NACFB Magazine - March 2018 by NACFB

Issue 56 March 2018

The magazine for the National Association of Commercial Finance Brokers

THE WAIT IS OVER Registration opens for CFE 2018

In this issue

CPD

Making the most of broker resources

Getting it just right

Keith Aldridge and Rob Lankey introduce Amicus Commercial Mortgages

Expat mortgages

Why itâ&#x20AC;&#x2122;s time to embrace this growing sector

Welcome | NACFB We understand that no two customers are the same. That’s why we’re flexible with our thinking, using the right balance of people and technology to help ensure a good outcome for your client and your business. ■ ■ ■ ■

Short term & Development Finance Specialist Residential BTL Commercial & Semi-commercial investment Trading Business Finance

Contact our award winning team

0330 123 4521 salesdesk@shawbrook.co.uk shawbrook.co.uk

t’s been another busy few months here at the NACFB, having staged 15 Member and Patron events with over 400 attendees. These included GDPR compliance workshops, sectorspecific, regional roundtable days and a successful Patrons Day too. I am also very pleased to announce that early bird registration is now open for the NACFB Commercial Finance Expo 2018. The biggest industry event of the year returns to the NEC on 20th June and you can find out more on page 8. Our efforts though are not just focused on the event front. Following the collapse of construction giant Carillion, the NACFB continues to lobby both the government and the Bank of England on behalf of our broker Members to ensure more is made of the alternative routes to finance available to impacted small businesses. Broader commercial funding awareness is key to making the SME sector more resilient, and is something we are calling for the government to focus on in the year ahead.

Proudly different. Proudly different THIS ADVERTISEMENT IS FOR INTERMEDIARIES ONLY AND SHOULD NOT BE DISTRIBUTED TO POTENTIAL CLIENTS

Our first Patrons Day of 2018 (more on page 10) was very well attended - it was great to see such a packed room. The roundtable sessions of the day were not only lively and informed, but will help steer the Association throughout 2018. Once again, I would encourage all Members to make the very most of your NACFB membership in 2018 by registering with NACFB Compliance, MyNACFB and attending as many upcoming events as possible. By extracting the best value from the Association’s membership offering through the full array of available benefits, we can help your business prosper. Until next month, Graham Toy, CEO, NACFB

Graham Toy CEO NACFB

In this March issue NACFB News 4-6 7 8-9 10-11 12

In the news Notes from our sponsor CFE 2018 Patrons Day Getting it just right

Compliance Update 14-15 How to make the most of CPD

Commercial Finance 16-17 Essential news bites

Top Story 18

Property investment appetite remains strong

Introducing 20

Masthaven announces large bridging loan proposition with dedicated team

Case Studies 22-23 Restructuring a 16 lenderstrong deal 24 P2P loan drives car dealership growth 26-27 Funding a cross-charge commercial purchase in 12 days

Ask the Expert 30

Arwel Griffith

Special Features 32-32 Change-of-use gains momentum 34 Why it’s time to embrace expat mortgages 36-37 Getting into the heads of SMEs 38-40 Measuring success

Industry Guides 42

A guide to small-ticket transactions 44-45 Invoice disputes: prevention is better than cure

Opinion & Commentary 46 48 50

Think potential, not pinch points The P2P species is evolving - for the better Three simple ways to leave your mark

Patron Profile 28-29 Invest & Fund is leading the charge against the biggest

For further information Kieran Jones, communications manager t. 020 7101 0359 Hamilton House, 1 Temple Avenue London EC4Y 0HA Email: Kieran.Jones@nacfb.org.uk Vera Sugar, editor t. 0203 818 0171 71 Gloucester Place, London W1U 8JW Email: vera@medianett.co.uk

ADVERTISING & EDITING: Medianett t. 0203 818 0163 www.medianett.co.uk DESIGN & PRODUCTION: Carbide Finger Ltd t. 0845 812 8206

NACFB Magazine | 3

Short term & Development Finance Specialist Residential BTL Commercial & Semi-commercial investment Trading Business Finance

Contact our award winning team

0330 123 4521 salesdesk@shawbrook.co.uk shawbrook.co.uk

Proudly different. Proudly different THIS ADVERTISEMENT IS FOR INTERMEDIARIES ONLY AND SHOULD NOT BE DISTRIBUTED TO POTENTIAL CLIENTS

Graham Toy CEO NACFB

In this March issue NACFB News 4-6 7 8-9 10-11 12

In the news Notes from our sponsor CFE 2018 Patrons Day Getting it just right

Compliance Update 14-15 How to make the most of CPD

Commercial Finance 16-17 Essential news bites

Top Story 18

Property investment appetite remains strong

Introducing 20

Masthaven announces large bridging loan proposition with dedicated team

Case Studies 22-23 Restructuring a 16 lenderstrong deal 24 P2P loan drives car dealership growth 26-27 Funding a cross-charge commercial purchase in 12 days

Ask the Expert 30

Arwel Griffith

Special Features 32-32 Change-of-use gains momentum 34 Why it’s time to embrace expat mortgages 36-37 Getting into the heads of SMEs 38-40 Measuring success

Industry Guides 42

A guide to small-ticket transactions 44-45 Invoice disputes: prevention is better than cure

Opinion & Commentary 46 48 50

Think potential, not pinch points The P2P species is evolving - for the better Three simple ways to leave your mark

Patron Profile 28-29 Invest & Fund is leading the charge against the biggest

ADVERTISING & EDITING: Medianett t. 0203 818 0163 www.medianett.co.uk DESIGN & PRODUCTION: Carbide Finger Ltd t. 0845 812 8206

NACFB Magazine | 3

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

Calling for input on FCA consultation

he FCA recently published a consultation paper outlining proposals to give more small businesses access to the Financial Ombudsman Service (FOS). In November 2015 the FCA published the discussion paper ‘Our approach to SMEs as users of financial services’ (DP15/7). From the feedback received, the FCA recognised that some SMEs do not have the means to resolve disputes with financial services firms and have fewer routes to seek redress. The FCA therefore proposed to change its rules to allow more SMEs to refer disputes to the FOS. The NACFB is sourcing input from all our Members to construct a formal response to the consultation, and will be submitting collated comments to the FCA in April 2018.

NACFB launches regional Members Days The NACFB has launched a series of Broker Days across the UK, providing a forum for all Members to share their views on the future plans for the Association. The three Broker Days will take place in London, Manchester and Birmingham throughout April, and will feature roundtable discussions on compliance issues, what brokers are looking for from the Association and how the NACFB can provide greater value for all Members. The free events will not feature any Patrons, but will instead enable the Association to listen carefully to the views of all of its Members. The workshops and seminars will also be fully CPD-accredited and will count towards your ongoing professional development.

