK economic trends.

P

ublished monthly, it surveys approximately 1,200 companies from all sectors and regions of the UK – including manufacturing, transport, retail, financial, property and business services, education and healthcare – to understand their views on business prospects and optimism on the UK economy.

The most recent barometer showed that optimism regarding the wider economy increased by four points to 32% in April, with overall business confidence unchanged at 32%, in line with the long-term average.

Beneath the headline reading, however, were some differing pictures. The net balance of firms expecting stronger trading prospects in the coming year fell by five points to 31% and was below the Q1 average of 37%. Some 44% of firms (down from 48% in March) expected their trading prospects to improve, while 13% (up from 12%) anticipated lower business activity.

The fall in business prospects, however, was offset by an improvement in economic optimism. The net balance of firms reporting greater optimism for the wider economy increased by four points to 32% and was above the Q1 average of 30%. Just over half of firms (51%) – up from 48% last month – said that they were more optimistic about the economy than three months ago, while 19% (down from 20%) were less optimistic.

Hann-Ju Ho, senior economist at Lloyds Bank Commercial Banking, said: “The uplift in economic optimism this month, against a backdrop of slightly eroding business prospects, is a positive move and may well be reflected in sterling briefly returning to preBrexit levels against the US dollar.

“With over half of firms more optimistic about the economy than

8 | NACFB Magazine

Overall business confidence has been broadly steady this year % net balance % net balance

they were at the start of the year, it will be interesting to see if that trend continues to grow as we approach the halfway point in 2018.”

There was also little change in firms’ assessment of the impact of Brexit on their business prospects.

The net balance remained slightly positive at 4% compared with 5% in March. Some 31% of firms – down from 33% – anticipated a positive impact, while 27% (down from 28%) expected a negative impact.

Rhys Herbert, senior economist at Lloyds Bank Commercial Banking, will be speaking at the NACFB Commercial Finance Expo, sharing his thoughts regarding specific issues that brokers should be aware of following the UK’s separation from the EU. Through Lloyds Bank, brokers are able to access up to date economic insight and analysis on a range of topics and issues that affect trading conditions and business confidence.

To subscribe to economic and business insight updates, please visit lloydsbank.com/business.

20 20

Source: BDRC Continental, Lloyds Bank Commercial Banking analytics as of 30/04/18 Source: BDRC Continental, Lloyds Bank Commercial Banking analytics as of 30/04/18

Overall business confidence by region 60 60

Overall confidence, % net balance Overall confidence, % net balance

Latest Latest

Prev 3m avg Prev 3m avg

50 50 40 40 30 30 20 20 10 10 0 0

UK UK

NE NE

NW NW

YH YH

WM WM

EM EM

WA WA

ET ET

LN LN

Source: BDRC Continental, Lloyds Bank Commercial Banking analytics as of 30/04/18 Source: BDRC Continental, Lloyds Bank Commercial Banking analytics as of 30/04/18

SE SE

SW SW

SC SC

NI NI

NACFB Magazine | 9

THE TEAM FOR BRIDGING LOANS

NACFB NEWS

Life after GDPR? The GDPR came into force on 25th May. Plenty has been written around the impact it will have on business at large and the NACFB has shared its view on how the regulation will impact the broking process on page 14.

We have shared with both Members and Patrons the work we have undertaken on GDPR, in particular around the broking process. There is real value in having a consistent and collaborative approach to this for a few key reasons:

WE

clarity in the broking process will minimise risks

Inisde CFE 2018 Wednesday 20th June sees the annual NACFB Commercial Finance Expo return to Hall 3A at Birmingham’s NEC for the ninth consecutive year. With over 130 confirmed exhibitors we are on course to stage the biggest event in the Association’s history.

Panel sessions As well as a place to do business, the Commercial Finance Expo is a place to join the debate. The sessions are guaranteed to feature lively exchanges and will seek to present a variety of differing viewpoints.

Don’t forget, you can view a detailed version of the agenda, profiles of the panellists and submit questions 48 hours prior to the conference via the CFE 2018 app, which can be downloaded via the CFE website,

Apple App Store or Google Play. You can view questions already submitted on the day and vote for the ones you wish to be answered on the day.

Meet the Expert sessions The Meet the Expert sessions will focus on key issues within each of the main commercial finance divisions and will be hosted by the NACFB’s support sponsors: Barclays, Hitachi Capital, OneSavings Bank/InterBay Commercial, Aldermore, Funding Circle & Together.

Each session consists of 20-minute presentations from industry experts within the commercial, asset, buy-to-let, development, cash flow, invoicing & factoring and bridging finance sectors.

For further information, visit:

www.commercialfinanceexpo.co.uk/agenda

transparency over responsibilities will permit clarity when it comes to accountability

COMMERCIAL

RETAIL

INDUSTRIAL

SHOPS

DO

ASTs

INVESTMENT

RESIDENTIAL

HOTELS

IT

OFFICES

INVESTORS

ALL!

C

consistency will maintain a level playing field when it comes to lender selection

M

Y

CM

clients have a right to know how their personal data is being processed audit trails will be more robust if the process across the market is consistent clarity and fairness regarding responsibilities will allow appropriate professional indemnity insurance policies to be effective.

We have examined and consulted on the broking process and have outlined a way in which we believe it can work best for all stakeholders in our compliance feature this month.

Our guidance lays out a pragmatic and compliant approach to the broking process and is reflected in the updated broker agreements and data protection policy templates. Visit www. nacfbcompliance.co.uk to find out more today.

MY

CY

CMY

K

FACTORIES

OWNER OCCUPIERS

Let’s Talk!

COM M ERCIAL

•

020 8349 5190 sayhello@alternativebridging.co.uk @ABC_Bridging

RESIDENT I AL

•

A PRINCIPAL LENDER 10 | NACFB Magazine

DEVELOP ME N T

THE TEAM FOR BRIDGING LOANS

NACFB NEWS

Life after GDPR? The GDPR came into force on 25th May. Plenty has been written around the impact it will have on business at large and the NACFB has shared its view on how the regulation will impact the broking process on page 14.

We have shared with both Members and Patrons the work we have undertaken on GDPR, in particular around the broking process. There is real value in having a consistent and collaborative approach to this for a few key reasons:

WE

clarity in the broking process will minimise risks

Inisde CFE 2018 Wednesday 20th June sees the annual NACFB Commercial Finance Expo return to Hall 3A at Birmingham’s NEC for the ninth consecutive year. With over 130 confirmed exhibitors we are on course to stage the biggest event in the Association’s history.

Panel sessions As well as a place to do business, the Commercial Finance Expo is a place to join the debate. The sessions are guaranteed to feature lively exchanges and will seek to present a variety of differing viewpoints.

Don’t forget, you can view a detailed version of the agenda, profiles of the panellists and submit questions 48 hours prior to the conference via the CFE 2018 app, which can be downloaded via the CFE website,

Apple App Store or Google Play. You can view questions already submitted on the day and vote for the ones you wish to be answered on the day.

Meet the Expert sessions The Meet the Expert sessions will focus on key issues within each of the main commercial finance divisions and will be hosted by the NACFB’s support sponsors: Barclays, Hitachi Capital, OneSavings Bank/InterBay Commercial, Aldermore, Funding Circle & Together.

Each session consists of 20-minute presentations from industry experts within the commercial, asset, buy-to-let, development, cash flow, invoicing & factoring and bridging finance sectors.

For further information, visit:

www.commercialfinanceexpo.co.uk/agenda

transparency over responsibilities will permit clarity when it comes to accountability

COMMERCIAL

RETAIL

INDUSTRIAL

SHOPS

DO

ASTs

INVESTMENT

RESIDENTIAL

HOTELS

IT

OFFICES

INVESTORS

ALL!

C

consistency will maintain a level playing field when it comes to lender selection

M

Y

CM

clients have a right to know how their personal data is being processed audit trails will be more robust if the process across the market is consistent clarity and fairness regarding responsibilities will allow appropriate professional indemnity insurance policies to be effective.

We have examined and consulted on the broking process and have outlined a way in which we believe it can work best for all stakeholders in our compliance feature this month.

Our guidance lays out a pragmatic and compliant approach to the broking process and is reflected in the updated broker agreements and data protection policy templates. Visit www. nacfbcompliance.co.uk to find out more today.

MY

CY

CMY

K

FACTORIES

OWNER OCCUPIERS

Let’s Talk!

COM M ERCIAL

•

020 8349 5190 sayhello@alternativebridging.co.uk @ABC_Bridging

RESIDENT I AL

•

A PRINCIPAL LENDER 10 | NACFB Magazine

DEVELOP ME N T

NACFB NEWS

NACFB NEWS

Meet the Expert sessions Time

Conference timetable & agenda

Topic

Expert

12.00pm – 12.20pm

Commercial mortgages

Matt Weaver Head of business banking, real estate, Barclays

12.25pm – 12.45pm

Asset finance

Hitachi Capital Representative to be confirmed

12.50pm – 1.10pm

Buy-to-let

Adrian Moloney, Sales director, OneSavings Bank/ InterBay Commercial

2.00pm – 2.20pm

Development finance

John Carter Commercial director, Aldermore Simon Knowles Property development manager, Aldermore

2.30pm – 2.50pm

3.30pm – 3.50pm

Time

Topic

Participants

10.30am – 10.40am

The 2018 Expo kicks off with a welcome and introductory comments from both the NACFB’s chairman and chief executive.

10.40am – 10.45am

Introduction from 2018’s NACFB headline sponsor, Lloyds Bank.

10.45am – 11.20am 11.20am – 12.00pm

Rhys Herbert, economist from Lloyds Bank, dares to look at the commercial finance landscape ‘Beyond Brexit’.

Former British soldier Ben McBean shares his motivating and inspiring life story of how he overcame the greatest adversity to become a leading property developer.

Session one

Paul Goodman Chairman, NACFB Graham Toy CEO, NACFB Andy Bishop UK director, business development & SME banking, Lloyds Bank Rhys Herbert Senior economist, Lloyds Bank Ben McBean property developer

12.00pm – 12.30pm

Is traditional buy-to-let dead and buried? - With a series of ‘leaking tap’ tax raids mounted on landlords over the last few years, how can the sector adapt more readily to the changing landscape?

New energy laws impacting buy-to-let lenders - How are lenders working with brokers to ensure this regulation is met?

Laura Kinghorn Regional manager, Northern England & Scotland, Funding Circle

Cash flow finance

Reshaping the BTL market - The PRA’s guidelines under SS 13/16 have been fully in place since October 2017 and this is bringing about a further re-alignment among lenders and brokers. What is the future landscape and how can we position ourselves most effectively to support landlords through the new processes?

Marc Goldberg Commercial CEO, Together

Bridging finance

Buy-to-let panel discussion session, topics include:

1.30pm – 2.05pm

Session two Peer-to-peer lending panel discussion session, topics include: Myth-busting P2P - How can the sector address longstanding P2P sceptics, and is it prepared for an economic downturn?

IFIsa going mainstream - With the majority of the UK’s biggest P2P lenders now authorised to roll out Isa offerings to the mass market, how can sector lenders raise awareness of the new tax wrapper so that it reaches mainstream heights?

An open banking revolution - With P2P platforms and lenders bracing for changes that open banking brings, how does the role of the broker change once the doorway opens to a bank – anywhere in the world – offering a choice of high-tech services and increased speed of execution?

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 loans can be used to:

Downing can offer:

ff

ff

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

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

2.20pm – 3.00pm

first-charge secured loans up to 70% loan-to-value ranging from £1 million to £10 million; ffintroducer fees paid on the first drawdown of the loan facility; ffinterest rates typically ranging from 8% - 11% p.a.; and ffterms typically ranging from 12-36 months.

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.

12 | NACFB Magazine

The changing dynamics of the lender-broker relationship, topics include: With the commercial finance landscape evolving at pace, how is the relationship between broker and lender changing?

How will modern finance professionals balance the increasing use of technology while safeguarding traditional personal relationship?

This session will hear from both lenders and brokers offering insight into ensuring the dynamic that has weathered the downturns continues in the future.

Follow us on Twitter and LinkedIn: @downingllp

Session three

Norman Chambers (chair) Managing director, NACFB David Whittaker CEO, Mortgages for Business Adrian Moloney Sales director, OneSavings Bank/ InterBay Commercial Karen Bennett Managing director,Shawbrook Bank John Heron, Director, Paragon Bank D’mitri Zaprzala Head of sales, Octopus Suzie Neuwirth (chair) Editor, P2P Finance News Stuart Law CEO, Assetz Capital James Lovett Broker proposition manager, Funding Circle John Goodall, CEO, Landbay Adrian Innes Head of origination, LendingCrowd Chirag Shah CEO, Nucleus Commercial Finance John Davies Director, Just Cashflow Graham Toy (chair) CEO, NACFB Niels Turfboer Managing director, Spotcap Dave Furnival Head of intermediary services, NatWest Greg Carter CEO, Growth Street Paul Goodman Managing director, Goodman Corporate Finance Mathew Kind Director, Kind Commercial Phil Gray Managing director, Watts Commercial

NACFB Magazine | 13

NACFB NEWS

NACFB NEWS

Meet the Expert sessions Time

Conference timetable & agenda

Topic

Expert

12.00pm – 12.20pm

Commercial mortgages

Matt Weaver Head of business banking, real estate, Barclays

12.25pm – 12.45pm

Asset finance

Hitachi Capital Representative to be confirmed

12.50pm – 1.10pm

Buy-to-let

Adrian Moloney, Sales director, OneSavings Bank/ InterBay Commercial

2.00pm – 2.20pm

Development finance

John Carter Commercial director, Aldermore Simon Knowles Property development manager, Aldermore

2.30pm – 2.50pm

3.30pm – 3.50pm

Time

Topic

Participants

10.30am – 10.40am

The 2018 Expo kicks off with a welcome and introductory comments from both the NACFB’s chairman and chief executive.

10.40am – 10.45am

Introduction from 2018’s NACFB headline sponsor, Lloyds Bank.

10.45am – 11.20am 11.20am – 12.00pm

Rhys Herbert, economist from Lloyds Bank, dares to look at the commercial finance landscape ‘Beyond Brexit’.

Former British soldier Ben McBean shares his motivating and inspiring life story of how he overcame the greatest adversity to become a leading property developer.

Session one

Paul Goodman Chairman, NACFB Graham Toy CEO, NACFB Andy Bishop UK director, business development & SME banking, Lloyds Bank Rhys Herbert Senior economist, Lloyds Bank Ben McBean property developer

12.00pm – 12.30pm

Is traditional buy-to-let dead and buried? - With a series of ‘leaking tap’ tax raids mounted on landlords over the last few years, how can the sector adapt more readily to the changing landscape?

New energy laws impacting buy-to-let lenders - How are lenders working with brokers to ensure this regulation is met?

Laura Kinghorn Regional manager, Northern England & Scotland, Funding Circle

Cash flow finance

Reshaping the BTL market - The PRA’s guidelines under SS 13/16 have been fully in place since October 2017 and this is bringing about a further re-alignment among lenders and brokers. What is the future landscape and how can we position ourselves most effectively to support landlords through the new processes?

Marc Goldberg Commercial CEO, Together

Bridging finance

Buy-to-let panel discussion session, topics include:

1.30pm – 2.05pm

Session two Peer-to-peer lending panel discussion session, topics include: Myth-busting P2P - How can the sector address longstanding P2P sceptics, and is it prepared for an economic downturn?

IFIsa going mainstream - With the majority of the UK’s biggest P2P lenders now authorised to roll out Isa offerings to the mass market, how can sector lenders raise awareness of the new tax wrapper so that it reaches mainstream heights?

An open banking revolution - With P2P platforms and lenders bracing for changes that open banking brings, how does the role of the broker change once the doorway opens to a bank – anywhere in the world – offering a choice of high-tech services and increased speed of execution?

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 loans can be used to:

Downing can offer:

ff

ff

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

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

2.20pm – 3.00pm

first-charge secured loans up to 70% loan-to-value ranging from £1 million to £10 million; ffintroducer fees paid on the first drawdown of the loan facility; ffinterest rates typically ranging from 8% - 11% p.a.; and ffterms typically ranging from 12-36 months.

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.

12 | NACFB Magazine

The changing dynamics of the lender-broker relationship, topics include: With the commercial finance landscape evolving at pace, how is the relationship between broker and lender changing?

How will modern finance professionals balance the increasing use of technology while safeguarding traditional personal relationship?

This session will hear from both lenders and brokers offering insight into ensuring the dynamic that has weathered the downturns continues in the future.

Follow us on Twitter and LinkedIn: @downingllp

Session three

Norman Chambers (chair) Managing director, NACFB David Whittaker CEO, Mortgages for Business Adrian Moloney Sales director, OneSavings Bank/ InterBay Commercial Karen Bennett Managing director,Shawbrook Bank John Heron, Director, Paragon Bank D’mitri Zaprzala Head of sales, Octopus Suzie Neuwirth (chair) Editor, P2P Finance News Stuart Law CEO, Assetz Capital James Lovett Broker proposition manager, Funding Circle John Goodall, CEO, Landbay Adrian Innes Head of origination, LendingCrowd Chirag Shah CEO, Nucleus Commercial Finance John Davies Director, Just Cashflow Graham Toy (chair) CEO, NACFB Niels Turfboer Managing director, Spotcap Dave Furnival Head of intermediary services, NatWest Greg Carter CEO, Growth Street Paul Goodman Managing director, Goodman Corporate Finance Mathew Kind Director, Kind Commercial Phil Gray Managing director, Watts Commercial

NACFB Magazine | 13

Key definitions

Compliance | update

Data subject: A living person whose personal data is processed.

Data controller: Either jointly or with others determines way personal data is processed.

The latest from our in-house compliance team Client & broker

GDPR and the broking process – the NACFB’s view

T

he GDPR came into force last month on 25th May. Plenty has been written around the impact it will have on business at large, but the NACFB is keen to share our view on how the regulation will impact the broking process – in a more visual manner.

GDPR will impact the broking journey from the early stages of client interaction right until a deal has been agreed and signed.

We are offering our view, as your trade body, on how a commercial finance deal will be affected. It is a view that has been arrived at after consultation with relevant stakeholders, including the regulator.

All NACFB Members now have access to the NACFB Compliance portal.