The days will provide a platform to help Members make the most of the new, streamlined membership structure. We wanted all NACFB Members to be able to benefit from full access to MyNACFB and full support from NACFB Compliance in addition to NACFB membership. From January 2018 all three levels of support we provide have been amalgamated under one subscription. Instead of subscribing to NACFB Compliance Services, paying for MyNACFB and paying the membership fee, all Members now receive all these benefits under a single fee. The event will conclude with a networking session which will allow Members to socialise with other NACFB Members and the executive

It's a contact sport. We’re obsessed with touching base with you, so you don’t have to worry about being left on the sideline.

team in a more informal setting. A buffet lunch and drinks will be provided on the day and an agenda with further details is hosted online. If you wish to attend any of the below events, you can register online via nacfb.org/events or email Andrina Dhillon on: andrina.dhillon@nacfb.org.uk Wednesday 11th April 2018 – London, Lloyds Bank, 155 Bishops Gate, London EC2M 3YB Thursday 19th April 2018 – Manchester, 40 Spring Gardens, M2 1EN Tuesday 24th April 2018 Birmingham, 125 Colmore Row, B3 3SD. 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.

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

Calling for input on FCA consultation

It's a contact sport. We’re obsessed with touching base with you, so you don’t have to worry about being left on the sideline.

4 | NACFB Magazine

NACFB NEWS

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

Lloyds Bank announces NACFB title sponsorship

Patron GDPR collaboration The first Patrons Day of 2018 (see more on page 10) saw the NACFB engage with attending Patrons on the upcoming GDPR directive. The session, led by NACFB Compliance’s Roger Deane, explained the approach the Association has been taking to support its broker Members in their preparations for May 2018, when the directive launches. The session featured a roundtable discussion to determine the best approach to the impact GDPR will have on day-today broking activities, such as the

Webinar programme roll-out The NACFB hosted its first workshop webinar to engage with Members in Northern Ireland and outline the upcoming GDPR directive. The successful trial webinar enabled brokers to access educational support and guidance from the comfort of their office or desktop. A broader webinar programme on a number of pertinent compliance topics is under development, and will be rolled out throughout 2018.

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passing of personal information between brokers and lenders. The GDPR directive states that organisations controlling personal data must be able to evidence how consent to process personal data was obtained. Discussions were aimed at driving a consensus as to the approach to challenges such as this, as well as in the context of the wider sales and advice process.

The other aim of the session, attended by over 40 NACFB Patrons, was to tackle issues and concerns such as the expectations of brokers from lenders, what security steps will need to be taken while processing data and, crucially, how this will be managed and arranged. Feedback from the session will be fed into ongoing GDPR workshops and shared with other trade associations in order to help ready the industry for the implementation date of 25th May 2018.

loyds Bank Commercial Banking is delighted to announce that it will partner with the National Association of Commercial Finance Brokers (NACFB) in a major sponsorship deal in 2018. As a founding Patron and NACFB Best Business Bank Award winner for six years in a row, Lloyds Bank SME is committed to supporting the NACFB to help them continue to drive their strategic aims for the benefit of their Members. As part of the sponsorship deal, Lloyds Bank will work closely with the NACFB on a new lending data project, to provide industry data across different sectors and segments, create improved market insight and generate opportunities for NACFB Members. In addition to headline sponsorship of the annual Commercial Finance Expo and the Gala Dinner, the sponsorship will focus on continuing to drive up the professional standards of NACFB Members through economic insight and thought leadership.

their customers’ businesses and committing to building a strong banking relationship, focused on helping them to achieve their goals. “As the industry continues to grow, there is a real opportunity for commercial finance brokers across all types of funding for SME businesses. Lloyds Bank has a strong reputation of SME support, having grown our own net lending to SMEs by 32 per cent since the start of 2011, while the market has contracted by 12 per cent (according to Lloyds Banking Group lending figures, correct as at October 2017). In 2017 we also launched our enhanced service for brokers, making it easier for them to support their clients’ funding needs. “Looking ahead we are excited and committed to supporting the NACFB, develop and enhance its relationship with its membership, enabling brokers to better serve their customers and create real value to the UK economy.”

Lloyds Bank will also work closely with the NACFB to enhance Member compliance standards through the soon-to-be launched NACFB Online Education programme and regional workshops. Gareth Oakley, managing director of SME banking, Lloyds Bank, commented: “Working in partnership with commercial finance brokers is a key part of our strategy to support the growth of the UK’s SMEs. We recognise the vital part that brokers play in helping their clients access the right finance and banking relationship for their business, and we provide a tailored service through our team of dedicated business development managers. “Our goal is to be the best bank for the clients of NACFB Members, investing time collaborating with brokers to understand their businesses,

Working in partnership with commercial finance brokers is a key part of our strategy to support the growth of the UK’s SMEs NACFB Magazine | 7

NACFB NEWS

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

Lloyds Bank announces NACFB title sponsorship

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Working in partnership with commercial finance brokers is a key part of our strategy to support the growth of the UK’s SMEs NACFB Magazine | 7

NACFB | cover story Early bird registrations will receive advanced access to the app and through it will benefit from exclusive priority meeting booking with each lender.

“This event is the big one for the year - it’s the one to be at, the one to be seen at and we’ve thoroughly enjoyed it. We’ve had a great time and it’s gone quickly. We’ve met lots of good competitors here as well – there’s a great inter-team dynamic which is good. We’ve really enjoyed it, so thank you to the NACFB.”

We have also launched a new website this year – you can find all relevant information here, including: visitor registration link event information

Paul Riddell Head of marketing & communications, Lendy

confirmed exhibitors agenda. Registration has opened for the NACFB Commercial Finance Expo 2018. The biggest industry event of the year returns to Hall 3A at Birmingham’s NEC on Wednesday 20th June 2018 from 9.30am until 4.30pm.

however, it is also an entertaining affair with a well-established, good-natured rapport between all exhibitors and attendees. It remains one of few places that brokers can see all their lenders and funders in one place on the same day.

The free event is open to anyone with an interest in commercial finance and this year’s event will host a wider spread of exhibitors than ever before – with over 100 confirmed to exhibit on the day.

Many lender exhibitors return year after year, wanting to take full advantage of the opportunity to meet with professionals operating in the UK commercial finance sector.

Why attend?

Now in its ninth year, the Commercial Finance Expo has become the headline event on the commercial finance calendar. Our sponsors span the widest cross-section of the market, making this the largest finance show for intermediaries in the country. This is a business event with a focus on networking and education,

The buzz

CFE app

For the first time, attendees will be able to download a bespoke event mobile app in advance of 20th June. The app will feature the full agenda, list keynote speakers and workshops, and enable delegates to book oneto-one meetings with any number of lender exhibitors. There will also be an opportunity for visitors to submit questions for the panel discussions at the CFE conference.

You can also register to exhibit. The NACFB Commercial Finance Expo is an opportunity for lenders, funders and large commercial brokers to promote themselves to the commercial finance broking community, as well as network with others in the industry. It is also an opportunity for legal advisers, valuers and others who provide ancillary services to the commercial intermediary market. The focus is very much on commercial finance and the supply of services to the commercial finance industry. We welcome exhibitors from the asset finance, development finance, bridging finance, invoice finance and commercial finance sector. As we’re expecting 2018 to be another busy year, early registration is recommended – please head to commercialfinanceexpo.co.uk

“On behalf of the Shawbrook commercial team, I’d like to extend my congratulations to the NACFB for hosting yet another hugely successful CFE.” Karen Bennett Director of commercial mortgages, Shawbrook Bank

“Funding Circle thoroughly enjoyed exhibiting at the NACFB’s Commercial Finance Expo in Birmingham this year. The venue and event itself provided a lively environment for collaboration with lots of new and familiar faces from the introducer community. “My panel on specialist lenders was a personal highlight. Funding Circle was set up in 2010 at a time when small businesses were suffering a crisis of access to finance. The panel gave me a great platform to talk directly to a crowd of introducers about how we’re able to fill the funding gap to support their clients’ ambitions.” Thomas Shave Regional manager, Funding Circle “All of the team from Together who attended the Commercial Finance Expo really enjoyed the event. The exhibition was excellent and it was great to see so many brokers and lenders coming together to share their knowledge and insights at the conference, with some really interesting debates.” Marc Goldberg Commercial CEO, Together

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NACFB | cover story Early bird registrations will receive advanced access to the app and through it will benefit from exclusive priority meeting booking with each lender.

We have also launched a new website this year – you can find all relevant information here, including: visitor registration link event information

Paul Riddell Head of marketing & communications, Lendy

Many lender exhibitors return year after year, wanting to take full advantage of the opportunity to meet with professionals operating in the UK commercial finance sector.

Why attend?

The buzz

CFE app

8 | NACFB Magazine

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NACFB NEWS

NACFB Patrons Day The first NAFCB Patrons Day of 2018 took place in London on 6th February. Representatives from over 40 NACFB Patrons joined chief executive Graham Toy and managing director Norman Chambers, as well as Members of the NACFB board, at a forum designed to provide an update on the Association’s progress and to look ahead to future challenges.

he opening words of board director Mike Geddes outlined that such days are part of the journey the NACFB is taking to not only increase engagement levels but also to act as a conduit between Patrons and brokers.

The purpose of the exercise was to relay the work that had been done by the NACFB and other associations since mid-2017 to identify how those operating within the commercial finance space can ensure they remain compliant.

Mike updated attendees on feedback gathered at last year’s event, which saw Patrons call for greater broker education and the desire for more sponsorship opportunities.

Roger relayed how NACFB Compliance had run dozens of dedicated GPDR workshops that addressed broker responsibilities while reviewing the principles and rules surrounding GDPR, analysing how these might impact day-to-day broker activities.

Mike highlighted the full calendar of upcoming regional and sectorspecific events, catering to key areas of the commercial finance industry. Such NACFB events host CPDaccredited compliance seminars and roundtable sessions with up to six key lenders from each sector. NACFB Compliance managing director Roger Deane led a session that assessed lender readiness for the upcoming GDPR directive.

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Following roundtable discussions, attending Patrons fed back on the efforts their organisations have made to address the upcoming changes. The information obtained is vital to ensuring that a proactive and uniform approach is adopted, and consistent processes are implemented. The NACFB remains well placed to communicate the expectations

placed upon Patrons and Members by such regulatory changes. Graham used the forum as a platform to discuss key issues face-to-face, and follow up on the AGM of 2017. He shared with the room updates on the streamlining of the Association’s membership structure and how this positively impacts NACFB Patrons.

revising of the principle-based code of practice and the development of a Patrons Charter. He further spoke of the desire to work closely with Patrons to roll out a full data project looking, in some detail, at the UK lending environment. He added that such a substantial undertaking would require full Patron backing – representatives in the room offered unanimous support for the project.

Key to his message was sharing that all NACFB Members now get compliance support as a benefit of membership. Graham spoke of how the NACFB prides itself on its understanding of the commercial finance industry and is seeking to raise the bar by offering the guidance and support necessary for all brokers to remain fully compliant with all regulatory requirements.

Norman led an afternoon session exploring the issue of onerous clauses contained within some Terms of Business Agreements (TOBA). He shared a fictional case study of a commercial deal that went wrong where the broker was liable to reimburse the lender for any loss resulting from breach of the original agreement.

Graham also ran through what the NACFB has been up to since the last Patrons Day, including a proposed board transition, the

In some cases, Norman outlined, there are clauses contained within TOBAs that say the broker must then arrange adequate PI cover to prepare for this

The NACFB remains well placed to communicate the expectations placed upon Patrons and Members by regulatory changes

risk. This has proved problematic in that relevant PI cover is not readily available for such a contractual liability, and the broker cannot comply with such terms. The group discussed how best to approach this matter in a manner that ensures that Patrons were still able to conduct their level of due diligence and brokers were not left with unreasonable liabilities. This was the first Patrons Day of 2018, but the Association will be hosting similar forums throughout the year to understand how it can work better to help our Patrons. Were you unable to attend and wish to offer your own perspective? Get in touch – the NACFB is not just receptive to feedback on Members and Patrons Days. You can reach us by contacting any member of the head office team via phone or email.

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NACFB NEWS

Mike updated attendees on feedback gathered at last year’s event, which saw Patrons call for greater broker education and the desire for more sponsorship opportunities.

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Graham also ran through what the NACFB has been up to since the last Patrons Day, including a proposed board transition, the

In some cases, Norman outlined, there are clauses contained within TOBAs that say the broker must then arrange adequate PI cover to prepare for this

The NACFB remains well placed to communicate the expectations placed upon Patrons and Members by regulatory changes

NACFB Magazine | 11

NACFB NEWS

Getting it just right 2

018 brings a bright new year for the team at Amicus. Following a strategic review, the business has refocused on building its asset and property finance propositions, and extending the latter with the launch of Amicus Commercial Mortgages. The NACFB Magazine has recently caught up with Keith Aldridge and Rob Lankey – the duo behind the new face of Amicus Property Finance. On the strategic review, Keith is upbeat: “We have decided to refocus on what we do best – and that’s to give the market a set of highly specialised, bespoke property lending propositions. We have taken stock and are now in an even stronger position to take forward the business to the next level.” Based in Peterborough, Amicus Commercial Mortgages has created a new way of working with master brokers who, as well as working their own network of introducers, will help manage and process new applications on its behalf. “The business employs a risk-based pricing model, paperless processing system and a pragmatic underwriting strategy from standard to bespoke transactions, depending on the deal complexity,” Rob explained. “This ‘one-stop commercial mortgage shop’ approach is delivered in a clear, straightforward way and gives direct access to experienced underwriters – it will help us to plug the service gap that is all too commonplace in the sector at the moment. “The commercial mortgages business has been over a year in the making and I’m confident it has been worth the wait. While it’s very tempting to rush towards a ‘go live’ date, we’ve had the unusual luxury of time to get our systems right and to finetune our proposition and process.” Rob works alongside a senior team which, in their own words, collectively has over 100 years of commercial mortgage experience.