Within the portal’s subscriber area, we offer a range of GDPR-ready document templates, from privacy notices to terms of business and data protection agreements.

The NACFB Compliance team is here to provide you and your brokerage with the guidance, training and support necessary for staying fully compliant with GDPR.

14 | NACFB Magazine

Broker provides a privacy notice to client to process personal data

With consent gained via the privacy notice, broker approaches panel of lenders

Broker’s privacy notice states categories of data processors, not specific lenders

Lenders operate under broker privacy notice to consider offering

Broker becomes data controller, determining how data is processed.

Broker also becomes

Lenders cannot use client data for any purpose other than consideration of proposal.

Client

Broker

Broker & chosen lender

Data processor: In relation to personal data, processes under instruction of the controller.

Lender is selected from panel. All other lenders to be notified by broker (as data controller) to erase client’s personal data (unless there is a legal requirement to store)

Privacy notice: Information notice setting out how data is processed, for what purpose and by who.

Personal data: Information relating to a living individual that can be used (either solely or part of accompanying data) to identify that person.

Selected lender also becomes data controller & processor, issuing own privacy notice to client

Lenders

We should stress that lenders will also have their own interpretation and therefore the process may vary and differ from our view, but we are keen to encourage a level of consistency and uniformity across the sector.

Chosen Lender

Lender Selection

Roger Deane Managing director NACFB Compliance

GDPR case study The NACFB Compliance team has constructed a case study of a typical commercial finance deal and have overlaid this process with the Association’s GDPR interpretation.

Broker & lender interaction

It should be noted that, as with all principle-based regulation, there can be a number of ways to adapt your processes, all of which can be as compliant as the other. What is important is that in adapting your processes to meet regulatory requirements, you consider a rationale for each decision you make.

This guidance is to be used for reference only – further information on GDPR can be found on the NACFB Compliance website.

Visit www.nacfbcompliance. co.uk to find out more.

Data Controller

Data Subject

Data Processor

Broker Privacy Notice

Data Controller

Data Processors

Data Processor

Lender Privacy Notice

Broking & Advice Process NACFB Magazine | 15

Key definitions

Compliance | update

Data subject: A living person whose personal data is processed.

Data controller: Either jointly or with others determines way personal data is processed.

The latest from our in-house compliance team Client & broker

GDPR and the broking process – the NACFB’s view

T

he GDPR came into force last month on 25th May. Plenty has been written around the impact it will have on business at large, but the NACFB is keen to share our view on how the regulation will impact the broking process – in a more visual manner.

GDPR will impact the broking journey from the early stages of client interaction right until a deal has been agreed and signed.

We are offering our view, as your trade body, on how a commercial finance deal will be affected. It is a view that has been arrived at after consultation with relevant stakeholders, including the regulator.

All NACFB Members now have access to the NACFB Compliance portal.

Within the portal’s subscriber area, we offer a range of GDPR-ready document templates, from privacy notices to terms of business and data protection agreements.

The NACFB Compliance team is here to provide you and your brokerage with the guidance, training and support necessary for staying fully compliant with GDPR.

14 | NACFB Magazine

Broker provides a privacy notice to client to process personal data

With consent gained via the privacy notice, broker approaches panel of lenders

Broker’s privacy notice states categories of data processors, not specific lenders

Lenders operate under broker privacy notice to consider offering

Broker becomes data controller, determining how data is processed.

Broker also becomes

Lenders cannot use client data for any purpose other than consideration of proposal.

Client

Broker

Broker & chosen lender

Data processor: In relation to personal data, processes under instruction of the controller.

Lender is selected from panel. All other lenders to be notified by broker (as data controller) to erase client’s personal data (unless there is a legal requirement to store)

Privacy notice: Information notice setting out how data is processed, for what purpose and by who.

Personal data: Information relating to a living individual that can be used (either solely or part of accompanying data) to identify that person.

Selected lender also becomes data controller & processor, issuing own privacy notice to client

Lenders

We should stress that lenders will also have their own interpretation and therefore the process may vary and differ from our view, but we are keen to encourage a level of consistency and uniformity across the sector.

Chosen Lender

Lender Selection

Roger Deane Managing director NACFB Compliance

GDPR case study The NACFB Compliance team has constructed a case study of a typical commercial finance deal and have overlaid this process with the Association’s GDPR interpretation.

Broker & lender interaction

It should be noted that, as with all principle-based regulation, there can be a number of ways to adapt your processes, all of which can be as compliant as the other. What is important is that in adapting your processes to meet regulatory requirements, you consider a rationale for each decision you make.

This guidance is to be used for reference only – further information on GDPR can be found on the NACFB Compliance website.

Visit www.nacfbcompliance. co.uk to find out more.

Data Controller

Data Subject

Data Processor

Broker Privacy Notice

Data Controller

Data Processors

Data Processor

Lender Privacy Notice

Broking & Advice Process NACFB Magazine | 15

Masthaven makes Bridging Plus available to all intermediaries Masthaven has announced the roll-out of its Bridging Plus short-term lending product to the wider market.

The specialist lender initially launched the product with key brokers in February.

Following positive feedback, it has now made Bridging Plus available to all intermediaries.

The lender previously also increased the LTV on the product from 70% to 75% in response to broker feedback.

Commercial Finance

Bridging loan volumes reach £154m in Q1

Tuscan Capital becomes NACFB Patron Tuscan Capital has announced that it has become a Patron of the National Association of Commercial Finance Brokers (NACFB).

The recently launched specialist lender said that it was an early ambition to associate itself with the NACFB. Colin Sanders, co-founder and CEO at Tuscan Capital, said he considered the NACFB to be one of the sector’s pivotal organisations.

mtf hires new commercial director Bridging lender mtf has confirmed the appointment of Gareth Lewis as its new commercial director.

Gareth joins from Precise Mortgages, where he served as director of bridging.

He has over 14 years of experience in the short-term lending market and has previously held roles at Tiuta and Cheval Property Finance.

Key Commercial sees slide in commercial lending rates

Bridging loan volume hit £154.02m in Q1 2018, up from the £118.79m recorded for the same period last year, according to the latest Bridging Trends report.

The quarterly report, published by short-term lender mtf, revealed that the volume in Q1 2018 – the highest recorded since the report was launched three years ago – was almost double the £80.47m recorded during Q1 2015.

Roma secures £25m debt facility Funds managed by Foresight Group have provided a debt facility of up to £25m to Roma Finance.

The facility will sit alongside the specialist property lender’s existing traditional funding lines provided by RBS and Cambridge Building Society.

Since 2014, Roma has completed just under 500 transactions and, since the start of 2018, has grown its loan book by almost 50%.

InterBay and TMA launch new club partnership

Specialist finance broker Key Commercial Finance claimed there has been a downward trend in rates for commercial, business and property funding.

The broker said that the lower rates were being fuelled by the number of commercial lenders escalating.

It also reported that high street banks were competing for market share within the ‘trading business’ market.

InterBay Commercial – part of the specialist lending and retail savings group OneSavings Bank PLC – has launched a new club partnership with TMA. TMA Club members will now be able to access InterBay’s range of commercial, semicommercial, buy-to-let, HMO and bridging products.

The news follows InterBay’s announcements of several new partnerships this year, including with Intrinsic, SimplyBiz and Paradigm Mortgage Services.

Nucleus launches start-up finance product Nucleus Commercial Finance has announced the launch of start-up finance, a new product tailored for start-ups.

Funding ranges from £25,00020m, with a secured, interestonly loan over a maximum of five years. The facility allows SMEs to use property as collateral.

At the end of the term, companies can choose to exit, or migrate to a term loan with Nucleus.

Number of restaurants up 13% since the recession

MSP Capital increases senior debt facilities

Property funder MSP Capital has announced the completion of an increase in its senior debt facilities to £60m.

The business – which specialises in secured short-term bridging and development loans – has also earmarked an additional £30m of senior debt funding for the launch of a complementary product.

The senior debt facilities were provided by Shawbrook Bank, with funds managed

by Insight Investment.

The number of restaurants in England has increased by 13% since the recession to 25,070 (2009: 22,230), according to recent research from Lendy.

The lender believed that saturation was the key reason why many were struggling in the current market.

Lendy stated that for commercial property investors, these findings reinforced the need for a diverse portfolio in a range of locations.

PayPal Working Capital provides £625m to UK SMEs PayPal Working Capital, PayPal’s small business finance scheme, has provided £625m of cash advances to over 30,000 UK SMEs since it launched in 2014.

These figures highlighted a 56% increase in the small business cash advances that PayPal supplied in the last 12 months.

In addition, PayPal Working Capital has seen 70% of cash advances issued outside of traditional banking hours.

Masthaven makes Bridging Plus available to all intermediaries Masthaven has announced the roll-out of its Bridging Plus short-term lending product to the wider market.

The specialist lender initially launched the product with key brokers in February.

Following positive feedback, it has now made Bridging Plus available to all intermediaries.

The lender previously also increased the LTV on the product from 70% to 75% in response to broker feedback.

Commercial Finance

Bridging loan volumes reach £154m in Q1

Tuscan Capital becomes NACFB Patron Tuscan Capital has announced that it has become a Patron of the National Association of Commercial Finance Brokers (NACFB).

The recently launched specialist lender said that it was an early ambition to associate itself with the NACFB. Colin Sanders, co-founder and CEO at Tuscan Capital, said he considered the NACFB to be one of the sector’s pivotal organisations.

mtf hires new commercial director Bridging lender mtf has confirmed the appointment of Gareth Lewis as its new commercial director.

Gareth joins from Precise Mortgages, where he served as director of bridging.

He has over 14 years of experience in the short-term lending market and has previously held roles at Tiuta and Cheval Property Finance.

Key Commercial sees slide in commercial lending rates

Bridging loan volume hit £154.02m in Q1 2018, up from the £118.79m recorded for the same period last year, according to the latest Bridging Trends report.

The quarterly report, published by short-term lender mtf, revealed that the volume in Q1 2018 – the highest recorded since the report was launched three years ago – was almost double the £80.47m recorded during Q1 2015.

Roma secures £25m debt facility Funds managed by Foresight Group have provided a debt facility of up to £25m to Roma Finance.

The facility will sit alongside the specialist property lender’s existing traditional funding lines provided by RBS and Cambridge Building Society.

Since 2014, Roma has completed just under 500 transactions and, since the start of 2018, has grown its loan book by almost 50%.

InterBay and TMA launch new club partnership

Specialist finance broker Key Commercial Finance claimed there has been a downward trend in rates for commercial, business and property funding.

The broker said that the lower rates were being fuelled by the number of commercial lenders escalating.

It also reported that high street banks were competing for market share within the ‘trading business’ market.

InterBay Commercial – part of the specialist lending and retail savings group OneSavings Bank PLC – has launched a new club partnership with TMA. TMA Club members will now be able to access InterBay’s range of commercial, semicommercial, buy-to-let, HMO and bridging products.

The news follows InterBay’s announcements of several new partnerships this year, including with Intrinsic, SimplyBiz and Paradigm Mortgage Services.

Nucleus launches start-up finance product Nucleus Commercial Finance has announced the launch of start-up finance, a new product tailored for start-ups.

Funding ranges from £25,00020m, with a secured, interestonly loan over a maximum of five years. The facility allows SMEs to use property as collateral.

At the end of the term, companies can choose to exit, or migrate to a term loan with Nucleus.

Number of restaurants up 13% since the recession

MSP Capital increases senior debt facilities

Property funder MSP Capital has announced the completion of an increase in its senior debt facilities to £60m.

The business – which specialises in secured short-term bridging and development loans – has also earmarked an additional £30m of senior debt funding for the launch of a complementary product.

The senior debt facilities were provided by Shawbrook Bank, with funds managed

by Insight Investment.

The number of restaurants in England has increased by 13% since the recession to 25,070 (2009: 22,230), according to recent research from Lendy.

The lender believed that saturation was the key reason why many were struggling in the current market.

Lendy stated that for commercial property investors, these findings reinforced the need for a diverse portfolio in a range of locations.

PayPal Working Capital provides £625m to UK SMEs PayPal Working Capital, PayPal’s small business finance scheme, has provided £625m of cash advances to over 30,000 UK SMEs since it launched in 2014.

These figures highlighted a 56% increase in the small business cash advances that PayPal supplied in the last 12 months.

In addition, PayPal Working Capital has seen 70% of cash advances issued outside of traditional banking hours.

Top | story Our pick of the latest Patron news

Expertise Commitment Growth

Growth in bridging gathers pace Vera Sugar Editor NACFB Magazine

T

he pace of growth in bridging applications is on the rise, according to recent figures from the Association of Short Term Lenders (ASTL).

The Q1 2018 figures showed applications were up by 23.2% on an annualised basis, totalling £19.7bn. The pace of increases in applications saw recent declines reversed, increasing by 28.9% compared with a decrease of 11% in Q4 2017.

Annual completions showed a 29.9% year-on-year increase, now close to £3.8bn.

This news follows Q4 2017 data, which reported that annual completions had surged by 24.6% to more than £3.5bn.

The value of loans written for the quarter ending 31st March 2018 revealed an increase of 1.5% compared with the previous quarter.

finance industry is in good shape and is ready and willing to meet the challenges and opportunities of today’s market.

Total loan books also demonstrated growth, with a rise of 13.1% compared with Q4 2017. The value of loan books increased by 35.6% compared with the end of Q1 2017, reaching £4.2bn.

“The bridging sector is now a wellestablished part of the property finance market and, barring any black swans, should continue to grow.”

These qualities are synonymous with the NACFB and also underpin the long-term relationships we build with our commercial and asset finance brokers.

At Shawbrook we thrive on working with our broker partners to help unlock the full potential of their clients’ ambitions, whether acquiring business critical assets, funding growth or investing in commercial property and development.

Find out how our regional knowledge, sector expertise and thoughtful approach to decision making could be the difference your customers are looking for by contacting us today.

Business Finance

0345 604 0975

Businessfinance@shawbrook.co.uk

Benson Hersch, CEO at the ASTL, said: “Our figures highlight the fact that the bridging QE 31/3/18 compared with QE 31/12/17

QE 31/3/18 compared with QE 31/3/17

Year end 31/3/18 compared with Year end 31/3/17

Loans written (£)

+1.5%

+ 32.5%

+29.9%

Loan book (£)*

+13.1%*

+35.6%*

+35.6%*

Applications (£)

+18.2%

+14.9%

+23.2%

Commercial Property

0330 123 4521 Salesdesk@shawbrook.co.uk

* As at the end of the period THIS ADVERTISEMENT IS INTENDED FOR INTERMEDIARY USE ONLY AND MUST NOT BE DISTRIBUTED TO POTENTIAL CLIENTS SB_NACFB_CFEADVERT_230418

18 | NACFB Magazine

Top | story Our pick of the latest Patron news

Expertise Commitment Growth

Growth in bridging gathers pace Vera Sugar Editor NACFB Magazine

T

he pace of growth in bridging applications is on the rise, according to recent figures from the Association of Short Term Lenders (ASTL).

The Q1 2018 figures showed applications were up by 23.2% on an annualised basis, totalling £19.7bn. The pace of increases in applications saw recent declines reversed, increasing by 28.9% compared with a decrease of 11% in Q4 2017.

Annual completions showed a 29.9% year-on-year increase, now close to £3.8bn.

This news follows Q4 2017 data, which reported that annual completions had surged by 24.6% to more than £3.5bn.

The value of loans written for the quarter ending 31st March 2018 revealed an increase of 1.5% compared with the previous quarter.

finance industry is in good shape and is ready and willing to meet the challenges and opportunities of today’s market.

Total loan books also demonstrated growth, with a rise of 13.1% compared with Q4 2017. The value of loan books increased by 35.6% compared with the end of Q1 2017, reaching £4.2bn.

“The bridging sector is now a wellestablished part of the property finance market and, barring any black swans, should continue to grow.”

These qualities are synonymous with the NACFB and also underpin the long-term relationships we build with our commercial and asset finance brokers.

At Shawbrook we thrive on working with our broker partners to help unlock the full potential of their clients’ ambitions, whether acquiring business critical assets, funding growth or investing in commercial property and development.

Find out how our regional knowledge, sector expertise and thoughtful approach to decision making could be the difference your customers are looking for by contacting us today.

Business Finance

0345 604 0975

Businessfinance@shawbrook.co.uk

Benson Hersch, CEO at the ASTL, said: “Our figures highlight the fact that the bridging QE 31/3/18 compared with QE 31/12/17

QE 31/3/18 compared with QE 31/3/17

Year end 31/3/18 compared with Year end 31/3/17

Loans written (£)

+1.5%

+ 32.5%

+29.9%

Loan book (£)*

+13.1%*

+35.6%*

+35.6%*

Applications (£)

+18.2%

+14.9%

+23.2%

Commercial Property

0330 123 4521 Salesdesk@shawbrook.co.uk

* As at the end of the period THIS ADVERTISEMENT IS INTENDED FOR INTERMEDIARY USE ONLY AND MUST NOT BE DISTRIBUTED TO POTENTIAL CLIENTS SB_NACFB_CFEADVERT_230418

18 | NACFB Magazine

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

UK Agricultural Finance expands its product offering

Robert Suss Director UK Agricultural Finance

U

K Agricultural Finance, the specialist lender that has been assisting the rural community in England, Scotland and Wales with much-need bridging finance, has secured additional funding to provide longer-term loans in order to help farmers diversify, sustain, grow and improve their businesses.

We are excited to start providing longer-term loans to farmers and continue to build our reputation for being a rural lender that listens to the needs of customers and advisers.

The launch of longer-term agricultural loans renews our commitment to introducing innovative financing solutions that address gaps in the market and meet the aspirations of borrowers up and down the country.

We are continually working with our broker network to improve our product range. The new term loan has been devised to help farmers find a new source of capital, at attractive rates, to grow their businesses.

20 | NACFB Magazine

The new funding comes at typical terms of three to seven years and with 6.5% - 9% variable rate, depending on loan characteristics, with affordability calculated at 125% with a maximum LTV of 60% all first charge against agricultural land and property.

One example of our new loan was a recent case when UK Agricultural Finance provided a £260,000 term loan in Kent to help a farming family restructure its borrowings and refurbish their farm shop.