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The team includes David Stiff as director of partner relationships; Steve Prydderch as head of credit and special servicing; Luke Watson as head of underwriting; Graham Ritchie as senior lending manager and Mike Williams as head of operations. According to Keith, in bringing Amicus Commercial Mortgages to the market, the lender has made a strong addition to its current bridging and development finance offerings. “We can now offer customers a seamless exit, if required, to a longer-term platform. We can also bring an end-to-end solution for our brokers and clients, and that’s something we are particularly excited about,” he added. The new commercial mortgage team has a strong commitment to customer service and to shaking up the market with a new approach. Rob was keen to point out how the business differs from the established competition: “In today’s market, what counts is decisiveness, delivery and execution. Having come through the ranks, doing all the roles to be done, you do learn better ways of doing things. I am always seeking to innovate, so I really do believe we have come up with a model for success which addresses some of the shortcomings brokers tell me exist in the market.

“Part of what makes us different is the decision to work with a limited number of brokers. I strongly believe that in the current market, where the activity of broking is being regulated and where start-ups, in particular, can suffer from getting their distribution model wrong at the outset, it’s important to work with brokers you can really trust. Trust is something built up over time. I have known and worked with some of our partners for over 25 years, and I know they will not let us down. I suspect we will see more lenders evolving to this model in the future.”

Introducing Amicus Commercial Mortgages I’m proud and excited to launch Amicus Commercial Mortgages. We’re a highly experienced team with a risk-based approach and flexible product lines. Uniquely pragmatic and decisive, we find helpful lending solutions by doing things differently. Whether your client is an owner-occupier or an investor, get in touch and let's talk about working together."

Rob Lankey, Managing Director, Amicus Commercial Mortgages

Keith claimed the new division, led by a highly experienced team, combined with an expert panel of carefully selected brokers, valuers and solicitors, is an exciting extension of the lender’s capabilities. “I’m looking forward to growing the business as the market sees the strength of our service, products and people, as well as our ability to meet the needs of the ever evolving property finance market,” he said. Rob added: “Our objective is to make this new commercial mortgage business the best yet – and I’m confident it will be.”

Peterborough 01733 797 403 commercial mortgages

Discover more at amicuscommercialmortgages.co.uk

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

NACFB NEWS

Getting it just right 2

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Rob Lankey, Managing Director, Amicus Commercial Mortgages

Peterborough 01733 797 403 commercial mortgages

Discover more at amicuscommercialmortgages.co.uk

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

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

How to make the most of CPD For many industry and professional bodies, continuing professional development (CPD) is a mandatory requirement – although unfortunately, it’s often seen as a blocker to getting on with the job. It shouldn’t be, and we find that its value and purpose is often misunderstood.

PD is a method for professionals to continue to be competent within their professions, tracking and developing their professional knowledge. CPD comes in many forms: workshops, articles, webinars, certifications, learning modules or blogs, to name a few. These types of activities are undertaken daily by most professionals – and yet they do not log this activity in a formal way. Formally logging these is important for verification; it demonstrates the learning activity, so that you can ensure that this experience and knowledge is applied to your role. The FCA recognises the importance of CPD. In some positions, it’s a regulatory requirement that a number of minimum hours are completed each year, and for this to be evidenced when requested. Good quality CPD should cover three main areas: your needs – identified knowledge or skill gaps specific to your role how you will meet your needs – a description (and type) of the activity you are going to do or have done, including the number of hours spent on the activity

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confirmation of how you met your needs (once carried out) - how the activity has met the objectives of the learning, and if tested, the test result. What are the benefits? CPD should be seen as an investment. It’s a method to manage your further education and knowledge, and how you invest in yourself to be the best that you can be. The NACFB sets standards for our Members, expecting the highest levels of service and knowledge, and CPD should be seen as a step towards evidencing this. Structured CPD allows you to plan your continued development, so that you can manage this throughout the year without the need to cram lots of information in a very short space of time just for the sake of ticking a compliance box. CPD is a demonstrable commitment to the enhancement of personal skills and the maintenance of competency. In essence, it is one element of proving your professional credibility.

CPD is a documented process that you control. You focus on learning that fits entirely with your role and can be both informal and formal. You won’t always receive a certificate, but you can use your log as proof that you have kept up to date with the latest developments in your field of expertise, or with new regulatory changes that effect you and your business. How can the NACFB help me achieve my goals? NACFB membership affords you free access to MyNACFB. This is a bespoke platform that provides Members with access to a selection of learning and CPD resources to support you, and it also acts as a record-keeping tool for the activities that have been undertaken, as well as evidencing any testing. For more information on how to access this site, visit www.nacfbcompliance.co.uk/training

What’s the difference between CPD and a qualification? A qualification allows you to study a certain subject by a recognised body. You will usually be awarded a certificate of some form, representing your pass score, and ultimately you will become qualified in that subject. But, the content of a qualification may only be valid for a set period; new developments in your field may mean the initial subject matter studied is now outdated, or new elements have superseded the original content.

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

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

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Commercial Finance

BBB to provide funding to Carillionimpacted SMEs

Hope Capital reduces rates Hope Capital has dropped its rates to 0.99% with LTVs of up to 75%. The bridging lender announced the rate reduction following a successful 2017 which saw it grow by almost 50%, claiming it’s now in a position to offer its best-ever rates. The lender added that it could also extend the 75% LTV under the right circumstances.

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Treasury begins SME finance inquiry

Growth Street to inject £20m into Welsh economy Growth Street has pledged to invest £20m into small businesses in Wales during the next 12 months. The alternative finance provider said it is targeting several key sectors this year, including manufacturing, wholesale and professional services. In 2017, Growth Street reported that it had matched £100m of loans between its platform users and borrowers since it launched in 2015.

The British Business Bank has announced that it will provide up to £100m of funding to SMEs affected by the liquidation of Carillion. The funding will be delivered through partners via the Bank’s Enterprise Finance Guarantee programme. The funds will be available to SMEs – such as the chain of subcontractors to Carillion – lacking sufficient security to borrow from high street banks.

IMLA reports 80% BTL investment drop

UTB balance sheet surpasses £1bn United Trust Bank (UTB) has announced that its balance sheet now exceeds £1bn following a successful year. The specialist bank has increased lending volumes over the past year, as well as taking on more office space at its Moorgate HQ. UTB currently has divisions providing development finance, mortgages, bridging finance, structured finance and asset finance.

Castle Trust creates industry first AI quotation engine Castle Trust has launched what it claims to be the industry’s first quotation engine powered by artificial intelligence. The engine offers instant quotations for loans up to £750,000, and can also generate the maximum achievable loan size for a given transaction. In addition, the lender has streamlined its processes to deliver faster bespoke quotations on loans between £750,000 and £25m.

Net buy-to-let property investment in the UK has fallen by 80% to just £5bn in 2017 (2015: £25bn), according to the Intermediary Mortgage Lenders Association (IMLA). The ‘Buy-to-Let: Under Pressure’ report revealed that between 2000 and 2017, UK buy-to-let landlords invested £289bn into the private rented sector, bringing 1.8 million properties into the rental market. Meanwhile, real rental prices decreased by 4.4%.

MFS announces free valuations Market Financial Solutions (MFS) has launched free valuations after announcing its expansion into the Midlands. The lender will offer free valuations on loans from £500,000-10m on all committed deals throughout the UK. MFS’s expansion follows the Office for National Statistics’ reporting of the average rate of house price growth in the West and East Midlands as 7.2% and 6.4% respectively.

InterBay restructures sales team

InterBay Commercial has announced a new sales structure to better support its broker network through five new appointments. The specialist lender has appointed two new strategic account managers – Marc Callaghan and Marc Turner – and three senior business development managers – Kelly Rule, Michael Mann and Gareth Broome – to focus on increased demand for specialised commercial and bridging products.

UK Finance appoints new chair of mortgages product and service board

UK commercial property rents rise 3.1% in 2017 UK prime commercial property rents grew by 3.1% during 2017, according to CBRE. According to the January Prime Rent and Yield Monitor, the figure was slightly down on the 3.7% rise reported in 2016, but still above trend. The research also found that prime commercial property rental values increased by 0.8% in Q4 2017 despite declining yields.

Funding 365 increases max loan term

Funding 365 has extended its maximum loan term from 12 to 18 months following a rise in demand from the lender’s broker partners. The increased term will apply to all the lender’s bridging products, apart from the short lease bridge, which will remain at 12 months. This comes shortly after Funding 365’s decision to increase its maximum loan size to £10m.

The Treasury committee has launched an inquiry into SME finance to observe the state of the market. The inquiry will look at the extent of competition, the various sources of funding and whether current regulation provides enough protection to borrowers. The Business, Energy & Industrial Strategy committee will be starting a separate inquiry into government support for SMEs to boost productivity.

Secure Trust Bank partners with L&G Mortgage Club Secure Trust Bank Mortgages has signed a new partnership with Legal & General Mortgage Club. The agreement will allow L&G broker members access to Secure Trust Bank’s product range. The specialist bank provides loans with fixed interest rate periods of two, three and five years and total loan terms of up to 35 years.

Octopus launches commercial auction bridge Octopus Property has partnered with Acuitus Finance for a pre-approved, non-regulated bridging product, for investors looking to purchase property at Acuitus auctions. Octopus will provide a 50% loan-to-price loan based on the auction price, for properties that sell for £500,000 or more. No further valuation will be required, which Octopus has claimed would save borrowers around £3,000-5,000 in costs.

The financial trade body UK Finance has appointed Miguel Sard as the new chair of its mortgages product and service board. Miguel is the managing director of mortgages at Santander and is responsible for the bank’s entire UK mortgage proposition. Prior, he served as managing director of Santander for Intermediaries and CEO of Santander Insurance Services in the UK.

Foundation Home Loans introduces portfolio BTL cashback product

Foundation Home Loans has introduced a new cashback buy-to-let product designed specifically for portfolio landlords. Available at 70% LTV, with a 1% arrangement fee, it offers £500 cashback following the completion of the loan. It is available to both individuals and limited companies on a five-year, fixed rate of 3.89%, and a five-year, fixed rate of 3.99% for HMOs and MUBs.

NACFB Magazine | 17

Commercial Finance

BBB to provide funding to Carillionimpacted SMEs

16 | NACFB Magazine

Treasury begins SME finance inquiry

IMLA reports 80% BTL investment drop

InterBay restructures sales team

UK Finance appoints new chair of mortgages product and service board

Funding 365 increases max loan term

Foundation Home Loans introduces portfolio BTL cashback product

NACFB Magazine | 17

Top | story

Businesses need flexibility when it comes to funding

Our pick of the latest Patron news

Time starved businesses need access to different types of financial support at different stages of their development and most especially when growing, they need flexibility.

to gain orders and have the ability to service them with speed and professionalism. Due to being in the start up phase of business, whilst there were many funders in the market place, it was difficult finding the right lender to suit our needs. We spoke to quite a few but couldn’t find the flexibility we needed.

This is exactly the situation Salford based Cream AV found itself in when bidding for an exciting new project.

“However, we stopped searching after talking with Just Cashflow as they had the funding solution we were looking for and showed a real interest and understanding in our business.”

Cream AV is a professional audio visual services company that can seamlessly integrate technology at your fingertips or from your lips, both on land or at sea. The company owners have a wealth of knowledge and experience working with the largest principle contractors in the construction industry.

The solution was Just Cashflow’s Revolving Credit Facility (RCF) that works in the same way as a traditional bank overdraft and allows growing companies to smooth out inevitable peaks and troughs. Interest is charged on a daily basis and there is no long-term commitment, so it provides complete flexibility for the borrower.

Cream AV received an order worth £150,000 and required working capital to facilitate the project. The company had secured the contract, however, the payment terms to the customer were 60 days with staged payments. Funding was required in order to purchase the equipment required to fulfil the order.