When an existing lender declined to extend their facility, the fifthgeneration family reached out to UK Agricultural Finance. The family had successfully reared rare-breed livestock, supported by the government’s Higher Level Stewardship scheme, and successfully sold their produce at large London farmers markets.

The team at UK Agricultural Finance, who pride themselves on face-to-face underwriting, visited the family at their farm and saw a well-run business with very well organised accounts and financial affairs, but which required someone who could take the time to understand their needs and take a holistic view of their requirements.

The lender took comfort in the fact that the family operates the entire business by themselves, from feeding and rearing to processing and sale, supported by highly productive land with good road access to a number of other farms. The family needed financial support to help drive more income to the business.

UK Agricultural Finance, following its site visit, was able to issue its offer in principle and provided the financing in a matter of days, allowing the family to focus on growing their business with real clarity going forward. The loan was provided at 45% LTV over a 36-month term.

Graham Noble, co-founder at UK Agricultural Finance, said: “Our specialist agricultural underwriters enjoyed meeting a committed farming family, which helped us make an informed, responsible underwriting decision to provide much-needed rural finance to allow this family to sustain, grow and improve their business.”

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

UK Agricultural Finance expands its product offering

Robert Suss Director UK Agricultural Finance

U

K Agricultural Finance, the specialist lender that has been assisting the rural community in England, Scotland and Wales with much-need bridging finance, has secured additional funding to provide longer-term loans in order to help farmers diversify, sustain, grow and improve their businesses.

We are excited to start providing longer-term loans to farmers and continue to build our reputation for being a rural lender that listens to the needs of customers and advisers.

The launch of longer-term agricultural loans renews our commitment to introducing innovative financing solutions that address gaps in the market and meet the aspirations of borrowers up and down the country.

We are continually working with our broker network to improve our product range. The new term loan has been devised to help farmers find a new source of capital, at attractive rates, to grow their businesses.

20 | NACFB Magazine

The new funding comes at typical terms of three to seven years and with 6.5% - 9% variable rate, depending on loan characteristics, with affordability calculated at 125% with a maximum LTV of 60% all first charge against agricultural land and property.

One example of our new loan was a recent case when UK Agricultural Finance provided a £260,000 term loan in Kent to help a farming family restructure its borrowings and refurbish their farm shop.

When an existing lender declined to extend their facility, the fifthgeneration family reached out to UK Agricultural Finance. The family had successfully reared rare-breed livestock, supported by the government’s Higher Level Stewardship scheme, and successfully sold their produce at large London farmers markets.

The team at UK Agricultural Finance, who pride themselves on face-to-face underwriting, visited the family at their farm and saw a well-run business with very well organised accounts and financial affairs, but which required someone who could take the time to understand their needs and take a holistic view of their requirements.

The lender took comfort in the fact that the family operates the entire business by themselves, from feeding and rearing to processing and sale, supported by highly productive land with good road access to a number of other farms. The family needed financial support to help drive more income to the business.

UK Agricultural Finance, following its site visit, was able to issue its offer in principle and provided the financing in a matter of days, allowing the family to focus on growing their business with real clarity going forward. The loan was provided at 45% LTV over a 36-month term.

Graham Noble, co-founder at UK Agricultural Finance, said: “Our specialist agricultural underwriters enjoyed meeting a committed farming family, which helped us make an informed, responsible underwriting decision to provide much-needed rural finance to allow this family to sustain, grow and improve their business.”

Case Studies Completion highlights from a selection of our Patrons and Members

A look behind poor credit for business cash advance

Keffey Kebede Funding advisor 365 Business Finance

L

ife and business don’t go in a straight line, and just like London buses, the knocks come one after the other. What makes matters worse is when a crisis in one’s personal life negatively impacts one’s business – potentially leading to a successful business having to stop trading.

Peter runs three very successful pubs and one hotel in south-west England.

Four years ago, Peter had a perfect credit score and enjoyed access to development finance whenever he needed it. The businesses were profitable, growing and providing well for Peter and his family.

Sadly, the relationship between Peter and his wife broke down and for some time Peter was drawn into complicated and messy divorce proceedings. To exacerbate his situation, Peter found himself financially responsible for his wife’s fiscal imprudence. He had signed as a guarantor on a property which his now ex-wife had failed to pay the rent on – resulting in a County Court Judgment being issued in Peter’s name. Over the

same period, credit cards which had been issued in both Peter’s and his wife’s name had been maxed out, leading to further bad credit and a deterioration in Peter’s credit score.

month. The advance would enable him to make flexible repayments based on his card sales, and no security or business plan would be necessary to progress the funding.

During this period, Peter had started a new business that required a £40,000 refurbishment that would ultimately add value, scale the business portfolio and increase profitability. Not only was he declined by the traditional high street lenders, but several alternative finance providers were uncomfortable funding Peter, due to his now very poor credit score.

Andrew Raphaely, a founding director at 365 Business Finance, took the time to visit Peter and his businesses to fully understand his situation and determine whether he was in fact a poor credit risk, or whether his financial predicament shouldn’t impact on his ability to grow his business and increase the profitability of his hospitality portfolio. On conclusion of the visit, Andrew approved Peter’s advance and the funds were in his account the next day.

Upon taking a deep dive into Peter’s application, 365 Business Finance’s underwriting team noticed that although his credit was poor and – on the surface – it looked like his businesses were under pressure, in fact they were well run and were generating more than £50,000 on credit and debit card sales.

This transactional activity meant Peter’s business portfolio might be well-suited to a business cash advance, and that his unfair negative credit legacy could be ignored.

Peter was potentially eligible for a business cash advance from 365 Business Finance, since he had been in business for more than six months and his terminal transactions exceeded £5,000 a

Peter’s business cash advance came with no admin fees, no setup costs, and he pays back the funding when his customers pay him. Peter benefits from a dedicated relationship manager who is on hand to address any enquiries he may have during the life of his advance.

Since the first advance from 365 Business Finance, several other businesses within Peter’s portfolio have enjoyed fast, flexible funding from 365 Business Finance, ensuring growth, development and scale are the positive things in life Peter can focus on.

Lord.

Or first time landlord?

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

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.*Other fees and charges apply and are variable based on the loan amount

22 | NACFB Magazine

Our lowest ever rate from 5.99%*

Case Studies Completion highlights from a selection of our Patrons and Members

A look behind poor credit for business cash advance

Keffey Kebede Funding advisor 365 Business Finance

L

ife and business don’t go in a straight line, and just like London buses, the knocks come one after the other. What makes matters worse is when a crisis in one’s personal life negatively impacts one’s business – potentially leading to a successful business having to stop trading.

Peter runs three very successful pubs and one hotel in south-west England.

Four years ago, Peter had a perfect credit score and enjoyed access to development finance whenever he needed it. The businesses were profitable, growing and providing well for Peter and his family.

Sadly, the relationship between Peter and his wife broke down and for some time Peter was drawn into complicated and messy divorce proceedings. To exacerbate his situation, Peter found himself financially responsible for his wife’s fiscal imprudence. He had signed as a guarantor on a property which his now ex-wife had failed to pay the rent on – resulting in a County Court Judgment being issued in Peter’s name. Over the

same period, credit cards which had been issued in both Peter’s and his wife’s name had been maxed out, leading to further bad credit and a deterioration in Peter’s credit score.

month. The advance would enable him to make flexible repayments based on his card sales, and no security or business plan would be necessary to progress the funding.

During this period, Peter had started a new business that required a £40,000 refurbishment that would ultimately add value, scale the business portfolio and increase profitability. Not only was he declined by the traditional high street lenders, but several alternative finance providers were uncomfortable funding Peter, due to his now very poor credit score.

Andrew Raphaely, a founding director at 365 Business Finance, took the time to visit Peter and his businesses to fully understand his situation and determine whether he was in fact a poor credit risk, or whether his financial predicament shouldn’t impact on his ability to grow his business and increase the profitability of his hospitality portfolio. On conclusion of the visit, Andrew approved Peter’s advance and the funds were in his account the next day.

Upon taking a deep dive into Peter’s application, 365 Business Finance’s underwriting team noticed that although his credit was poor and – on the surface – it looked like his businesses were under pressure, in fact they were well run and were generating more than £50,000 on credit and debit card sales.

This transactional activity meant Peter’s business portfolio might be well-suited to a business cash advance, and that his unfair negative credit legacy could be ignored.

Peter was potentially eligible for a business cash advance from 365 Business Finance, since he had been in business for more than six months and his terminal transactions exceeded £5,000 a

Peter’s business cash advance came with no admin fees, no setup costs, and he pays back the funding when his customers pay him. Peter benefits from a dedicated relationship manager who is on hand to address any enquiries he may have during the life of his advance.

Since the first advance from 365 Business Finance, several other businesses within Peter’s portfolio have enjoyed fast, flexible funding from 365 Business Finance, ensuring growth, development and scale are the positive things in life Peter can focus on.

Lord.

Or first time landlord?

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

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.*Other fees and charges apply and are variable based on the loan amount

22 | NACFB Magazine

Our lowest ever rate from 5.99%*

When you need to get your clients’ business across the finishing line.

CASE STUDIES

Life can be running smoothly for SMEs until they hit a bump in the road or suddenly have an opportunity they want to take advantage of. Often traditional Banks aren’t structured to provide finance quickly enough and this is where professional brokers and intermediaries can prove invaluable.

Exit funding supports portfolio diversification Chris Sherlock Relationship director Barclays Real Estate

Property developer John Morley was well-established in buy-to-let housing in Merseyside, and he wanted to diversify his portfolio.

H

e was keen to begin developing larger sites into residential apartments and commercial outlets, and saw an opportunity in the disused office buildings in Liverpool’s city centre.

“I knew that if I got one redeveloped and showed the city council what we could do, I’d be offered more sites,” said John. It was just a matter of getting the first one.

His breakthrough came with the chance to convert former offices in the centre of the city, supported by essential exit funding from Barclays.

John said: “The Dale Street deal was the start of us doing larger city-centre property deals. I bought the building, which was in a bit of a mess, and began converting it into 10 apartments and three commercial units. During the project, I invited Chris Sherlock from Barclays to have a look around it and showed him the layout and what we were trying to achieve.

“As a relationship director in real estate, Chris gave me his full support and said he’d provide exit funding after the work was done and fully let. That gave me the confidence to really go for it and get it finished and tenanted.”

Barclays then came in with £1.5m of exit funding, structured as a five-year committed term with a 25-year amortisation profile. This offered John both commitment and financial flexibility.

The whole funding solution was delivered in nine weeks. But John said he values Barclays as much for Chris’s knowledge and expertise in the sector as for its speed.

“It’s not so much about getting the money straight away, but more about having someone you can trust.

“I now know that if I’m looking at a site, I can give Chris a call and very quickly we can work out if it’s something we can do and what sort of levels of lending we can get.

It’s about having someone who understands real estate and the type of property we’re now doing.

“Dale Street has stood me in good stead in many ways. Since this deal, we’ve completed the site next door, creating six commercial units and 18 residential apartments, which we’ll keep for buy-to-let. We also have a couple of ongoing developments which are both for sale.”

John is now working on his next development funding from Barclays, as well as exit funding, enabling him to take his business forward with a far more diverse property portfolio – just as he’d wanted.

Just Cashflow is one of the leading and most innovative alternative lenders and offers flexible funding solutions to ambitious businesses from £10,000 to £500,000, to support their continued growth. The company works with professional Brokers and intermediaries seeking to provide medium to longer term funding for clients with a clear focus on what is needed to get deals over the finishing line.

This could mean partnering with other lenders or whatever it takes to help you find the optimum solution for your clients’ businesses. Just Cashflow

knows that every business is different so are able to offer tailored financial solutions to meet their requirements.

Take a look at some of their flexible funding options:

The Revolving Credit Facility (RCF) gives your clients access to funds to support their day to day cash flow and continued growth. It acts exactly like a traditional bank overdraft and allows business owners to smooth out the peaks and troughs of running their business. And what’s more, your clients will only pay interest on the fund if they draw it down. This means you can pre-arrange the level of funding required to complete a deal, without interest charges to your client until they actually need the funds.

Portfolio Builder is a true, 100% bridging product offering funding from £26,000 to £500,000. Especially for established UK property businesses that own at least one commercial

property, including buy-to-lets, the solution operates as a replica of a normal bridging loan where much larger funding is required for a new purchase. As Just Cashflow is a business lender and not a property lender, due diligence is based on how the business is being managed and who is managing it.

Their newest solution, Business Builder, is a flexible loan that can be designed by you with your client in mind. It provides 2 to 5 year loan facilities for businesses who need funds for longer periods and who want certainly on their monthly or weekly payments. Additional features that can be worked into the design include payment holidays, early repayment without penalties and loan extensions.

Just Cashflow can help you get your clients funding deals across the finishing line – call them today on 0121 227 6450

The final piece in the puzzle

- a loan you can design yourself.

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 our new loan products enable us to offer you tailored financial solutions to meet the requirements of your clients.

Business Builder enables you to design a loan with your Client that can give them access to funds from £10,000 to £500,000 in a way that exactly fits with their business needs. Blend a short term and long term loan, pay it off without penalties, add in a payment holiday - a Just Cashflow loan can do it all.

The application process is really simple and straightforward and our underwriting team will support you and help you complete the picture for your clients.

Just call us now

0121 418 5037

FS668057

Alternatively, find out more

justcashflow.com/partner

BCMS668054

Just Cash Flow PLC is registered at 1 Charterhouse Mews, Farringdon, London EC1M 6BB under Company number 08508165 © Just Cash Flow PLC 2018

24 | NACFB Magazine

When you need to get your clients’ business across the finishing line.

CASE STUDIES

Life can be running smoothly for SMEs until they hit a bump in the road or suddenly have an opportunity they want to take advantage of. Often traditional Banks aren’t structured to provide finance quickly enough and this is where professional brokers and intermediaries can prove invaluable.

Exit funding supports portfolio diversification Chris Sherlock Relationship director Barclays Real Estate

Property developer John Morley was well-established in buy-to-let housing in Merseyside, and he wanted to diversify his portfolio.

H

e was keen to begin developing larger sites into residential apartments and commercial outlets, and saw an opportunity in the disused office buildings in Liverpool’s city centre.

“I knew that if I got one redeveloped and showed the city council what we could do, I’d be offered more sites,” said John. It was just a matter of getting the first one.

His breakthrough came with the chance to convert former offices in the centre of the city, supported by essential exit funding from Barclays.

John said: “The Dale Street deal was the start of us doing larger city-centre property deals. I bought the building, which was in a bit of a mess, and began converting it into 10 apartments and three commercial units. During the project, I invited Chris Sherlock from Barclays to have a look around it and showed him the layout and what we were trying to achieve.

“As a relationship director in real estate, Chris gave me his full support and said he’d provide exit funding after the work was done and fully let. That gave me the confidence to really go for it and get it finished and tenanted.”

Barclays then came in with £1.5m of exit funding, structured as a five-year committed term with a 25-year amortisation profile. This offered John both commitment and financial flexibility.

The whole funding solution was delivered in nine weeks. But John said he values Barclays as much for Chris’s knowledge and expertise in the sector as for its speed.

“It’s not so much about getting the money straight away, but more about having someone you can trust.

“I now know that if I’m looking at a site, I can give Chris a call and very quickly we can work out if it’s something we can do and what sort of levels of lending we can get.

It’s about having someone who understands real estate and the type of property we’re now doing.

“Dale Street has stood me in good stead in many ways. Since this deal, we’ve completed the site next door, creating six commercial units and 18 residential apartments, which we’ll keep for buy-to-let. We also have a couple of ongoing developments which are both for sale.”

John is now working on his next development funding from Barclays, as well as exit funding, enabling him to take his business forward with a far more diverse property portfolio – just as he’d wanted.

Just Cashflow is one of the leading and most innovative alternative lenders and offers flexible funding solutions to ambitious businesses from £10,000 to £500,000, to support their continued growth. The company works with professional Brokers and intermediaries seeking to provide medium to longer term funding for clients with a clear focus on what is needed to get deals over the finishing line.

This could mean partnering with other lenders or whatever it takes to help you find the optimum solution for your clients’ businesses. Just Cashflow

knows that every business is different so are able to offer tailored financial solutions to meet their requirements.

Take a look at some of their flexible funding options:

The Revolving Credit Facility (RCF) gives your clients access to funds to support their day to day cash flow and continued growth. It acts exactly like a traditional bank overdraft and allows business owners to smooth out the peaks and troughs of running their business. And what’s more, your clients will only pay interest on the fund if they draw it down. This means you can pre-arrange the level of funding required to complete a deal, without interest charges to your client until they actually need the funds.

Portfolio Builder is a true, 100% bridging product offering funding from £26,000 to £500,000. Especially for established UK property businesses that own at least one commercial

property, including buy-to-lets, the solution operates as a replica of a normal bridging loan where much larger funding is required for a new purchase. As Just Cashflow is a business lender and not a property lender, due diligence is based on how the business is being managed and who is managing it.

Their newest solution, Business Builder, is a flexible loan that can be designed by you with your client in mind. It provides 2 to 5 year loan facilities for businesses who need funds for longer periods and who want certainly on their monthly or weekly payments. Additional features that can be worked into the design include payment holidays, early repayment without penalties and loan extensions.

Just Cashflow can help you get your clients funding deals across the finishing line – call them today on 0121 227 6450

The final piece in the puzzle

- a loan you can design yourself.

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 our new loan products enable us to offer you tailored financial solutions to meet the requirements of your clients.

Business Builder enables you to design a loan with your Client that can give them access to funds from £10,000 to £500,000 in a way that exactly fits with their business needs. Blend a short term and long term loan, pay it off without penalties, add in a payment holiday - a Just Cashflow loan can do it all.

The application process is really simple and straightforward and our underwriting team will support you and help you complete the picture for your clients.

Just call us now

0121 418 5037

FS668057

Alternatively, find out more

justcashflow.com/partner

BCMS668054

Just Cash Flow PLC is registered at 1 Charterhouse Mews, Farringdon, London EC1M 6BB under Company number 08508165 © Just Cash Flow PLC 2018

24 | NACFB Magazine

CASE STUDIES

CASE STUDIES

I’ve yet to meet a company with simple or standard requirements - that’s one thing that makes this job so interesting speed. This would allow it to be more operationally efficient and to sell to the on-the-spot market, since they could quickly ramp up production to meet demand in the event of new orders.