Property investment appetite remains strong Tomer Aboody Director mtf

third of UK property professionals are looking to expand their portfolios in 2018, according to a new survey from mtf. The bridging lender polled 109 property professionals as part of its research into the future performance of the UK property sector. Of those questioned, some 33% planned to increase their portfolios, demonstrating continued resilience against an uncertain economic backdrop, and despite 40% of respondents believing that conditions for landlords and property investors wouldn’t improve in 2018.

while no-one questioned planned to reduce their exposure to the market. Of the 33% looking to expand their portfolios, 60% said they were looking to buy in the South East. Only 20% claimed they were looking to purchase property in London, as investors are increasingly looking to diversify geographically. Nearly half (43%) claimed that the biggest challenge for landlords and property investors in 2017 was the additional stamp duty charge of 3% when buying investment property. Other challenges included: economic uncertainty – 21% new affordability rules – 16% accessing funds – 15%

Of the participating investors, some 45% had bought residential properties as investment, compared with 21% purchasing foreign properties and 11% buying commercial properties as investment. Tomer Aboody, director of mtf said: “While there is continuing uncertainty, particularly over how the Brexit negotiations will unfold, UK property investors remain resilient. “The fact that property professionals have continued to invest in the UK, despite the uncertainty and numerous challenges, bodes well for the future of the market. “Bridging finance is there as a tool to help investors fulfil their requirements when looking to purchase properties quickly and increase their portfolios.”

Rene Lacopini, Director, said “As a relatively new business it was essential

18 | NACFB Magazine

Rene explains, “We were looking for flexibility and the ability to access funds – dip in and out, only being charged on what is required rather than a loan where you can find yourself paying interest on money that isn’t really needed. This is exactly what Just Cashflow provided and we most definitely will work with them on future projects.

“I am extremely grateful for the way they responded to our business needs. I was initially under a lot of pressure to get the funds into our account in a very short turn around – just a few hours from signing important documents. The effort from the Just Cashflow team and the guidance and understanding of our situation was greatly appreciated.” For more information on how Just Cashflow’s solutions are ideally placed to help build businesses, call our Broker Support Team on 0121 418 5037 or visit justcashflow.com/partner

Get your clients across the finishing line As a professional broker or intermediary you’ll be used to seeking fast and flexible funding for your clients. Just Cashflow knows that every business is different and we are able to offer you tailored financial solutions to meet the requirements of your clients. Our Revolving Credit Facility gives you access to funds from £10,000 to £500,000, for ambitious businesses, to support their continued growth. You will find the application process really simple and straightforward and our underwriting team will support you, to help ensure you get even more clients across the finishing line.

Just call us now

0121 418 5037

Alternatively, find out more

justcashflow.com/partner

Patron Member

stripping back of tax relief – 5% Half of all participants (50%) said they planned no changes for the year,

The ability to access the funding as and when they needed it provided Cream AV with the confidence to actively source further orders in the knowledge that

they had the funding partner to help them purchase material and equipment.

FS668057

BCMS668054

Just Cash Flow PLC is registered at 1 Charterhouse Mews, Farringdon, London EC1M 6BB under Company number 08508165 © Just Cash Flow PLC 2017

Top | story

Businesses need flexibility when it comes to funding

Our pick of the latest Patron news

Time starved businesses need access to different types of financial support at different stages of their development and most especially when growing, they need flexibility.

This is exactly the situation Salford based Cream AV found itself in when bidding for an exciting new project.

“However, we stopped searching after talking with Just Cashflow as they had the funding solution we were looking for and showed a real interest and understanding in our business.”

Property investment appetite remains strong Tomer Aboody Director mtf

Rene Lacopini, Director, said “As a relatively new business it was essential

18 | NACFB Magazine

Just call us now

0121 418 5037

Alternatively, find out more

justcashflow.com/partner

Patron Member

stripping back of tax relief – 5% Half of all participants (50%) said they planned no changes for the year,

The ability to access the funding as and when they needed it provided Cream AV with the confidence to actively source further orders in the knowledge that

they had the funding partner to help them purchase material and equipment.

FS668057

BCMS668054

Just Cash Flow PLC is registered at 1 Charterhouse Mews, Farringdon, London EC1M 6BB under Company number 08508165 © Just Cash Flow PLC 2017

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

Masthaven announces large bridging loan proposition with dedicated team

Vera Sugar Editor NACFB Magazine

asthaven has announced the launch of its new Bridging Plus products for loans over £750,000. The proposition now provides brokers with access to a dedicated team headed by Masthaven’s managing director of short term lending, James Bloom. The product will initially be available via the bank’s premier partners, and will also offer a dedicated underwriting team.

our commitment to introducing inventive solutions that address gaps in the bridging market and meet the ambitions of borrowers up and down the country. “Not only does it offer our broker partners leading commission, but also gives them access to a team of specialists and either reduced or bespoke pricing solutions for their clients. Monthly rates for prime Bridging Plus products start at: 0.48% up to 50% LTV 0.58% up to 60% LTV

The specialist bank has reduced rates for its prime Bridging Plus products which, the bank claims, places Masthaven’s new larger loan bridging products among the most competitive in the market. James said: “The launch of this new larger loans bridging product renews

0.68 up to 65% LTV 0.78% up to 70% LTV A flexible, custom pricing structure will be available for standard Bridging Plus products.

Andre Bartlett, director at SPF Short Term Finance, one of Masthaven’s premier partners, said: “Masthaven [is], again, trailblazing for the broker. It is refreshing to work with an organisation that seeks feedback from its intermediaries in order to develop and offer products to meet the needs of both brokers and customers alike. “At SPF Short Term Finance, we specialise in larger loans making this an ideal product for us. I am confident our clients will benefit from the launch of this product and I look forward to including Bridging Plus as part of our offering.”

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?

James added: “It may only be a year since Masthaven Bank launched, but we have a rich heritage in the property loans market and have quickly built a reputation for being a bank that listens to the needs of customers and advisers.”

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).

20 | 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.

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

Masthaven announces large bridging loan proposition with dedicated team

Vera Sugar Editor NACFB Magazine

0.68 up to 65% LTV 0.78% up to 70% LTV A flexible, custom pricing structure will be available for standard Bridging Plus products.

We’re redefining standard

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

Prime Bridging Standard Bridging Light Development Development Commercial

Are you ready to rethink what standard means?

20 | 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.

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

Restructuring a 16 lender-strong deal Ric Simmons Sales director Praetura Asset Finance

that through the multitude of different finance agreements they had in place, the monthly repayments were crippling the business.

ne of the key focuses for us at Praetura Asset Finance is the difference that we can make to a deal by taking the time to understand a client’s business, which was recently illustrated by a case that was brought to us towards the end of 2017.

It was at this point that they approached their broker, PMD Business Finance. The solution was a refinance deal and due to the number of assets involved and the size of the figure that the client was wanting to raise, they needed a lender with specific expertise in this field – which is why they called Praetura.

The client is a profitable agricultural contracting business, but available cash flow was tight and if something wasn’t done swiftly, it could become a critical issue. Due to the company’s rapid growth, they had invested heavily in fixed assets. The company’s new financial controller had identified

The first thing we wanted to do was to take the time to find out more, so our MD and myself – along with the introducing broker – spent a morning with the owner and financial controller, who re-affirmed what the broker had told us. They needed to improve their cash flow

22 | NACFB Magazine

and had identified that this could be done by reducing the monthly payments on their hard assets. In the short term, they were looking to save approximately £30,000 per month. But as the conversation went on, we also talked about future plans for the business. It came to light that if they could inject a lump-sum in the region of £500,000 into the business, then sub-contractors could be paid off and the work brought in-house, which would spearhead the next phase of the company’s growth plans. We went away from that meeting with a very large list of assets. We took the time to go through each item on the list individually to determine the approximate value and settlement costs, so that we could identify those that would yield

the biggest cost saving, balanced with the highest equity. We were then able to go back to the client with three different solutions. The option they chose would inject £500,000 into their business and reduce their repayments by £40,000 per month. The restructuring – enabled by the cash injection – would add an additional £80,000 to the business’s monthly cash flow. We could have looked at the deal, worked out how to reduce their monthly payments by £30,000 per month as requested and moved on. But would this have been the best solution for the client’s business? Or, was the better deal the one that was looking to help them in the long term as well as the short term? If we hadn’t taken the time to talk to them

and find out more, would they have known this was even possible?

facilitated too, thanks to the additional funding the deal was able to inject.

The deal itself involved settling 36 hire purchase agreements on a range of commercial vehicles and plant machinery with 16 different finance companies. And yes, all those settlements needed to be individually arranged with a variety of settlement dates to juggle. The client also requested (for cash flow purposes) that the payments be split across the month. So, we arranged for the deal to be paid out in three tranches, lending a total of £1.5m.

Tom Brown, head of direct finance at PMD Business Finance, said: “A number of factors made this deal a perfect fit for Praetura, including their specialism in asset refinance, their expertise in structuring a deal to the customer’s benefit and their credit appetite to lend at this level.”

The client is now in a position where they can look ahead and plan for the future. There’s an extra £120,000 per month not going out of the business, so as well as achieving the short-term goals, long-term plans have been

Without doubt, this was a timeconsuming deal, but it was time well spent; we made sure we understood the business, that we had assessed what options were available and ensured the solution offered would help the business to grow.

NACFB Magazine | 23

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

Restructuring a 16 lender-strong deal Ric Simmons Sales director Praetura Asset Finance

that through the multitude of different finance agreements they had in place, the monthly repayments were crippling the business.

22 | NACFB Magazine

and find out more, would they have known this was even possible?

facilitated too, thanks to the additional funding the deal was able to inject.

NACFB Magazine | 23

CASE STUDIES

MFS

P2P loan drives car dealership growth Thomas Shave Regional manager Funding Circle

When it comes to property, speed is everything

ast year was a record-breaking one for Funding Circle in which investors - big and small - have surpassed the £3bn cumulative lending milestone to small businesses across the country. Building successful relationships with commercial finance brokers has been instrumental. However, it isn’t just working with the biggest brokerages that allowed us to help thousands of small businesses last year. We are also focused on building a strong network of trusted partners – as the following case study shows. One of our oldest partners is NGI Finance, an Oxfordshire-based brokerage specialising in commercial loans, asset finance, development and commercial mortgages. Back in 2011, NGI Finance saw an exciting opportunity to offer its small business clients unsecured loans through online lending. Although this alternative form of finance was in its infancy at the time, it identified us as a partner it could successfully collaborate with. Seven years on, the relationship has flourished on both sides. NGI Finance has successfully introduced more than 250 of its clients to Funding Circle for small business loans and has become an important partner among our broker network. “Funding Circle created a product that did not exist before,” said Chris Morris, managing director at NGI Finance. “We are now able to recommend an alternative option to our clients looking for working capital. It’s an exciting opportunity to offer something different.” One small business client Chris has been able to help is Your Best Car, a car dealership with branches in Kent and Buckinghamshire. After a strong year in 2012, the business needed additional funds

24 | NACFB Magazine

MFS specialise in fast, flexible bridging loans

Your Best Car dealership to purchase new stock and hire additional staff. Chris helped owner Andrew Woolger carefully weigh up his options between a stocking loan or an unsecured loan through Funding Circle.

“If the rates hadn’t been competitive I would have looked elsewhere, but Funding Circle really is the best in the field at the moment and I couldn’t have grown my business to where it is today without their support,” he added.

Andrew said: “I had questions at first – I had never heard of Funding Circle before.” After researching Funding Circle online, visiting the website and reading customer reviews, Andrew was convinced that an unsecured loan was the best decision for his business.

Andrew has now taken four loans through Funding Circle, and NGI Finance continues to recommend us to other business owners in the motor trade industry.

“I actually thought that connecting borrowers and individual investors was a lovely idea. On one hand, businesses are able to access funding more easily, and on the other hand, investors earn a higher return. “It is difficult to access finance in the motor trade sector. The traditional funding options available are costly and highly regimented. It’s nice to know that there is an alternative which is fairly priced and less restrictive.” Following a positive experience with his first loan, Andrew didn’t hesitate to go back to NGI Finance for further loans through Funding Circle every time his business needed a cash flow boost to grow.

“We’ve worked with Funding Circle for many years now,” said Chris. “They have involved us at every stage of the lending process, so we understand their criteria and requirements, which means we can get even faster answers for our clients; it’s a win-win situation for everyone involved. “The feedback from our clients has been very positive. The online application system and fast turnaround sets Funding Circle apart from the rest as far as I’m concerned. “As a broker, I always suggest the best solution for my clients. I know that they are in good hands with Funding Circle, and the number of repeat requests we get shows that their product is meeting small businesses’ needs.”

Introducing a new special offer: FREE VALUATIONS on all residential properties for bridging – £500,000 to 1.5 million on completion

Loans from £200,000 to £10 million 75% LTV Rates as low as 0.75% per month Simple application process No hidden costs

+44(0)20 7060 1234

www.mfsuk.com

info@mfsuk.com

CASE STUDIES

MFS

P2P loan drives car dealership growth Thomas Shave Regional manager Funding Circle

When it comes to property, speed is everything

24 | NACFB Magazine

MFS specialise in fast, flexible bridging loans

Andrew has now taken four loans through Funding Circle, and NGI Finance continues to recommend us to other business owners in the motor trade industry.

Introducing a new special offer: FREE VALUATIONS on all residential properties for bridging – £500,000 to 1.5 million on completion

Loans from £200,000 to £10 million 75% LTV Rates as low as 0.75% per month Simple application process No hidden costs

+44(0)20 7060 1234

www.mfsuk.com

info@mfsuk.com

CASE STUDIES

Funding a cross-charge commercial purchase in 12 days There are more changes on the way for businesses in 2018, from economic pressures and ongoing uncertainty caused by Brexit to GDPR requirements – all of which are set to create further challenges for the SME community, one way or another.