We were also able to understand what had caused the trading issues and judged that the business had taken the right steps to solve them.

As a result, we recommended the facility for approval, and also worked closely with Investec Capital Solutions to put together a tailored finance package, including an invoice discounting line – which would release valuable cash tied up in the company’s blue-chip debtor base – as well as an asset finance agreement. In total, the deal was worth approximately £4m.

Tailored package helps ramp up pharma production

Wesley Harfield Head of sales Investec Asset Finance

A

lthough an increasing number of deals take place entirely online, it’s always good to visit a business in person.

Contrary to what you might think, it’s not just to ‘kick the tyres’ – although it’s always good to see the shop floor and see how busy the production line is, for example.

26 | NACFB Magazine

The really valuable thing for us though is that we get to meet the team behind a business and see them in their element. The best businesses have teams that are proud of what they do. That passion shines through and I think we’d all agree that it’s one of the key things that makes a business successful.

Even more helpful is the fact that we’re able to sit down with that team and work out exactly what they need in terms of funding. Forms serve a purpose, but they don’t tell the whole story – I’ve yet to meet a company that had simple or standard requirements, and that’s one of

the things that makes this job so interesting. We can really take the time to understand a client and be flexible. It’s amazing how something that would take days or even weeks to hammer out over email can be resolved with a quick chat in person.

One business that stands out was a pharmaceuticals company that I had the pleasure of visiting at the end of 2017. The company manufactures common, over-thecounter and prescription drugs.

It keeps the ingredients on site and uses them to manufacture and package pharmaceuticals.

Having seen the work that goes

into it, I won’t look at a paracetamol tablet in the same way again.

There are some interesting quirks about this sort of production line. The raw ingredients have a fixed valuation, which increases as they are processed: packaged tablets are worth more than loose tablets, which in turn are worth more than the sum of their constituent parts. Provided you have the right licencing, this is a pretty compelling asset, particularly given the bluechip clients. All in all, a promising company with a solid background and reliable management team, as well as a hard asset for security.

However, when we first reviewed its financial information, it looked as though the business had had a deterioration in its financial position.

As a result, we arranged to meet the borrower’s leadership team in person so that we could better understand its current and future trading. I headed down there and took a tour of the premises, getting a more accurate view of how the business works, and sitting down with the management team who provided more background.

The leadership team had a clear rationale for seeking funding: the company needed new machinery to be able to increase its packaging

When it comes to large, £1m-plus financing rounds, we’re fast too. We’re happy to look at deals of any size – although we have a reputation for turning smaller financing agreements around very fast, we’ve been quietly writing much larger deals too. We pride ourselves on taking the time to understand businesses and provide finance that is tailored to them.

On a separate note, the team at Investec Asset Finance was proud to take home the award for Best Service from an Asset-based Finance Provider at the 2018 Business Moneyfacts awards. It’s the fifth year in a row that we’ve won this award, and because it’s voted for by brokers like you, it means a great deal. Thanks again for your continued support.

NACFB Magazine | 27

CASE STUDIES

CASE STUDIES

I’ve yet to meet a company with simple or standard requirements - that’s one thing that makes this job so interesting speed. This would allow it to be more operationally efficient and to sell to the on-the-spot market, since they could quickly ramp up production to meet demand in the event of new orders.

We were also able to understand what had caused the trading issues and judged that the business had taken the right steps to solve them.

As a result, we recommended the facility for approval, and also worked closely with Investec Capital Solutions to put together a tailored finance package, including an invoice discounting line – which would release valuable cash tied up in the company’s blue-chip debtor base – as well as an asset finance agreement. In total, the deal was worth approximately £4m.

Tailored package helps ramp up pharma production

Wesley Harfield Head of sales Investec Asset Finance

A

lthough an increasing number of deals take place entirely online, it’s always good to visit a business in person.

Contrary to what you might think, it’s not just to ‘kick the tyres’ – although it’s always good to see the shop floor and see how busy the production line is, for example.

26 | NACFB Magazine

The really valuable thing for us though is that we get to meet the team behind a business and see them in their element. The best businesses have teams that are proud of what they do. That passion shines through and I think we’d all agree that it’s one of the key things that makes a business successful.

Even more helpful is the fact that we’re able to sit down with that team and work out exactly what they need in terms of funding. Forms serve a purpose, but they don’t tell the whole story – I’ve yet to meet a company that had simple or standard requirements, and that’s one of

the things that makes this job so interesting. We can really take the time to understand a client and be flexible. It’s amazing how something that would take days or even weeks to hammer out over email can be resolved with a quick chat in person.

One business that stands out was a pharmaceuticals company that I had the pleasure of visiting at the end of 2017. The company manufactures common, over-thecounter and prescription drugs.

It keeps the ingredients on site and uses them to manufacture and package pharmaceuticals.

Having seen the work that goes

into it, I won’t look at a paracetamol tablet in the same way again.

There are some interesting quirks about this sort of production line. The raw ingredients have a fixed valuation, which increases as they are processed: packaged tablets are worth more than loose tablets, which in turn are worth more than the sum of their constituent parts. Provided you have the right licencing, this is a pretty compelling asset, particularly given the bluechip clients. All in all, a promising company with a solid background and reliable management team, as well as a hard asset for security.

However, when we first reviewed its financial information, it looked as though the business had had a deterioration in its financial position.

As a result, we arranged to meet the borrower’s leadership team in person so that we could better understand its current and future trading. I headed down there and took a tour of the premises, getting a more accurate view of how the business works, and sitting down with the management team who provided more background.

The leadership team had a clear rationale for seeking funding: the company needed new machinery to be able to increase its packaging

When it comes to large, £1m-plus financing rounds, we’re fast too. We’re happy to look at deals of any size – although we have a reputation for turning smaller financing agreements around very fast, we’ve been quietly writing much larger deals too. We pride ourselves on taking the time to understand businesses and provide finance that is tailored to them.

On a separate note, the team at Investec Asset Finance was proud to take home the award for Best Service from an Asset-based Finance Provider at the 2018 Business Moneyfacts awards. It’s the fifth year in a row that we’ve won this award, and because it’s voted for by brokers like you, it means a great deal. Thanks again for your continued support.

NACFB Magazine | 27

CASE STUDIES

Assetz Capital, more than a partnership Our fast and flexible approach to lending will enable you to support existing borrowers and identify new clients

Broker focal point for £4m first-time development Damien Druce Director and head of intermediary sales Assetz Capital

I

t is easy to underestimate the importance of building a strong relationship with a broker at an early stage of any development transaction. With inexperienced developers unlikely to understand the complexities around development finance, it’s essential that borrowers have an intermediary with unparalleled knowledge of the market to ensure that they can identify the lender best suited to the needs of their clients.

Not only this, but intermediaries also play an instrumental role as the key point of contact for both lending institutions and borrowers throughout a deal process. It is often the close-knit relationship with brokers that gets a deal over the line.

A perfect case in point is a deal that Assetz Capital facilitated for Cecilia and Benjamin McNair Scott, a married couple from Guildford. The pair required £2.1m to help build two luxurious detached houses in Surrey, with an anticipated gross development value of £4.2m. The borrowers had acquired a site with enormous potential in August 2015 and had obtained planning permission for the properties on Pewley Hill, one of Guildford’s premier residential roads. The funding would be used to assist with the costs of planning and fund the development costs in full.

28 | NACFB Magazine

Cecilia and Benjamin had no prior development experience, and so required assistance along the way.

They appointed Feeling Homes, a specialist contractor in the local area, to support them with the project.

However, this still left a gap in the process as the developers did not have the capital to fund the development.

As you hear regularly in the news, securing financial backing can often be problematic for first-time developers. This significantly reduced the number of options available to Cecilia and Benjamin – they required a broker with extensive knowledge of the market to navigate the selection process and identify a finance option that would suit the situation.

The benefit of using an experienced broker such as Darren Lund at B2B Finance proved pivotal in getting this deal completed. Darren introduced the deal to Mark Roberts, relationship director at Assetz Capital, using his knowledge of the various lenders in the development finance market place. The broker’s relationship with both the client and the lender is the making or breaking of any transaction. In this case, having £2.1m of the lender’s money and two properties worth over £4m riding on the broker’s judgement is certainly a heavy weight to carry – making trust in the broker from both parties pivotal.

Peer-to-peer lending was identified as a viable option, as this type of finance often best suits developers due to its flexibility and competitive pricing. In recent years, we have seen high street banks steer towards

a more consumer-like approach, as opposed to old-style relationship lending, which has had a drastic impact on the funding available to ambitious businesses and developers.

What sets Assetz Capital apart from other peer-to-peer lenders is its ‘fairer growth for all’ approach to lending, as it is keen to support developers regardless of their level of experience, providing that the project team as a whole has the right track record and the project risks have been well mitigated.

As well as this, Assetz has a commitment to a decision in principle within 24 hours. In this instance, our in-house credit committee was key to a speedy process, as the team approved the deal from receipt of valuation and monitoring surveyor reports. Karen Clough in our relationship management support team was responsible for liaising with solicitors to ensure all legal documentation and condition precedents were met in a timely fashion. This helped us guarantee that completion could take place within our borrowers’ required timescales.

The results speak for themselves.

Construction started in March 2018 and is set to complete within 10 months. Without the broker’s knowledge, Cecilia and Benjamin would not have considered the peer-to-peer option, and it was the excellent relationship and level of service that led to a smooth and successful completion.

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

Broker focal point for £4m first-time development Damien Druce Director and head of intermediary sales Assetz Capital

I

t is easy to underestimate the importance of building a strong relationship with a broker at an early stage of any development transaction. With inexperienced developers unlikely to understand the complexities around development finance, it’s essential that borrowers have an intermediary with unparalleled knowledge of the market to ensure that they can identify the lender best suited to the needs of their clients.

Not only this, but intermediaries also play an instrumental role as the key point of contact for both lending institutions and borrowers throughout a deal process. It is often the close-knit relationship with brokers that gets a deal over the line.

A perfect case in point is a deal that Assetz Capital facilitated for Cecilia and Benjamin McNair Scott, a married couple from Guildford. The pair required £2.1m to help build two luxurious detached houses in Surrey, with an anticipated gross development value of £4.2m. The borrowers had acquired a site with enormous potential in August 2015 and had obtained planning permission for the properties on Pewley Hill, one of Guildford’s premier residential roads. The funding would be used to assist with the costs of planning and fund the development costs in full.

28 | NACFB Magazine

Cecilia and Benjamin had no prior development experience, and so required assistance along the way.

They appointed Feeling Homes, a specialist contractor in the local area, to support them with the project.

However, this still left a gap in the process as the developers did not have the capital to fund the development.

As you hear regularly in the news, securing financial backing can often be problematic for first-time developers. This significantly reduced the number of options available to Cecilia and Benjamin – they required a broker with extensive knowledge of the market to navigate the selection process and identify a finance option that would suit the situation.

The benefit of using an experienced broker such as Darren Lund at B2B Finance proved pivotal in getting this deal completed. Darren introduced the deal to Mark Roberts, relationship director at Assetz Capital, using his knowledge of the various lenders in the development finance market place. The broker’s relationship with both the client and the lender is the making or breaking of any transaction. In this case, having £2.1m of the lender’s money and two properties worth over £4m riding on the broker’s judgement is certainly a heavy weight to carry – making trust in the broker from both parties pivotal.

Peer-to-peer lending was identified as a viable option, as this type of finance often best suits developers due to its flexibility and competitive pricing. In recent years, we have seen high street banks steer towards

a more consumer-like approach, as opposed to old-style relationship lending, which has had a drastic impact on the funding available to ambitious businesses and developers.

What sets Assetz Capital apart from other peer-to-peer lenders is its ‘fairer growth for all’ approach to lending, as it is keen to support developers regardless of their level of experience, providing that the project team as a whole has the right track record and the project risks have been well mitigated.

As well as this, Assetz has a commitment to a decision in principle within 24 hours. In this instance, our in-house credit committee was key to a speedy process, as the team approved the deal from receipt of valuation and monitoring surveyor reports. Karen Clough in our relationship management support team was responsible for liaising with solicitors to ensure all legal documentation and condition precedents were met in a timely fashion. This helped us guarantee that completion could take place within our borrowers’ required timescales.

The results speak for themselves.

Construction started in March 2018 and is set to complete within 10 months. Without the broker’s knowledge, Cecilia and Benjamin would not have considered the peer-to-peer option, and it was the excellent relationship and level of service that led to a smooth and successful completion.

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.

Digest

Vera Sugar Editor NACFB Magazine

The talk of the industry

The decline of bridging LTVs Sustaining or shackling the market?

S

ome 42% of brokers wish for higher LTVs to be offered in the bridging sector, according to a recent survey by specialist lender mtf. In contrast, none of those surveyed wished for lower rates or further transparency. The results of the survey seem to demonstrate a shift from traditional broker demands, with speed and flexibility normally dominating advisers’ wish lists.

The LTV ratio, determined by how much equity the borrower is able to inject into the investment, will often be the key indicator of how expensive the mortgage will ultimately be – and of how much risk the lender is willing to take.

According to the Intermediary Mortgage Lenders Association, the UK housing market’s average LTV currently stands at 26% – below pre-financial crisis levels – due to the combination of increased housing equity injection and rising property values.

In bridging lending – considered riskier and more expensive than a traditional mortgage due to its short-term nature – higher LTVs, if offered, will traditionally be paired with higher interest rates. In Q4 2017, average LTVs stood at conservative levels, measured at 45% according to the Bridging Trends survey. This demonstrates a drop of over 5% compared with the average of 50.6% measured in Q4 2016.

In what cases do bridging borrowers need higher LTVs? “If lenders are willing to take higher risks, they will offer higher LTV loans and there will doubtless be brokers seeking such loans on behalf of clients,” said Marie

Grundy, sales director at West One Loans.

“That client demand may be driven by several factors, not least flattening or declining property values in London and the South East in recent months.”

Another reason why brokers would seek higher LTVs for clients could be working with an inexperienced developer with low initial capital. In this case, not only would the broker need to find a lender willing to consider an inexperienced borrower, but they would also have to negotiate a higher ratio for their client.

However, according to Sarah Jackson, head of underwriting at Pivot, the interest in higher LTVs is more related to growing competition than specific broker needs: “Having seen pricing reduced to record levels in the bridging sector, brokers and lenders alike are having to find new USPs to differentiate themselves from the competition. As such, pressure is now being applied to LTVs, with lenders being expected to adjust their risk appetite to obtain a competitive advantage in a crowded market.”

Benson Hersch, CEO at the Association of Short Term Lenders (ASTL), claimed that another reason why brokers may be seeking

30 | NACFB Magazine

NACFB Magazine | 31

Digest

Vera Sugar Editor NACFB Magazine

The talk of the industry

The decline of bridging LTVs Sustaining or shackling the market?

S

ome 42% of brokers wish for higher LTVs to be offered in the bridging sector, according to a recent survey by specialist lender mtf. In contrast, none of those surveyed wished for lower rates or further transparency. The results of the survey seem to demonstrate a shift from traditional broker demands, with speed and flexibility normally dominating advisers’ wish lists.

The LTV ratio, determined by how much equity the borrower is able to inject into the investment, will often be the key indicator of how expensive the mortgage will ultimately be – and of how much risk the lender is willing to take.

According to the Intermediary Mortgage Lenders Association, the UK housing market’s average LTV currently stands at 26% – below pre-financial crisis levels – due to the combination of increased housing equity injection and rising property values.

In bridging lending – considered riskier and more expensive than a traditional mortgage due to its short-term nature – higher LTVs, if offered, will traditionally be paired with higher interest rates. In Q4 2017, average LTVs stood at conservative levels, measured at 45% according to the Bridging Trends survey. This demonstrates a drop of over 5% compared with the average of 50.6% measured in Q4 2016.

In what cases do bridging borrowers need higher LTVs? “If lenders are willing to take higher risks, they will offer higher LTV loans and there will doubtless be brokers seeking such loans on behalf of clients,” said Marie

Grundy, sales director at West One Loans.

“That client demand may be driven by several factors, not least flattening or declining property values in London and the South East in recent months.”

Another reason why brokers would seek higher LTVs for clients could be working with an inexperienced developer with low initial capital. In this case, not only would the broker need to find a lender willing to consider an inexperienced borrower, but they would also have to negotiate a higher ratio for their client.

However, according to Sarah Jackson, head of underwriting at Pivot, the interest in higher LTVs is more related to growing competition than specific broker needs: “Having seen pricing reduced to record levels in the bridging sector, brokers and lenders alike are having to find new USPs to differentiate themselves from the competition. As such, pressure is now being applied to LTVs, with lenders being expected to adjust their risk appetite to obtain a competitive advantage in a crowded market.”

Benson Hersch, CEO at the Association of Short Term Lenders (ASTL), claimed that another reason why brokers may be seeking

30 | NACFB Magazine

NACFB Magazine | 31

DIGEST

We believe that LTV prudence is a key part of sustainability, so that bridging lenders can deal with shocks like the Q3 2016 impact of the EU referendum leave vote

higher LTVs is the tendency of some surveyors to provide conservative valuations in the present economic climate – but he didn’t believe many lenders would offer much higher LTVs than they do currently.

an increased lending risk since they give a smaller cushion to protect the lender’s capital either from covering legal costs in the unfortunate event of a repossession, or from falling property values.

“Crucially, lenders are looking more closely at what the funds will be used for.

An approach of ‘how much can I get?’ is not likely to excite them,” he said.

“We believe that LTV prudence is a key part of sustainability, so that bridging lenders can deal with shocks like the Q3 2016 impact of the EU referendum leave vote.”

How much risk should bridging lenders take on?

According to Kit Thompson, director of short-term and development finance at Brightstar, the current economic climate is precisely the reason lenders should refrain from taking on too much risk: “From a purely responsible lending point of view, it would not be prudent for lenders to consider increasing their max LTVs at this time, as the UK economy is already facing enough challenges – what with ‘hard’ or ‘soft’ Brexit, the threat of war between Russia and the US over Syria, Trump in the White House and a new housing minister, plus the possibility of a new Prime Minister here.

Benson said: “My personal view is that bridging lenders should not be offering higher LTVs unless other factors come into play. For example, a high-networth customer or if a property is under development, which may boost its value.

“These are just a few of the reasons [why] I believe lenders would be prudent to keep this status quo for now and see how things play out. There is still plenty of appetite to lend, but at responsible levels.“ “Signs of correction in property prices in some areas/sectors and the fact that valuations always carry some sort of tolerance level means increasing LTVs at present may not be a wise move,” added Sarah.

Marie pointed to increased risk factors lenders should consider: “LTVs are a critical component of the risk position a lender takes. Higher LTV loans present

32 | NACFB Magazine

“Lenders should also note that the PRA’s affordability rules for BTL loans offered by banks and building societies could well be adopted by the FCA at some future date, resulting in lower refinancing LTVs. Where the exit from a bridging loan is refinance, bridging lenders are monitoring long-term lenders’ rates and rent cover requirements carefully. Bridging lending at rates of 80% or higher seriously reduces the buffer needed to ensure that a refinance will realise sufficient funds to settle the bridging loan. The same applies for sale exits, particularly as the market is skittish and sale times are increasing.”

An informed decision But why would bridging lenders be willing to offer increased LTVs for borrowers?

For the moment, one of the reasons may be the gap in the market that brokers perceive – and lenders with solid broker relationships and reliable underwriting teams are well-placed to tap into this area. However, according to Kit, some of them already have: “I think of those 42% of brokers who said they would like to see higher LTV bridging available, they

are probably not aware of what schemes are already available in the marketplace.

“For example, while the majority of lenders offer non-regulated bridging terms [with] up to 70% or 75% LTV based on purchase price, there are a small number of bridging lenders offering up to 80% LTV. Coupled with a handful of lenders offering 75-80% LTV based on open market value and not purchase price, it is possible to fund 100% of purchase price without additional security being offered, when the client is purchasing below market value.

“To say, therefore, that LTVs should be increased isn’t actually realistic.

High LTV deals already exist – you just need specialist knowledge of the sector to access the right lenders.”

Another reason could be a potential for higher returns, as with a higher LTV lenders will be able to raise interest rates too.

“From our viewpoint, it’s really dependant on three factors which govern the risk of a deal: quality of borrower, quality of the asset and the strength of the exit,” said Sarah. “These three core values are entwined with risk appetite and expertise, and from there we can make an informed decision.”

Kit added: “You also have to consider that if LTVs were to increase, say, to 85% LTV, by the time interest and fees are factored in and if house prices take a drop by 10 – 15% (which they already have in the capital and some parts of the country), then borrowers start to default, lenders call in their loans and repossession rise.

“Nobody wants that, as we’ve been there before – and must learn from our past mistakes.”

DIGEST

We believe that LTV prudence is a key part of sustainability, so that bridging lenders can deal with shocks like the Q3 2016 impact of the EU referendum leave vote

higher LTVs is the tendency of some surveyors to provide conservative valuations in the present economic climate – but he didn’t believe many lenders would offer much higher LTVs than they do currently.

an increased lending risk since they give a smaller cushion to protect the lender’s capital either from covering legal costs in the unfortunate event of a repossession, or from falling property values.

“Crucially, lenders are looking more closely at what the funds will be used for.

An approach of ‘how much can I get?’ is not likely to excite them,” he said.

“We believe that LTV prudence is a key part of sustainability, so that bridging lenders can deal with shocks like the Q3 2016 impact of the EU referendum leave vote.”

How much risk should bridging lenders take on?

According to Kit Thompson, director of short-term and development finance at Brightstar, the current economic climate is precisely the reason lenders should refrain from taking on too much risk: “From a purely responsible lending point of view, it would not be prudent for lenders to consider increasing their max LTVs at this time, as the UK economy is already facing enough challenges – what with ‘hard’ or ‘soft’ Brexit, the threat of war between Russia and the US over Syria, Trump in the White House and a new housing minister, plus the possibility of a new Prime Minister here.

Benson said: “My personal view is that bridging lenders should not be offering higher LTVs unless other factors come into play. For example, a high-networth customer or if a property is under development, which may boost its value.

“These are just a few of the reasons [why] I believe lenders would be prudent to keep this status quo for now and see how things play out. There is still plenty of appetite to lend, but at responsible levels.“ “Signs of correction in property prices in some areas/sectors and the fact that valuations always carry some sort of tolerance level means increasing LTVs at present may not be a wise move,” added Sarah.

Marie pointed to increased risk factors lenders should consider: “LTVs are a critical component of the risk position a lender takes. Higher LTV loans present

32 | NACFB Magazine

“Lenders should also note that the PRA’s affordability rules for BTL loans offered by banks and building societies could well be adopted by the FCA at some future date, resulting in lower refinancing LTVs. Where the exit from a bridging loan is refinance, bridging lenders are monitoring long-term lenders’ rates and rent cover requirements carefully. Bridging lending at rates of 80% or higher seriously reduces the buffer needed to ensure that a refinance will realise sufficient funds to settle the bridging loan. The same applies for sale exits, particularly as the market is skittish and sale times are increasing.”

An informed decision But why would bridging lenders be willing to offer increased LTVs for borrowers?

For the moment, one of the reasons may be the gap in the market that brokers perceive – and lenders with solid broker relationships and reliable underwriting teams are well-placed to tap into this area. However, according to Kit, some of them already have: “I think of those 42% of brokers who said they would like to see higher LTV bridging available, they

are probably not aware of what schemes are already available in the marketplace.

“For example, while the majority of lenders offer non-regulated bridging terms [with] up to 70% or 75% LTV based on purchase price, there are a small number of bridging lenders offering up to 80% LTV. Coupled with a handful of lenders offering 75-80% LTV based on open market value and not purchase price, it is possible to fund 100% of purchase price without additional security being offered, when the client is purchasing below market value.

“To say, therefore, that LTVs should be increased isn’t actually realistic.

High LTV deals already exist – you just need specialist knowledge of the sector to access the right lenders.”

Another reason could be a potential for higher returns, as with a higher LTV lenders will be able to raise interest rates too.

“From our viewpoint, it’s really dependant on three factors which govern the risk of a deal: quality of borrower, quality of the asset and the strength of the exit,” said Sarah. “These three core values are entwined with risk appetite and expertise, and from there we can make an informed decision.”

Kit added: “You also have to consider that if LTVs were to increase, say, to 85% LTV, by the time interest and fees are factored in and if house prices take a drop by 10 – 15% (which they already have in the capital and some parts of the country), then borrowers start to default, lenders call in their loans and repossession rise.

“Nobody wants that, as we’ve been there before – and must learn from our past mistakes.”

Patron | profile

We are Spotcap

Our team is passionate about helping these businesses and pleased to be working with brokers all over the country

Fully unsecured business loans from a team of experts Niels Turfboer Managing director Spotcap

A

re you keen to grow your business further? Are you looking for new ways to expand your offering and serve your clients better?

Well then, nice to meet you. We are Spotcap, the only lender in the UK that provides unsecured business loans of up to £300,000 without the need for a personal or director’s guarantee.

Spotcap works with companies from all sectors, providing short-term loans that suit many purposes, including managing cash flow, purchasing equipment, as well as investing in or expanding part of the business.

What makes us unique is that our loans are fully unsecured. While other unsecured lenders still require a personal or director’s guarantee as a security, we don’t. Innovative technology – developed in-house – helps our underwriters to sift through financial documents and make reliable credit decisions within one business day at a competitive rate.

Our unsecured loan offering is a good fit for businesses that have been operating for at least two years and have strong financials. Interestingly, our average client, however, has been in business for approximately five years with a turnover of £2m-25m.

Our team is passionate about helping these businesses and pleased to be working with brokers all over the country. Since the start of our operations in October 2016, we have already partnered with over 200 brokers from across the country. Let me introduce you to a few of our team members.

Luke Bowmar, commercial partnership manager

Darwin Delahaye, commercial partnership manager

“Playing an active part in building relationships from scratch, and seeing our broker network constantly growing is hugely motivating.”

“If a broker is not entirely sure whether a Spotcap loan is right for a client, I’ll chat through the numbers with them to see if it’s a fit.”

Luke, who is originally from Nottingham, spends a lot of his time travelling up and down the country.

Many of our referrals are word-ofmouth and often come from brokers interested in the possibilities of our product. Luke believes that by offering loans of up to £300,000 with no need for a guarantee, we really provide brokers with a valuable alternative.

Darwin has many years of banking and business lending experience, having worked at Barclays, NatWest and Pilatus Bank before joining Spotcap. For our broker partners, Darwin is the financial go-to expert.

Do you have any questions about our product or the application process?

Get in touch with Luke.

Nasima Begum, sales support manager “The type of work day I enjoy most?

Being on the phone to clients and brokers to help them get the deals over the line swiftly. It’s a very supportive working environment and they are always grateful for our help.”

Nasima is an experienced client support manager who worked for HSBC and Barclays for six years. For Nasima, face-to-face meetings and phone calls are crucial to further personal relationships with brokers and clients. And, due to her great attitude and infectious laugh, she makes the application process a tad more fun.

If you have all your client’s relevant financial information, including turnover, revenue, current loan obligations and overdraft, give Darwin a call. He’ll happily discuss a potential application and advise whether we can provide your client with an unsecured loan.

Spotcap will be attending the NACFB’s Commercial Finance Expo on 20th June. Niels will be speaking on the changing dynamics of the lender-broker relationship, and you can come and meet the rest of the team on stand G12.

At Spotcap, we use self-learning algorithms, credit score technology and other software solutions to automate part of the credit decision process. This, in turn, frees up time for Nasima and the team to focus on the need of partners and clients.

34 | NACFB Magazine

NACFB Magazine | 35

Patron | profile

We are Spotcap

Our team is passionate about helping these businesses and pleased to be working with brokers all over the country

Fully unsecured business loans from a team of experts Niels Turfboer Managing director Spotcap

A

re you keen to grow your business further? Are you looking for new ways to expand your offering and serve your clients better?

Well then, nice to meet you. We are Spotcap, the only lender in the UK that provides unsecured business loans of up to £300,000 without the need for a personal or director’s guarantee.

Spotcap works with companies from all sectors, providing short-term loans that suit many purposes, including managing cash flow, purchasing equipment, as well as investing in or expanding part of the business.

What makes us unique is that our loans are fully unsecured. While other unsecured lenders still require a personal or director’s guarantee as a security, we don’t. Innovative technology – developed in-house – helps our underwriters to sift through financial documents and make reliable credit decisions within one business day at a competitive rate.

Our unsecured loan offering is a good fit for businesses that have been operating for at least two years and have strong financials. Interestingly, our average client, however, has been in business for approximately five years with a turnover of £2m-25m.

Our team is passionate about helping these businesses and pleased to be working with brokers all over the country. Since the start of our operations in October 2016, we have already partnered with over 200 brokers from across the country. Let me introduce you to a few of our team members.

Luke Bowmar, commercial partnership manager

Darwin Delahaye, commercial partnership manager

“Playing an active part in building relationships from scratch, and seeing our broker network constantly growing is hugely motivating.”

“If a broker is not entirely sure whether a Spotcap loan is right for a client, I’ll chat through the numbers with them to see if it’s a fit.”

Luke, who is originally from Nottingham, spends a lot of his time travelling up and down the country.

Many of our referrals are word-ofmouth and often come from brokers interested in the possibilities of our product. Luke believes that by offering loans of up to £300,000 with no need for a guarantee, we really provide brokers with a valuable alternative.

Darwin has many years of banking and business lending experience, having worked at Barclays, NatWest and Pilatus Bank before joining Spotcap. For our broker partners, Darwin is the financial go-to expert.

Do you have any questions about our product or the application process?

Get in touch with Luke.

Nasima Begum, sales support manager “The type of work day I enjoy most?

Being on the phone to clients and brokers to help them get the deals over the line swiftly. It’s a very supportive working environment and they are always grateful for our help.”

Nasima is an experienced client support manager who worked for HSBC and Barclays for six years. For Nasima, face-to-face meetings and phone calls are crucial to further personal relationships with brokers and clients. And, due to her great attitude and infectious laugh, she makes the application process a tad more fun.

If you have all your client’s relevant financial information, including turnover, revenue, current loan obligations and overdraft, give Darwin a call. He’ll happily discuss a potential application and advise whether we can provide your client with an unsecured loan.

Spotcap will be attending the NACFB’s Commercial Finance Expo on 20th June. Niels will be speaking on the changing dynamics of the lender-broker relationship, and you can come and meet the rest of the team on stand G12.

At Spotcap, we use self-learning algorithms, credit score technology and other software solutions to automate part of the credit decision process. This, in turn, frees up time for Nasima and the team to focus on the need of partners and clients.

34 | NACFB Magazine

NACFB Magazine | 35

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

MFS

®

Specialists in fast, flexible, bespoke bridging loans Fighting the good fight Martin McTague, policy director at the Federation of Small Businesses (FSB), on reforming a broken business rates system

Broken chains are to blame for a tenth of all property deals that fall through. MFS combines speed and experience to make sure buyers have the finance they need to complete their purchase.

MFS provides bridging loans for...

Q A

What’s wrong with rates?

The business rates tax has its roots in the Elizabethan poor laws which recently celebrated their 400-year anniversary. A lot has changed since then, but the rates regime is still stuck in the past.

The fundamental principle underlying the business rates system – that property value is a reasonable proxy for an occupant’s wealth – is no longer fit for purpose.

Businesses in many properties rent, so don’t benefit when their properties rise in value. Yet they’re still expected to pay increasing business rates on top of rising rents. The tax is not linked in any way to fluctuations in trade or income. This assumption creates perverse outcomes, because while multi-million-pound e-commerce giants, operating out of remote warehouses, are seeing their rates fall, thousands of small high street shops were hit with massive hikes following last year’s business rates revaluation.

Revaluations are also infrequent – fiveyear intervals are the norm. Last year’s revaluation had a twist though. Expected to take place in 2015 (based on 2013 property values) it was delayed by two years (with bills calculated using 2015 values). Property prices in many pockets of the country surged in the

36 | NACFB Magazine

interim, meaning those hit with hikes were hit a lot harder than anticipated.

As of April 2018, bills have risen again for many as year-one caps on increases were lost and an inflation-linked rise was applied.

Q A

Is change possible?

FSB has fought hard for business rates reform. We’ve successfully ensured many more of our members are exempt from the tax, reducing liabilities for the small business community by £6.7bn for this revaluation period.

Other wins include a £435m support package unveiled by the chancellor as part of the 2017 Spring Budget. It consists of a £300m fund that councils can draw on to help small firms hit by big rates increases, a discount on bills for pubs and a cap on hikes for firms that are having to pay rates for the first time.

This year the government has also committed to more frequent revaluations – every three years, rather than every five – which should help to make the system fairer. We’ve also secured a reduction in the annual inflation-linked increase in bills. It’s now applied according to the consumer prices index, rather than the considerably higher retail prices index.

Small business rates relief is now thoroughly embedded in the system, taking the smallest businesses out of the tax altogether, and providing tapered relief for those who are just above the threshold. The relief now needs to be expanded, with targeted help for those areas most impacted by rates rises – not least London, where few small firms qualify.

Over the long term, a fundamental review of business rates has been promised. It can’t come soon enough.

Q A

What support is out there for small firms?

Any firm that saw a significant rise in their bill after April 2017 should speak to their local council about discretionary relief. We know that the £300m fund is not reaching firms on the ground as quickly as it should.

Renovation projects

Auction properties

Broken chains

Offshore SPVs

Property investors

Our terms in brief: Loans from £200,000 to £10 million Rates from just 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

There are hundreds of rating surveyors who approach small businesses promising a discount on rates in return for a fee. Only consultants who are accredited by the Royal Institution of Chartered Surveyors should be used. If you’re unsure about a contract, don’t sign it until you’ve sought legal advice.

Within the FSB community, our campaigning on the issue continues.

The tax is 400 years in the making.

We’re not done fighting it yet.

+44(0)20 7060 1234

www.mfsuk.com

info@mfsuk.com

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

MFS

®

Specialists in fast, flexible, bespoke bridging loans Fighting the good fight Martin McTague, policy director at the Federation of Small Businesses (FSB), on reforming a broken business rates system

Broken chains are to blame for a tenth of all property deals that fall through. MFS combines speed and experience to make sure buyers have the finance they need to complete their purchase.

MFS provides bridging loans for...

Q A

What’s wrong with rates?

The business rates tax has its roots in the Elizabethan poor laws which recently celebrated their 400-year anniversary. A lot has changed since then, but the rates regime is still stuck in the past.

The fundamental principle underlying the business rates system – that property value is a reasonable proxy for an occupant’s wealth – is no longer fit for purpose.

Businesses in many properties rent, so don’t benefit when their properties rise in value. Yet they’re still expected to pay increasing business rates on top of rising rents. The tax is not linked in any way to fluctuations in trade or income. This assumption creates perverse outcomes, because while multi-million-pound e-commerce giants, operating out of remote warehouses, are seeing their rates fall, thousands of small high street shops were hit with massive hikes following last year’s business rates revaluation.

Revaluations are also infrequent – fiveyear intervals are the norm. Last year’s revaluation had a twist though. Expected to take place in 2015 (based on 2013 property values) it was delayed by two years (with bills calculated using 2015 values). Property prices in many pockets of the country surged in the

36 | NACFB Magazine

interim, meaning those hit with hikes were hit a lot harder than anticipated.

As of April 2018, bills have risen again for many as year-one caps on increases were lost and an inflation-linked rise was applied.

Q A

Is change possible?

FSB has fought hard for business rates reform. We’ve successfully ensured many more of our members are exempt from the tax, reducing liabilities for the small business community by £6.7bn for this revaluation period.

Other wins include a £435m support package unveiled by the chancellor as part of the 2017 Spring Budget. It consists of a £300m fund that councils can draw on to help small firms hit by big rates increases, a discount on bills for pubs and a cap on hikes for firms that are having to pay rates for the first time.

This year the government has also committed to more frequent revaluations – every three years, rather than every five – which should help to make the system fairer. We’ve also secured a reduction in the annual inflation-linked increase in bills. It’s now applied according to the consumer prices index, rather than the considerably higher retail prices index.

Small business rates relief is now thoroughly embedded in the system, taking the smallest businesses out of the tax altogether, and providing tapered relief for those who are just above the threshold. The relief now needs to be expanded, with targeted help for those areas most impacted by rates rises – not least London, where few small firms qualify.

Over the long term, a fundamental review of business rates has been promised. It can’t come soon enough.

Q A

What support is out there for small firms?

Any firm that saw a significant rise in their bill after April 2017 should speak to their local council about discretionary relief. We know that the £300m fund is not reaching firms on the ground as quickly as it should.

Renovation projects

Auction properties

Broken chains

Offshore SPVs

Property investors

Our terms in brief: Loans from £200,000 to £10 million Rates from just 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

There are hundreds of rating surveyors who approach small businesses promising a discount on rates in return for a fee. Only consultants who are accredited by the Royal Institution of Chartered Surveyors should be used. If you’re unsure about a contract, don’t sign it until you’ve sought legal advice.

Within the FSB community, our campaigning on the issue continues.

The tax is 400 years in the making.

We’re not done fighting it yet.

+44(0)20 7060 1234

www.mfsuk.com

info@mfsuk.com

Special | features

After you’ve worked hard to build a relationship, there’s an inherent trust – and it’s not something that you want to jeopardise

An up-to-date insight into the industry

Kelly Rule, senior business development manager, InterBay Commercial

The better we know you, the better we can help Why BDMs still play a key role in the specialist market

W

ith the speed that specialist finance cases often require, brokers are increasingly calling for direct access to lenders’ decision makers to get the deal done as soon as possible. However, skipping the vital step of building a relationship – most often via a business development manager (BDM) – can mean that when push comes to shove, the lender may retreat.

BDMs can act as an essential resource for brokers in these circumstances. The NACFB Magazine spoke to Kelly Rule, senior business development manager at InterBay Commercial, about how she can help when things get a bit more complicated – and why she believes face-to-face interaction is still a priority.

How long have you been in your role?

I’ve been at OneSavings Bank for over two years. Initially I joined as internal sales manager, before really taking the plunge and moving into a senior business development manager position – which means my new office is now my car.

38 | NACFB Magazine

It’s been great to actually meet face-toface with many of the brokers I spoke to before on the phone and I get a real sense of satisfaction in being able to provide business solutions for my clients.

Why is building relationships with brokers so important?

Building genuine and lasting working relationships with brokers is invaluable – not just for our business, but often for theirs too.

It’s a very different style of communication when you are trying to explain something face to face, rather than on the phone.

To really understand a broker’s particular needs and that of their clients, it helps to meet them in their own environment and I find we get things resolved a lot quicker than via a telephone conversation.

After you’ve worked hard to build up a relationship there’s an inherent trust, and it’s not something that you want to jeopardise.

For example, my brokers know that if they call me and they need help getting a deal over the line, nine times out of 10 I can sort

something out. It’s also about being available and taking the time to respond, whether by phone or email. I’ll try to get back on the same day using whatever method I can.

As a specialist provider, trust will also be built up after we’ve helped a broker with a particularly complex case or when new regulations are introduced.

For example, last year’s PRA regulations made it more difficult for portfolio landlords to access funding, as they now have to submit a lot more financial information. We found that many brokers were unsure about what these changes meant for their clients.

We were able to advise them by hosting an evening of discussion around the changes, as well as creating an online portal aimed at helping brokers submit this newly required information on behalf of their clients.

For InterBay, maintaining good relationships has obvious benefits. The brokers we work with all know that we will go the extra mile to create bespoke solutions for their clients and help them through any

NACFB Magazine | 39

Special | features

After you’ve worked hard to build a relationship, there’s an inherent trust – and it’s not something that you want to jeopardise

An up-to-date insight into the industry

Kelly Rule, senior business development manager, InterBay Commercial

The better we know you, the better we can help Why BDMs still play a key role in the specialist market

W

ith the speed that specialist finance cases often require, brokers are increasingly calling for direct access to lenders’ decision makers to get the deal done as soon as possible. However, skipping the vital step of building a relationship – most often via a business development manager (BDM) – can mean that when push comes to shove, the lender may retreat.

BDMs can act as an essential resource for brokers in these circumstances. The NACFB Magazine spoke to Kelly Rule, senior business development manager at InterBay Commercial, about how she can help when things get a bit more complicated – and why she believes face-to-face interaction is still a priority.

How long have you been in your role?

I’ve been at OneSavings Bank for over two years. Initially I joined as internal sales manager, before really taking the plunge and moving into a senior business development manager position – which means my new office is now my car.

38 | NACFB Magazine

It’s been great to actually meet face-toface with many of the brokers I spoke to before on the phone and I get a real sense of satisfaction in being able to provide business solutions for my clients.

Why is building relationships with brokers so important?

Building genuine and lasting working relationships with brokers is invaluable – not just for our business, but often for theirs too.

It’s a very different style of communication when you are trying to explain something face to face, rather than on the phone.

To really understand a broker’s particular needs and that of their clients, it helps to meet them in their own environment and I find we get things resolved a lot quicker than via a telephone conversation.

After you’ve worked hard to build up a relationship there’s an inherent trust, and it’s not something that you want to jeopardise.

For example, my brokers know that if they call me and they need help getting a deal over the line, nine times out of 10 I can sort

something out. It’s also about being available and taking the time to respond, whether by phone or email. I’ll try to get back on the same day using whatever method I can.

As a specialist provider, trust will also be built up after we’ve helped a broker with a particularly complex case or when new regulations are introduced.

For example, last year’s PRA regulations made it more difficult for portfolio landlords to access funding, as they now have to submit a lot more financial information. We found that many brokers were unsure about what these changes meant for their clients.

We were able to advise them by hosting an evening of discussion around the changes, as well as creating an online portal aimed at helping brokers submit this newly required information on behalf of their clients.

For InterBay, maintaining good relationships has obvious benefits. The brokers we work with all know that we will go the extra mile to create bespoke solutions for their clients and help them through any

NACFB Magazine | 39

SPECIAL FEATURES

changes in the market – and the better we know the broker, the easier we can help them achieve their objectives.

How can you help with complex cases?

Good relationships are built over time, but working together on complex cases can help to create or strengthen existing relationships with brokers. One of the benefits of working closely with your BDM as a broker is that they will be able to spot any potential pitfalls early in the process and will therefore work to resolve them.

In addition, if a BDM is doing their job correctly, they will look into creating a bespoke proposition that best meets the criteria required by broker and client. We can also provide guidance by making sure all the paperwork to do with the case is precise. This can stop delays and help speed up the application process. Easy to do, but invaluable for maintaining relationships.

For example, at InterBay, the BDMs are actively involved with the transactional

If a BDM is doing their job correctly, they will look into creating a bespoke proposition that best meets the criteria required by broker and client

credit committee, so if you have a complex case that is outside of criteria, it’s an ideal opportunity to present your case to the people who can say yes. This is invaluable as it helps speed up the entire process and ultimately means I can get an answer back to the broker much faster.

Do you have examples of a complex case and how your relationship with a broker helped?

I have worked with Cornerstone Finance for a while and have built a strong relationship with them. Recently they had a large loan enquiry for £6m for a large client in Cardiff who was up against a competitor. They needed assurance that they could get the funding as not only was it a complex case, but a large amount too.

After hearing their concerns and speaking with my team I could assure my client that I could take on the case. I submitted the application to the committee, got an agreement and the client was delighted.

What can Conister do for you...

Wholesale Funding Asset Finance Block Discounting Commercial Loans Premium Finance Personal Loans

Competitive rates - Quick Decisions For further details: telephone 01624 694694 email info@conisterbank.co.im or visit www.conisterbank.co.im 40 | NACFB Magazine

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.

SPECIAL FEATURES

changes in the market – and the better we know the broker, the easier we can help them achieve their objectives.

How can you help with complex cases?

Good relationships are built over time, but working together on complex cases can help to create or strengthen existing relationships with brokers. One of the benefits of working closely with your BDM as a broker is that they will be able to spot any potential pitfalls early in the process and will therefore work to resolve them.

In addition, if a BDM is doing their job correctly, they will look into creating a bespoke proposition that best meets the criteria required by broker and client. We can also provide guidance by making sure all the paperwork to do with the case is precise. This can stop delays and help speed up the application process. Easy to do, but invaluable for maintaining relationships.

For example, at InterBay, the BDMs are actively involved with the transactional

If a BDM is doing their job correctly, they will look into creating a bespoke proposition that best meets the criteria required by broker and client

credit committee, so if you have a complex case that is outside of criteria, it’s an ideal opportunity to present your case to the people who can say yes. This is invaluable as it helps speed up the entire process and ultimately means I can get an answer back to the broker much faster.

Do you have examples of a complex case and how your relationship with a broker helped?

I have worked with Cornerstone Finance for a while and have built a strong relationship with them. Recently they had a large loan enquiry for £6m for a large client in Cardiff who was up against a competitor. They needed assurance that they could get the funding as not only was it a complex case, but a large amount too.

After hearing their concerns and speaking with my team I could assure my client that I could take on the case. I submitted the application to the committee, got an agreement and the client was delighted.

What can Conister do for you...

Wholesale Funding Asset Finance Block Discounting Commercial Loans Premium Finance Personal Loans

Competitive rates - Quick Decisions For further details: telephone 01624 694694 email info@conisterbank.co.im or visit www.conisterbank.co.im 40 | NACFB Magazine

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.

SPECIAL FEATURES

SPECIAL FEATURES

Rising interest rates:

the next big concern for SMEs?

Marc Bajer CEO Hadrian’s Wall Capital

After nearly a decade of near-zero interest rates, the Bank of England has signalled that rate rises are on the agenda again.

A

recent study by Hadrian’s Wall Capital showed that a 0.25% rise in interest rates will cost British SMEs an additional £355m in interest payments in the first year alone. Total annual interest rate payments on floating rate loans are projected to jump to more than £4bn overnight, highlighting the urgent need for SMEs to switch their borrowing to fixed rates while interest rates are still low.

Additional interest payments are a massive issue for many SMEs that have debts and loans to pay on a floating rate.

Just 11% of business lending is provided for on a fixed rate, down from 50% five years ago. Banks have taken note of the mood music coming out of Threadneedle Street and taken the opportunity to push back the interest rate risk onto their clients and, in this case, businesses.

On top of this, SMEs have become cautious about hedging their interest rate risk because of the swaps misselling scandal. Even if they wanted to, it can be difficult to find an institution that will sell a swap to an SME. The reality is that floating interest rates create a lot of uncertainty for SMEs. Rises will put pressure onto businesses’ cash flow and make it far more difficult to plan for future investment.

There is a real risk that strong businesses with ambitious growth plans will pause their efforts to make sure they can meet their larger debt repayments, which is bad for their business and the economy as a whole.

Moreover, there is the danger that planned and future corporate activity may be abandoned with the lack of certainty over the cost of acquiring new debt, preventing business innovation. Less competitive firms will struggle in a higher rate environment.

42 | NACFB Magazine

NACFB Magazine | 43

SPECIAL FEATURES

SPECIAL FEATURES

Rising interest rates:

the next big concern for SMEs?

Marc Bajer CEO Hadrian’s Wall Capital

After nearly a decade of near-zero interest rates, the Bank of England has signalled that rate rises are on the agenda again.

A

recent study by Hadrian’s Wall Capital showed that a 0.25% rise in interest rates will cost British SMEs an additional £355m in interest payments in the first year alone. Total annual interest rate payments on floating rate loans are projected to jump to more than £4bn overnight, highlighting the urgent need for SMEs to switch their borrowing to fixed rates while interest rates are still low.

Additional interest payments are a massive issue for many SMEs that have debts and loans to pay on a floating rate.

Just 11% of business lending is provided for on a fixed rate, down from 50% five years ago. Banks have taken note of the mood music coming out of Threadneedle Street and taken the opportunity to push back the interest rate risk onto their clients and, in this case, businesses.

On top of this, SMEs have become cautious about hedging their interest rate risk because of the swaps misselling scandal. Even if they wanted to, it can be difficult to find an institution that will sell a swap to an SME. The reality is that floating interest rates create a lot of uncertainty for SMEs. Rises will put pressure onto businesses’ cash flow and make it far more difficult to plan for future investment.

There is a real risk that strong businesses with ambitious growth plans will pause their efforts to make sure they can meet their larger debt repayments, which is bad for their business and the economy as a whole.

Moreover, there is the danger that planned and future corporate activity may be abandoned with the lack of certainty over the cost of acquiring new debt, preventing business innovation. Less competitive firms will struggle in a higher rate environment.

42 | NACFB Magazine

NACFB Magazine | 43

SPECIAL FEATURES

SMEs should lock themselves in to fixed-rate debt where possible, before interest rates continue to escalate

Official bank rate history (Source BoE)

WITH YOU EVERY STEP THE OF TH E WAY

6%

5%

4%

3%

We’re more than just a principal lender.

2%

We have the in-house expertise to support your clients whether it is their first project or if they are

1%

SMEs should lock themselves in to fixed-rate debt where possible, before interest rates continue to escalate. The current historically low rate is something businesses should be looking to take advantage of now. A rise of one percentage point in interest rates to 1.5%, although still historically low, will cost SMEs an extra £1.4bn in interest payments. For corporate finance advisers promoting M&A activity, there is an additional incentive for their clients to obtain fixedrate loans, to create certainty of financial costs for the targeted acquisition.

44 | NACFB Magazine

However, getting certainty over the rate is easier said than done. As already mentioned, banks are reducing their interest rate risk and pushing it onto the borrower. As a result, SMEs are increasingly turning to alternative finance providers to give their business the certainty it needs.

However, even in this case, alternative finance providers’ interest rates will be linked to traditional lenders. An alternative option is to borrow from an investment fund, where capital costs are lower.

At Hadrian’s Wall, we believe this approach offers value and certainty to both the borrower and the lender.

Nov 2017

Aug 2016

Mar 2009

TFeb 2009

Jan 2009

Nov 2008

Oct 2008

Apr 2008

Feb 2008

Dec 2007

TJul 2007

May 2007

Jan 2007

Nov 2006

Aug 2006

Aug 2005

Aug 2004

Jun 2004

May 2004

Feb 2004

Nov 2003

Jul 2003

Feb 2003

Nov 2001

Oct 2001

Sep 2001

Aug 2001

May 2001

Feb 2001

Apr 2001

Feb 2000

Jan 2000

0

TDec 2008

seasoned property professionals.

Put simply, SME funding and the impact of spiralling borrowing costs cannot simply be ignored. It is often said that small businesses are the backbone of the UK economy. SMEs need access to stable, fixed-rate funding, which will insulate them from interest rate rises. It is time for the financing providers to support SMEs, for the benefit of the UK economy.

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

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

SPECIAL FEATURES

SMEs should lock themselves in to fixed-rate debt where possible, before interest rates continue to escalate

Official bank rate history (Source BoE)

WITH YOU EVERY STEP THE OF TH E WAY

6%

5%

4%

3%

We’re more than just a principal lender.

2%

We have the in-house expertise to support your clients whether it is their first project or if they are

1%

SMEs should lock themselves in to fixed-rate debt where possible, before interest rates continue to escalate. The current historically low rate is something businesses should be looking to take advantage of now. A rise of one percentage point in interest rates to 1.5%, although still historically low, will cost SMEs an extra £1.4bn in interest payments. For corporate finance advisers promoting M&A activity, there is an additional incentive for their clients to obtain fixedrate loans, to create certainty of financial costs for the targeted acquisition.

44 | NACFB Magazine

However, getting certainty over the rate is easier said than done. As already mentioned, banks are reducing their interest rate risk and pushing it onto the borrower. As a result, SMEs are increasingly turning to alternative finance providers to give their business the certainty it needs.

However, even in this case, alternative finance providers’ interest rates will be linked to traditional lenders. An alternative option is to borrow from an investment fund, where capital costs are lower.

At Hadrian’s Wall, we believe this approach offers value and certainty to both the borrower and the lender.

Nov 2017

Aug 2016

Mar 2009

TFeb 2009

Jan 2009

Nov 2008

Oct 2008

Apr 2008

Feb 2008

Dec 2007

TJul 2007

May 2007

Jan 2007

Nov 2006

Aug 2006

Aug 2005

Aug 2004

Jun 2004

May 2004

Feb 2004

Nov 2003

Jul 2003

Feb 2003

Nov 2001

Oct 2001

Sep 2001

Aug 2001

May 2001

Feb 2001

Apr 2001

Feb 2000

Jan 2000

0

TDec 2008

seasoned property professionals.

Put simply, SME funding and the impact of spiralling borrowing costs cannot simply be ignored. It is often said that small businesses are the backbone of the UK economy. SMEs need access to stable, fixed-rate funding, which will insulate them from interest rate rises. It is time for the financing providers to support SMEs, for the benefit of the UK economy.

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

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

SPECIAL FEATURES

What can the North do with £100m?

SPECIAL FEATURES

In 2016, Manchester United Football Club received very little change from close to £100m when purchasing a single player, Paul Pogba, from Italian club Juventus. Some doubt if the investment has – or ever will – pay off, but one thing is for certain: Manchester’s small businesses could do a lot more with the same amount of money.

businesses is all but guaranteed long into the future. How distinct then, their fortunes from those of the city’s 100,000 small and micro-businesses that, combined, are predicted to contribute over £13bn to the UK economy between 2016/25.

Christoph Rieche Co-founder & CEO iwoca

T

ogether, the two biggest football clubs in Manchester could be described as the beating heart of the city, and the fans its lifeblood. Financed by wealthy owners, the future of these

2015, we’ve seen the amount of support we offer in the North grow by 89% per year, and 65% in Manchester.

Far from being backed by sovereign wealth funds and private equity, the owners of small and micro-businesses rely heavily on banks for their finance. Since the financial crisis in 2008, however, banks have become more and more reluctant to lend to this sector as they continue to deleverage their

In March, iwoca pledged to lend £100m by 2020 to micro- and small businesses across the North of England. Of this, £15m is for Manchester alone. Since

FSB Small Business Index – regional variation in small business confidence Source: FSB - Verve ‘Voice of Small Business’ Panel Survey 40% Q4 2017

Q1 2018

30%

20%

10%

0%

-10%

-20%

46 | NACFB Magazine

Scotland

North West

Eastern

South West

West Midlands

England

South East

Wales

Yorkshire and the Humber

East Midlands

-30%

NACFB Magazine | 47

SPECIAL FEATURES

What can the North do with £100m?

SPECIAL FEATURES

In 2016, Manchester United Football Club received very little change from close to £100m when purchasing a single player, Paul Pogba, from Italian club Juventus. Some doubt if the investment has – or ever will – pay off, but one thing is for certain: Manchester’s small businesses could do a lot more with the same amount of money.

businesses is all but guaranteed long into the future. How distinct then, their fortunes from those of the city’s 100,000 small and micro-businesses that, combined, are predicted to contribute over £13bn to the UK economy between 2016/25.

Christoph Rieche Co-founder & CEO iwoca

T

ogether, the two biggest football clubs in Manchester could be described as the beating heart of the city, and the fans its lifeblood. Financed by wealthy owners, the future of these

2015, we’ve seen the amount of support we offer in the North grow by 89% per year, and 65% in Manchester.

Far from being backed by sovereign wealth funds and private equity, the owners of small and micro-businesses rely heavily on banks for their finance. Since the financial crisis in 2008, however, banks have become more and more reluctant to lend to this sector as they continue to deleverage their

In March, iwoca pledged to lend £100m by 2020 to micro- and small businesses across the North of England. Of this, £15m is for Manchester alone. Since

FSB Small Business Index – regional variation in small business confidence Source: FSB - Verve ‘Voice of Small Business’ Panel Survey 40% Q4 2017

Q1 2018

30%

20%

10%

0%

-10%

-20%

46 | NACFB Magazine

Scotland

North West

Eastern

South West

West Midlands

England

South East

Wales

Yorkshire and the Humber

East Midlands

-30%

NACFB Magazine | 47

SPECIAL FEATURES

balance sheets. This reduced risk appetite particularly affects SME portfolios, which the banks see as being riskier than the consumer and corporate lending markets.

The results can be seen in data collected

by UK Finance. In Manchester, the value of lending through loans and overdrafts to SMEs contracted by -22.8% over the last three years. In the same period, the North West region suffered a contraction of -15.3%, while in the North of England as a whole, lending shrank by -14.3%.

When it comes to credit withdrawal, the North West is the worst-affected region in the country. Here, business confidence now stands at -17%, in contrast to London at +13%, according to the Federation of Small Business’ (FSB) Voice of Small Business Index.

Access to finance is critical for small businesses. Some studies suggest that as many as 62% of invoices issued by UK SMEs in 2017 were paid late. The average value of these invoices was more than £50,000. And, while invoices are left unpaid, small businesses are out of pocket. Even though these businesses employ less than 10 people, the sector accounts for 96% of the UK’s 5.5 million businesses, one in three private sector jobs and over 20% of all economic output.

With better access to finance, small businesses could invest in raising productivity. For the UK as a whole, productivity is no higher now than it was just before the 2008 financial crisis, when the country enjoyed a decade of annual growth at 2.1%. Earlier this year, a study by OpusEnergy found that 86% of SMEs believed they had productivity issues. For many, finance would help them combat these by funding measures to nurture and inspire employees.

The alternative finance sector has played a key role in driving SME growth by enabling firms to boost turnover and profit through investment in staff, operations and inventory. For the time being, however, awareness is still low with regards to alternative finance providing products that are tailored to meet the needs of small business customers on their terms.

More could be done to address this.

At iwoca, we’re determined to make small and micro-business owners aware that instead of lengthy and cumbersome application forms, and rigid and unfair lending criteria, iwoca applications are simple and

48 | NACFB Magazine

straightforward. Our technology makes faster and fairer lending decisions.

to be part of the team at iwoca that has committed to lend £100m to SMEs in the North. It is a great opportunity for SMEs in this region to grow and excel in their industry and I am excited to work with local commercial brokers to get the funds into the hands of SMEs.”

We believe our £100m pledge for the North can make a difference. “It is great news that funding is set aside for the North and it’s a great opportunity for SMEs to access the funds they need to expand, grow and thrive,” said Paul Mak, director at Pomegranate Commercial Finance.

While £100m may only buy a single football player today, it can do so much more when used to plug the small business lending gap and fuel the economic growth of tomorrow.

iwoca’s regional introducer manager for the North, Craig Ashton, added: “Having grown up in Manchester, I am honoured

-18%

Most confident Least confident

-3% 26% 28% 7%

0%

16% 3%

10%

4%

Source: FSB Voice of Small Business Index

SPEED MEETS EXPERIENCE 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.

SPECIAL FEATURES

balance sheets. This reduced risk appetite particularly affects SME portfolios, which the banks see as being riskier than the consumer and corporate lending markets.

The results can be seen in data collected

by UK Finance. In Manchester, the value of lending through loans and overdrafts to SMEs contracted by -22.8% over the last three years. In the same period, the North West region suffered a contraction of -15.3%, while in the North of England as a whole, lending shrank by -14.3%.

When it comes to credit withdrawal, the North West is the worst-affected region in the country. Here, business confidence now stands at -17%, in contrast to London at +13%, according to the Federation of Small Business’ (FSB) Voice of Small Business Index.

Access to finance is critical for small businesses. Some studies suggest that as many as 62% of invoices issued by UK SMEs in 2017 were paid late. The average value of these invoices was more than £50,000. And, while invoices are left unpaid, small businesses are out of pocket. Even though these businesses employ less than 10 people, the sector accounts for 96% of the UK’s 5.5 million businesses, one in three private sector jobs and over 20% of all economic output.

With better access to finance, small businesses could invest in raising productivity. For the UK as a whole, productivity is no higher now than it was just before the 2008 financial crisis, when the country enjoyed a decade of annual growth at 2.1%. Earlier this year, a study by OpusEnergy found that 86% of SMEs believed they had productivity issues. For many, finance would help them combat these by funding measures to nurture and inspire employees.

The alternative finance sector has played a key role in driving SME growth by enabling firms to boost turnover and profit through investment in staff, operations and inventory. For the time being, however, awareness is still low with regards to alternative finance providing products that are tailored to meet the needs of small business customers on their terms.

More could be done to address this.

At iwoca, we’re determined to make small and micro-business owners aware that instead of lengthy and cumbersome application forms, and rigid and unfair lending criteria, iwoca applications are simple and

48 | NACFB Magazine

straightforward. Our technology makes faster and fairer lending decisions.

to be part of the team at iwoca that has committed to lend £100m to SMEs in the North. It is a great opportunity for SMEs in this region to grow and excel in their industry and I am excited to work with local commercial brokers to get the funds into the hands of SMEs.”

We believe our £100m pledge for the North can make a difference. “It is great news that funding is set aside for the North and it’s a great opportunity for SMEs to access the funds they need to expand, grow and thrive,” said Paul Mak, director at Pomegranate Commercial Finance.

While £100m may only buy a single football player today, it can do so much more when used to plug the small business lending gap and fuel the economic growth of tomorrow.

iwoca’s regional introducer manager for the North, Craig Ashton, added: “Having grown up in Manchester, I am honoured

-18%

Most confident Least confident

-3% 26% 28% 7%

0%

16% 3%

10%

4%

Source: FSB Voice of Small Business Index

SPEED MEETS EXPERIENCE 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.

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

Five traits of pension-led funding you may not know about Adam Tavener Chairman Clifton Asset Management

I

t has become increasingly common for individuals looking to finance their business to turn their pension pots into a source of investment support.

This increase is driven both by the new pension freedoms regime, where anyone over the age of 55 can access their entire pension fund (with a tax charge), and by the over-55s making up a significant sub-section of individuals setting up businesses in the UK. This is a potentially lucrative marketplace for commercial finance brokers to engage with and, crucially, add value to, since the options and benefits available under pension-led funding (PLF) are poorly understood.

In no particular order, the key reasons to recommend PLF are:

PLF is the only source of SME finance where all the interest charges are repaid to the business owners’ own pension pot, thus increasing its value rather than paying away to a third party. Think of it as buying, not renting. A successful PLF deal, where all repayments are made, should lead to an increase in the value of both the pension and, hopefully, the business, since it now has the funding it needs to grow.

1

It is common for PLF deals to be regularly repeated as the business grows and encounters new funding requirements. As the value of the pension pot grows, it is able to accommodate a second, third and even fourth round of business finance.

PLF transactions do not normally trigger a tax charge if you use more than 25% of your pension, since it is an investment and not an encashment.

Nor do you have to be over 55 to use PLF. To be commercially viable, the combined value of the pension pots (often there is more than one person in control of the business) needs to be in excess of £50,000.

2

All too often we come across business owners who have used more of their pension than the taxfree 25% and taken a tax hit on the balance withdrawn. These sums can be substantial, and we are frequently asked ‘why didn’t somebody tell me about PLF?’ Lack of knowledge is the usual answer – not a position in which most professionals would wish to find themselves.

PLF is extremely versatile. It can be used to fund businesses where there are few traditional assets to provide security. It can be used for both early-stage and more mature

3

businesses and doesn’t require profitability as an absolute condition – although the overall commerciality of the deal will be tested.

Because it is agnostic as to sector and use (purpose of funding is rarely an issue), it is applicable to the widest range of businesses.

Indeed, in most cases, where there are pensions available in excess of £50,000 it should really be the first option. This is not to say that there are no criteria, as the overall commerciality of the deal, together with an assessment of what – if any – security is available is always undertaken. A key role for a PLF provider such as ourselves is to mitigate client risk.

Any broker recommending PLF to a client – and thus saving them a (frequently) hefty tax bill – is likely to have a client for life. A familiarity with this product is really adding value and depth to a client proposition.

4

In the case of Clifton Asset Management, the commission paid to brokers – 3% of the amount funded – comes from our professional fees, not from adding cost to the client, and is highly transparent and ethical. We have just paid out a £30,000-plus commission to one broker for a deal based solely on a telephone referral.

We did all the packaging and other work necessary to get the deal away.

5

SME owners need greater awareness of the options open to them under PLF. What better body of professionals to deliver this awareness than NACFB Members who, by definition, have a high standard of delivering quality outcomes and a profound understanding of SMEs and their financing needs?

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?

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).

50 | 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.

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

Five traits of pension-led funding you may not know about Adam Tavener Chairman Clifton Asset Management

I

t has become increasingly common for individuals looking to finance their business to turn their pension pots into a source of investment support.

This increase is driven both by the new pension freedoms regime, where anyone over the age of 55 can access their entire pension fund (with a tax charge), and by the over-55s making up a significant sub-section of individuals setting up businesses in the UK. This is a potentially lucrative marketplace for commercial finance brokers to engage with and, crucially, add value to, since the options and benefits available under pension-led funding (PLF) are poorly understood.

In no particular order, the key reasons to recommend PLF are:

PLF is the only source of SME finance where all the interest charges are repaid to the business owners’ own pension pot, thus increasing its value rather than paying away to a third party. Think of it as buying, not renting. A successful PLF deal, where all repayments are made, should lead to an increase in the value of both the pension and, hopefully, the business, since it now has the funding it needs to grow.

1

It is common for PLF deals to be regularly repeated as the business grows and encounters new funding requirements. As the value of the pension pot grows, it is able to accommodate a second, third and even fourth round of business finance.

PLF transactions do not normally trigger a tax charge if you use more than 25% of your pension, since it is an investment and not an encashment.

Nor do you have to be over 55 to use PLF. To be commercially viable, the combined value of the pension pots (often there is more than one person in control of the business) needs to be in excess of £50,000.

2

All too often we come across business owners who have used more of their pension than the taxfree 25% and taken a tax hit on the balance withdrawn. These sums can be substantial, and we are frequently asked ‘why didn’t somebody tell me about PLF?’ Lack of knowledge is the usual answer – not a position in which most professionals would wish to find themselves.

PLF is extremely versatile. It can be used to fund businesses where there are few traditional assets to provide security. It can be used for both early-stage and more mature

3

businesses and doesn’t require profitability as an absolute condition – although the overall commerciality of the deal will be tested.

Because it is agnostic as to sector and use (purpose of funding is rarely an issue), it is applicable to the widest range of businesses.

Indeed, in most cases, where there are pensions available in excess of £50,000 it should really be the first option. This is not to say that there are no criteria, as the overall commerciality of the deal, together with an assessment of what – if any – security is available is always undertaken. A key role for a PLF provider such as ourselves is to mitigate client risk.

Any broker recommending PLF to a client – and thus saving them a (frequently) hefty tax bill – is likely to have a client for life. A familiarity with this product is really adding value and depth to a client proposition.

4

In the case of Clifton Asset Management, the commission paid to brokers – 3% of the amount funded – comes from our professional fees, not from adding cost to the client, and is highly transparent and ethical. We have just paid out a £30,000-plus commission to one broker for a deal based solely on a telephone referral.

We did all the packaging and other work necessary to get the deal away.

5

SME owners need greater awareness of the options open to them under PLF. What better body of professionals to deliver this awareness than NACFB Members who, by definition, have a high standard of delivering quality outcomes and a profound understanding of SMEs and their financing needs?

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?

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).

50 | 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.

GUIDES

GUIDES

2018 Cash flow calendar As SMEs look to achieve sustainable growth throughout 2018, experts at Hitachi Capital Invoice Finance provide key calendar dates that could impact a businesses’ cash flow and top tips on how to fully prepare for the second half of 2018.

Aug

Start to consider financial and marketing plans for Q4

European August shut down - remember that many businesses in France, Italy and Spain close throughout August for several weeks, which may affect those that import and export from these countries

Key takeaways from 2017 Making business rates fairer

Brexit divorce bill

Bank rate increase

The most recent business rates revelation came into effect in England and Wales on 1st April 2017 which promised 600,000 businesses to pay no business rates at all.

This will save businesses around £370m in total from 2020/21

The size of the bill could affect chabges to financial budgets, trading and recruitment laws and the UK’s citizen’s rights.

Monitor changes as this may impact your individual business.

In november, the official bank rate increased for the first time since July 2007, and has been lifted from 0.25% to 0.5%.

Sep In September 2017, retailers had their biggest slump in sales and their lowest growth rate for years. Consider this by monitoring spend and consumer sales.

Oct

31

October is commonly known for the 2018 deadline for submitting paper self-assessment returns for the 2018/19 tax year.

Recruitment Agency Expo 3rd to 4th Oct 2018 NEC, Birmingham

Nov

Businesses will incur a £100 penalty if the 2017 paper Tax Return is not yet filed.

Monthly Dates

14

Jun The summer rush is a good time to consider hiring an apprentice, to help with the increase in work load.

6 - 18

20 - 21

Advanced Manufacturing Show

Manufacturing Excellence Conference

6th to 8th June 2018 NEC, Birmingham

20th to 21st June 2018 International Business Festival, Liverpool.

Summer often means reduced business hours all round - try to account for this in your business schedule by adjusting sales targets to make up for this.

Often the month of the deadline to file your income tax return with HMRC if you want ant tax collected through your PAYE coding (under £3,000).

15

The second payment on account for the tax year ending the previous 5th Appril is due.

School summer holidays begin. Do you have provision in place to deal with reduced staff numbers?

52 | NACFB Magazine

The month in which the Autumn statement is announced, and will outline the government’s taxation and spending plans. Updates can include changes to corporation tax, the National Living Wage as well as priorities for taxes as a result of Brexit

Dec

Jul

Often the month of tax payments deadline for Q3

26 Boxing day bank holiday

31 Filing date for company tax returns.

NACFB Magazine | 53

GUIDES

GUIDES

2018 Cash flow calendar As SMEs look to achieve sustainable growth throughout 2018, experts at Hitachi Capital Invoice Finance provide key calendar dates that could impact a businesses’ cash flow and top tips on how to fully prepare for the second half of 2018.

Aug

Start to consider financial and marketing plans for Q4

European August shut down - remember that many businesses in France, Italy and Spain close throughout August for several weeks, which may affect those that import and export from these countries

Key takeaways from 2017 Making business rates fairer

Brexit divorce bill

Bank rate increase

The most recent business rates revelation came into effect in England and Wales on 1st April 2017 which promised 600,000 businesses to pay no business rates at all.

This will save businesses around £370m in total from 2020/21

The size of the bill could affect chabges to financial budgets, trading and recruitment laws and the UK’s citizen’s rights.

Monitor changes as this may impact your individual business.

In november, the official bank rate increased for the first time since July 2007, and has been lifted from 0.25% to 0.5%.

Sep In September 2017, retailers had their biggest slump in sales and their lowest growth rate for years. Consider this by monitoring spend and consumer sales.

Oct

31

October is commonly known for the 2018 deadline for submitting paper self-assessment returns for the 2018/19 tax year.

Recruitment Agency Expo 3rd to 4th Oct 2018 NEC, Birmingham

Nov

Businesses will incur a £100 penalty if the 2017 paper Tax Return is not yet filed.

Monthly Dates

14

Jun The summer rush is a good time to consider hiring an apprentice, to help with the increase in work load.

6 - 18

20 - 21

Advanced Manufacturing Show

Manufacturing Excellence Conference

6th to 8th June 2018 NEC, Birmingham

20th to 21st June 2018 International Business Festival, Liverpool.

Summer often means reduced business hours all round - try to account for this in your business schedule by adjusting sales targets to make up for this.

Often the month of the deadline to file your income tax return with HMRC if you want ant tax collected through your PAYE coding (under £3,000).

15

The second payment on account for the tax year ending the previous 5th Appril is due.

School summer holidays begin. Do you have provision in place to deal with reduced staff numbers?

52 | NACFB Magazine

The month in which the Autumn statement is announced, and will outline the government’s taxation and spending plans. Updates can include changes to corporation tax, the National Living Wage as well as priorities for taxes as a result of Brexit

Dec

Jul

Often the month of tax payments deadline for Q3

26 Boxing day bank holiday

31 Filing date for company tax returns.

NACFB Magazine | 53

Opinion | & commentary Thought leadership from our Patrons and Members

Lenders: get your ducks in a row

I would like all lenders out there to listen to what our customers want. I think there’s a way to go when it comes to providing the finance products that our customers tell us they need the most.

Peter Williams Director Oxford Funding

H

ard to believe? Well, many lenders would completely refute this. They believe they listen to what their brokers tell them and act on it to come up with products that match the requirement – that is, as long as it’s bridging (if you’re a bridging lender) or factoring (you guessed it – if you’re a factoring company).

When brokers stick to their guns and express their need for a product because it is a good, low-risk area with sound returns, we usually get two reactions: either the lender doesn’t offer it, or they say they’ll check with the team.

The first answer is the most common.

You ask, they say no and the shutters come down. In the second case – well, I’ll give you an example: “Have you thought of financing ducks?”

“We don’t finance ducks.”

“I know that, but will you consider it?”

“Why should we?”

The answer to that is perhaps because this is lending that nobody else

54 | NACFB Magazine

does. In addition, perhaps you’re short of introductions – which is what you are in the business for.

Let’s say the lender comes back and seems willing to consider it. The discussion moves on – a product with rates and terms is agreed and the broker flies off looking for the ducks who want finance. In go the applications, all meeting the pre-agreed criteria with requisite waddle, quack and white feathers… but nothing happens.

Eventually, you get told they are all rejected.

You ask why, and the reply comes back that the legal team won’t take them on as they weren’t all called Donald - and so another great idea is killed at birth.

And why does this happen? My belief is because all great businesses are either run by inspired eccentrics or by foot soldiers who have come up through the ranks – not by solicitors and accountants.

However, too many finance companies have a middle management ground filled with solicitors and accountants who refuse to take a chance on something new. Take another example: why do so many pizza/pasta chain restaurants open side by side and then fail? Because the accountants and solicitors tend to want to stick to tried and tested products, despite the market already being saturated.

I think lenders need to ask themselves: if a broker comes up with an idea that doesn’t fit neatly into the boxes of what they already do, have they the facilities to seriously consider the proposal?

Would the top management get to hear about it, or would the accountants and solicitors kill it off before any imaginative decision makers got their hands on it?

What the sales reps should be told is to think outside the box. If nobody lends to ducks, then it’s worth having a look. For a moment, ignore the solicitor who says it can’t be done legally, and the accountant who says they’ll never pay. Try it. Run a test batch or trial period. If lenders aren’t willing to consider new areas of lending, they will always find that brokers have more lenders than business to offer them.

To lenders out there – tell your reps not just to sell your product, but to go duck hunting and to come back with innovative, new ways to lend. You may be a bridging or an equipment finance lender but, fundamentally, you are a lender. If you think about it there is no reason why, if you are, say, a sales ledger lender, you can’t be an unsecured business loan lender too if you want more business. Ask your brokers. You may be surprised by what they tell you.

NACFB Magazine | 55

Opinion | & commentary Thought leadership from our Patrons and Members

Lenders: get your ducks in a row

I would like all lenders out there to listen to what our customers want. I think there’s a way to go when it comes to providing the finance products that our customers tell us they need the most.

Peter Williams Director Oxford Funding

H

ard to believe? Well, many lenders would completely refute this. They believe they listen to what their brokers tell them and act on it to come up with products that match the requirement – that is, as long as it’s bridging (if you’re a bridging lender) or factoring (you guessed it – if you’re a factoring company).

When brokers stick to their guns and express their need for a product because it is a good, low-risk area with sound returns, we usually get two reactions: either the lender doesn’t offer it, or they say they’ll check with the team.

The first answer is the most common.

You ask, they say no and the shutters come down. In the second case – well, I’ll give you an example: “Have you thought of financing ducks?”

“We don’t finance ducks.”

“I know that, but will you consider it?”

“Why should we?”

The answer to that is perhaps because this is lending that nobody else

54 | NACFB Magazine

does. In addition, perhaps you’re short of introductions – which is what you are in the business for.

Let’s say the lender comes back and seems willing to consider it. The discussion moves on – a product with rates and terms is agreed and the broker flies off looking for the ducks who want finance. In go the applications, all meeting the pre-agreed criteria with requisite waddle, quack and white feathers… but nothing happens.

Eventually, you get told they are all rejected.

You ask why, and the reply comes back that the legal team won’t take them on as they weren’t all called Donald - and so another great idea is killed at birth.

And why does this happen? My belief is because all great businesses are either run by inspired eccentrics or by foot soldiers who have come up through the ranks – not by solicitors and accountants.

However, too many finance companies have a middle management ground filled with solicitors and accountants who refuse to take a chance on something new. Take another example: why do so many pizza/pasta chain restaurants open side by side and then fail? Because the accountants and solicitors tend to want to stick to tried and tested products, despite the market already being saturated.

I think lenders need to ask themselves: if a broker comes up with an idea that doesn’t fit neatly into the boxes of what they already do, have they the facilities to seriously consider the proposal?

Would the top management get to hear about it, or would the accountants and solicitors kill it off before any imaginative decision makers got their hands on it?

What the sales reps should be told is to think outside the box. If nobody lends to ducks, then it’s worth having a look. For a moment, ignore the solicitor who says it can’t be done legally, and the accountant who says they’ll never pay. Try it. Run a test batch or trial period. If lenders aren’t willing to consider new areas of lending, they will always find that brokers have more lenders than business to offer them.

To lenders out there – tell your reps not just to sell your product, but to go duck hunting and to come back with innovative, new ways to lend. You may be a bridging or an equipment finance lender but, fundamentally, you are a lender. If you think about it there is no reason why, if you are, say, a sales ledger lender, you can’t be an unsecured business loan lender too if you want more business. Ask your brokers. You may be surprised by what they tell you.

NACFB Magazine | 55

OPINION & COMMENTARY

OPINION & COMMENTARY

the online sector needs you James Lovett Broker proposition manager Funding Circle

H

owever, changes in technology, particularly within the rapidly growing online lending sector, have revolutionised it as a finance product. Combined with the decline in lending from banks, non-bank business loans are now a credible and popular option for a large number of small- and medium-sized businesses.

British Business Bank – showing that small businesses are now more aware of the diversity of funding solutions available to them. While the growth is impressive, platforms are also looking to ensure their longevity and resilience. An increasing number of institutional investors, including the government, are now lending directly to businesses through platforms. This not only provides millions in additional capital, but makes the entire ecosystem more sustainable as a wide range of investors are now lending to small businesses where they were not able to previously.

Established a decade ago, the online lending sector has made great strides both in its service and market share. In 2012, just 0.9% of new loans to small businesses were made through lending platforms. By 2016, however, that had risen to over 15%, while in the same year the online finance market grew by 43% to reach £4.58bn, according to the Cambridge Centre for Alternative Finance.

The contribution of small businesses to the UK economy is huge, accounting for 99.3% of all private sector businesses at the start of 2017 and 51% of all private sector turnover in the UK. Despite this, banks continue to struggle with supporting them.

In the last quarter of 2017, the combined net lending of the major lenders to small businesses was in deficit – meaning they collected more in repayments than they gave out in new loans.

The online lending sector continued this trend into 2017, with an astonishing 51% growth in P2P lending reported by the

These developments have had a significant impact on brokerages that have had to adapt to the market’s changing conditions.

56 | NACFB Magazine

As a result, brokers needed to diversify their product portfolios to find different solutions for their clients, and no longer specialise in one single type of finance.

The advances in business finance loans, brought about by lending platforms, has created exciting new opportunities for brokers. Now faster, simpler and with better flexibility on price and loan amount, it can play a vital role in a broker’s offering.

Previously viewed as a supplementary loan, business finance has now become a core product for many of our introducers, with some brokers setting up loan teams to help them grow their businesses alongside their property or asset finance offerings.

How brokers are collaborating with Funding Circle As a leader in the online finance sector, Funding Circle has played an important part in shaping the market. We’ve worked with brokers from the outset, developing a network of introducers around the country.

As a specialised small business lending platform, our product is not only well-suited to the needs of their clients, but with our dedicated introducer service we can provide greater value and a more tailored offering.

Over the last few years, the rise in prominence of online lending platforms has been remarkable. Previously considered an ‘alternative finance’ product, unsecured loans were historically hard to obtain for small businesses and the brokers who serve them.

To better cater to the needs of the market, in 2017 we launched our Business Champion programme. This is focused on forging strong relationships with the brokers who work closely with us and continue to drive quality business – and is open to all brokers, no matter what their company size. By working closely together, we can continue to deliver the best possible value and service to them and their clients.

The features of the Business Champion programme will evolve over time, but initially include a number of benefits ranging from dedicated service to marketing support. The main goal of the programme is to deliver activity that helps us grow alongside our broker partners.

are extremely proud to be a Business Champion with Funding Circle.”

Phil Gray, managing director at Watts Commercial Finance, added: “Funding Circle’s service levels, innovative products and support to both us and the clients make them a pleasure to work with.

platforms has created a wealth of new opportunities for brokers. Those who are ready to adapt will help to shape the new service moving forward and be able to say yes to more of their clients more often.

“Q1 this year was a record quarter for us with unsecured loans, and we look forward to continual growth in this sector with Funding Circle’s help and support.”

We are very much open to building our relationships with existing and new brokers and see the NACFB community as a crucial part of the evolution of our product. The expansion of online lending

“We work with SMEs from almost every sector,” said Paul Scrivin-Wood, director at QED Finance. “By matching them with precisely the right lenders or platforms and financial products, we play our part in making our nation thrive.

“Since the intervention of Funding Circle into the lending arena, so many more of our clients have seen their dreams become reality. For this reason, we

NACFB Magazine | 57

OPINION & COMMENTARY

OPINION & COMMENTARY

the online sector needs you James Lovett Broker proposition manager Funding Circle

H

owever, changes in technology, particularly within the rapidly growing online lending sector, have revolutionised it as a finance product. Combined with the decline in lending from banks, non-bank business loans are now a credible and popular option for a large number of small- and medium-sized businesses.

British Business Bank – showing that small businesses are now more aware of the diversity of funding solutions available to them. While the growth is impressive, platforms are also looking to ensure their longevity and resilience. An increasing number of institutional investors, including the government, are now lending directly to businesses through platforms. This not only provides millions in additional capital, but makes the entire ecosystem more sustainable as a wide range of investors are now lending to small businesses where they were not able to previously.

Established a decade ago, the online lending sector has made great strides both in its service and market share. In 2012, just 0.9% of new loans to small businesses were made through lending platforms. By 2016, however, that had risen to over 15%, while in the same year the online finance market grew by 43% to reach £4.58bn, according to the Cambridge Centre for Alternative Finance.

The contribution of small businesses to the UK economy is huge, accounting for 99.3% of all private sector businesses at the start of 2017 and 51% of all private sector turnover in the UK. Despite this, banks continue to struggle with supporting them.

In the last quarter of 2017, the combined net lending of the major lenders to small businesses was in deficit – meaning they collected more in repayments than they gave out in new loans.

The online lending sector continued this trend into 2017, with an astonishing 51% growth in P2P lending reported by the

These developments have had a significant impact on brokerages that have had to adapt to the market’s changing conditions.

56 | NACFB Magazine

As a result, brokers needed to diversify their product portfolios to find different solutions for their clients, and no longer specialise in one single type of finance.

The advances in business finance loans, brought about by lending platforms, has created exciting new opportunities for brokers. Now faster, simpler and with better flexibility on price and loan amount, it can play a vital role in a broker’s offering.

Previously viewed as a supplementary loan, business finance has now become a core product for many of our introducers, with some brokers setting up loan teams to help them grow their businesses alongside their property or asset finance offerings.

How brokers are collaborating with Funding Circle As a leader in the online finance sector, Funding Circle has played an important part in shaping the market. We’ve worked with brokers from the outset, developing a network of introducers around the country.

As a specialised small business lending platform, our product is not only well-suited to the needs of their clients, but with our dedicated introducer service we can provide greater value and a more tailored offering.

Over the last few years, the rise in prominence of online lending platforms has been remarkable. Previously considered an ‘alternative finance’ product, unsecured loans were historically hard to obtain for small businesses and the brokers who serve them.

To better cater to the needs of the market, in 2017 we launched our Business Champion programme. This is focused on forging strong relationships with the brokers who work closely with us and continue to drive quality business – and is open to all brokers, no matter what their company size. By working closely together, we can continue to deliver the best possible value and service to them and their clients.

The features of the Business Champion programme will evolve over time, but initially include a number of benefits ranging from dedicated service to marketing support. The main goal of the programme is to deliver activity that helps us grow alongside our broker partners.

are extremely proud to be a Business Champion with Funding Circle.”

Phil Gray, managing director at Watts Commercial Finance, added: “Funding Circle’s service levels, innovative products and support to both us and the clients make them a pleasure to work with.

platforms has created a wealth of new opportunities for brokers. Those who are ready to adapt will help to shape the new service moving forward and be able to say yes to more of their clients more often.

“Q1 this year was a record quarter for us with unsecured loans, and we look forward to continual growth in this sector with Funding Circle’s help and support.”

We are very much open to building our relationships with existing and new brokers and see the NACFB community as a crucial part of the evolution of our product. The expansion of online lending

“We work with SMEs from almost every sector,” said Paul Scrivin-Wood, director at QED Finance. “By matching them with precisely the right lenders or platforms and financial products, we play our part in making our nation thrive.

“Since the intervention of Funding Circle into the lending arena, so many more of our clients have seen their dreams become reality. For this reason, we

NACFB Magazine | 57

OPINION & COMMENTARY

Adam Barrett Head of lending Invest & Fund One of my Invest & Fund colleagues tells a story that when they announced they were leaving a well-known high street bank to join a little-known P2P finance platform, someone suggested they were crossing over to the dark side. A little unfair perhaps, but having spent most of my career in investment banking and only recently jumping to the alternative finance sector, I think I understand the point.

By definition, alternative finance – or crowdfunding, P2P lending, private credit, whatever you wish to call it – is different.

But different doesn’t have to be a bad thing. At a very basic level, the alternative finance market is simply an entrepreneurial response to changing market conditions.

A slowdown in bank lending, technology that aims to decentralise the lending process and Britain’s ongoing undersupply of new homes have combined to create the perfect conditions for the emergence of a different type of lender.

58 | NACFB Magazine

And different, it seems, is working. A recent report by the Cambridge Centre for Alternative Finance (CCAF) shows P2P property lending grew an impressive 88% in 2016. In total, the amount of property finance transacted in the alternative marketplace now tops £1.15bn. That’s substantial business in anyone’s terms.

While the growth is good news, there’s more to do to build confidence across the entire market. The Invest & Fund model – originate a loan, publish the opportunity on a marketplace and then find lenders to fill it – can feel challenging to some.

Unlike a bank or balance sheet lender, our model means we can’t, technically, guarantee funding. We’re ok with that.

It’s part of the reality of our alternative finance model. With a strong book of lenders, and more than £42m in total lending completed since 2015, we have filled every loan we’ve approved. Happily, our loans also tend to fill in minutes and hours, showing us the demand is out there.

The real heat is on us to find new deals for lenders, and more institutional partners to help us scale even greater heights.

It’s not all about being different, though.

Numerous opportunities have shown that it’s possible for banks to work side by side with alternative financiers in the best interest of their customers and shareholders. In 2017, new digital bank Revolut struck a partnership with alternative finance platform Lending Works. The British Business Bank is actively seeking lending partners and has committed millions to support SMEs. In 2015, Zopa partnered with Metro Bank, allowing the bank to lend to customers via the Zopa platform. Zopa took things a step further in 2017, announcing plans to acquire a UK banking licence.

Bridging Finance rates from only

0.49%

pm

Available for standard and light refurbishment Rates cut by up to 0.40% Through all distribution channels

The upside to all of this is that for anyone who wants to borrow to build quality homes across Britain, the rise of the alternative financier, alongside smarter regulation and governance, can only be good news. Increased competition keeps everyone on their toes, drives innovation and makes sure customers – the lenders and borrowers of this world – are kept front and centre. Banks have to work harder, and the alternative finance sector needs to shout louder and work smarter.

In the end, everyone should win.

Call us

0800 116 4385

Visit us

precisemortgages.co.uk

Follow us

FOR INTERMEDIARY USE ONLY.

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)

Best outcomes should take priority, alternative or not

Introducing our lowest ever range

OPINION & COMMENTARY

Adam Barrett Head of lending Invest & Fund One of my Invest & Fund colleagues tells a story that when they announced they were leaving a well-known high street bank to join a little-known P2P finance platform, someone suggested they were crossing over to the dark side. A little unfair perhaps, but having spent most of my career in investment banking and only recently jumping to the alternative finance sector, I think I understand the point.

By definition, alternative finance – or crowdfunding, P2P lending, private credit, whatever you wish to call it – is different.

But different doesn’t have to be a bad thing. At a very basic level, the alternative finance market is simply an entrepreneurial response to changing market conditions.

A slowdown in bank lending, technology that aims to decentralise the lending process and Britain’s ongoing undersupply of new homes have combined to create the perfect conditions for the emergence of a different type of lender.

58 | NACFB Magazine

And different, it seems, is working. A recent report by the Cambridge Centre for Alternative Finance (CCAF) shows P2P property lending grew an impressive 88% in 2016. In total, the amount of property finance transacted in the alternative marketplace now tops £1.15bn. That’s substantial business in anyone’s terms.

While the growth is good news, there’s more to do to build confidence across the entire market. The Invest & Fund model – originate a loan, publish the opportunity on a marketplace and then find lenders to fill it – can feel challenging to some.

Unlike a bank or balance sheet lender, our model means we can’t, technically, guarantee funding. We’re ok with that.

It’s part of the reality of our alternative finance model. With a strong book of lenders, and more than £42m in total lending completed since 2015, we have filled every loan we’ve approved. Happily, our loans also tend to fill in minutes and hours, showing us the demand is out there.

The real heat is on us to find new deals for lenders, and more institutional partners to help us scale even greater heights.

It’s not all about being different, though.

Numerous opportunities have shown that it’s possible for banks to work side by side with alternative financiers in the best interest of their customers and shareholders. In 2017, new digital bank Revolut struck a partnership with alternative finance platform Lending Works. The British Business Bank is actively seeking lending partners and has committed millions to support SMEs. In 2015, Zopa partnered with Metro Bank, allowing the bank to lend to customers via the Zopa platform. Zopa took things a step further in 2017, announcing plans to acquire a UK banking licence.

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The upside to all of this is that for anyone who wants to borrow to build quality homes across Britain, the rise of the alternative financier, alongside smarter regulation and governance, can only be good news. Increased competition keeps everyone on their toes, drives innovation and makes sure customers – the lenders and borrowers of this world – are kept front and centre. Banks have to work harder, and the alternative finance sector needs to shout louder and work smarter.

In the end, everyone should win.

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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.

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