James Anderson Head of new business mtf

ccess to finance, however, continues to be a critical challenge for UK small businesses. There is an ongoing lack of flexibility and – for companies trying to react quickly to the new challenges in the market – that makes it hard for them to seize opportunities. Small business owners need a wider, more versatile pool of liquidity to draw from, which is tailored to meet their needs. One major source of capital available and willing to fund the SME space is bridging finance. As an example, mtf recently completed a bridging loan for clients who were looking to raise funds to invest in their growing retail business.

26 | NACFB Magazine

Due to the strength of the cash flow from their first retail premises, the clients had been able to obtain a commercial mortgage for a second location. However, an opportunity had suddenly come up to purchase the premises next door. To achieve faster growth, the clients wanted to purchase both to expand their store front, as well as purchase stock for the new, larger store.

On receipt of the enquiry, mtf was able to give an immediate decision, and we issued the offer of loan that day. The clients needed 100% of the purchase price, so released equity in their principal residence by way of a second charge to increase funding.

The sellers had a specific completion date, which meant the clients needed to move quickly to take advantage of the opportunity and were unable to obtain a commercial mortgage in the timeframe required.

Given that both the commercial and the residential property now needed to be valued, it was imperative that the valuation was undertaken as soon as possible. Therefore, we instructed the valuation at the same time as going to offer. Our team then worked around the clock to ensure all the legal requirements were addressed, so that everything was ready to be sent to our lawyers as soon as the valuation report came in.

Faced with roughly a fortnight to complete the purchase, the clients needed to act quickly, and they were immediately introduced to us by one of our longstanding brokers.

In just 12 days, mtf provided a £450,000 bridging loan – spread over both assets at 65% LTV – based on the open market value of both properties. Interest was retained at

0.95% per month over a 12-month term, with no exit fees or ERCs. No personal guarantees were required. Our loan meant the clients were able to purchase the property by the proposed completion date, capitalising on a fantastic investment for their business. What’s more, the 12-month term gave them plenty of time to pay for the initial operating costs and purchase additional stock. The clients would then work with their broker on the exit by refinance on the main residence and by taking out a commercial mortgage on the new premises. The client’s broker later commented: “This case was difficult initially as the clients had tried to secure their own funding before coming to me. With such a short deadline in which to complete the purchase, I knew I had to place the case with a lender that could perform. mtf was the obvious

Our team worked around the clock so that everything was ready to be sent to our lawyers as soon as the valuation report came in

choice here and while the clients had themselves received indicative terms from other lenders at lower rates, I carefully explained that there were aspects of the case that many other lenders would not have understood which would be relevant to this case. “It was the combination of good advice and robust performance from mtf which made the deal happen with days to spare. The new shop is now open, and we are working through the exit for the clients.” mtf’s bridging loan products are designed to meet the many diverse needs of business owners. As a non-status lender, we do not require evidence of trading history, accounts or proof of income, and do not require personal guarantees. This allows us to take a practical, commonsense approach to lending.

NACFB Magazine | 27

CASE STUDIES

James Anderson Head of new business mtf

26 | NACFB Magazine

Faced with roughly a fortnight to complete the purchase, the clients needed to act quickly, and they were immediately introduced to us by one of our longstanding brokers.

In just 12 days, mtf provided a £450,000 bridging loan – spread over both assets at 65% LTV – based on the open market value of both properties. Interest was retained at

Our team worked around the clock so that everything was ready to be sent to our lawyers as soon as the valuation report came in

NACFB Magazine | 27

Patron | profile

Invest & Fund is leading the charge against the biggest Gary Trueman Head of borrower origination Invest & Fund

he team at specialist lender Invest & Fund knows that winning against the bigger lenders means working harder to find a competitive edge. There’s no getting around it – residential bridging and development finance is a competitive sport. A recent report from management consultants EY on the bridging industry in the UK suggests the 10 biggest lenders are responsible for 75% of bridging activity. That’s the kind of statistic that could leave smaller, specialist lenders dazed and confused. At Invest & Fund, we take it as a challenge – all

28 | NACFB Magazine

it really means is that to win, we have to work harder and offer something more than any of the top 10. It’s always possible to win against the biggest when it matters. You only have to take a look at the track record of the New Zealand rugby union team for proof. World rankings were introduced in rugby in 2003, with the All Blacks taking the top spot the following year as the best team in the world with an 80% win rate. The strange thing about the All Blacks, however, was that even though they dominated the rankings – and won the first World Cup in 1987 – they didn’t win another World Cup until 2011 (and again in 2015, but that’s another story).

That’s an unusual record: the best team in the world unable to win when it mattered most. There are plenty of theories as to why. John Eales, former Australian captain, believed the All Blacks’ poor World Cup record was less about the team’s form, and more about the ability of lower-ranked teams to find peak performance when facing the biggest team in the world. We think there’s some similarity in that theory to the way we operate. As a specialist lender, we’re never going to be the biggest. It’s more important for us to be the best in our field, hit our own peak performance and take every residential development and bridging opportunity that comes our way.

The right team on the ground Having the right team is essential. Invest & Fund is led by a team of property finance, credit and banking experts with decades of experience. Our origination team takes a hands-on approach to projects across England and Wales, getting out every day to meet developers and brokers, visiting every site we support and applying knowledge and experience to structuring high-quality finance that works for everyone. We also have a network of 500+ hungry individual, high-net-worth and institutional lenders keen to see and fund a bigger pot of highquality residential developments. In fact, our lenders recently funded a £1m+ bridge-to-sale facility in under four hours – so far, funding a loan hasn’t been a problem.

Finance with an edge Everyone in our industry talks about competitive rates, faster funding and greater certainty. We agree, but we also know this isn’t enough. Our team adds more value by working alongside brokers and developers to build trusted relationships and create flexible funding solutions from deep credit and property expertise. As we approach the £50m total lending mark, our goal is simple: to win more of that 75% from the big lenders. The best way to do this is to deliver an alternative finance service that helps brokers and developers hit their own peak performance. If you’re interested in putting us to the test, we’re ready.

About Invest & Fund Alternative finance platform with 500+ individual and institutional lenders 100% focus on residential bridging and property development finance Competitive rates and terms Highly skilled team with deep credit and loan structuring expertise

NACFB Magazine | 29

Patron | profile

Invest & Fund is leading the charge against the biggest Gary Trueman Head of borrower origination Invest & Fund

28 | NACFB Magazine

NACFB Magazine | 29

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

Working in partnership Arwel Griffith, senior partner at Robert Sterling Surveyors, on what brokers need to know about the surveying process

Q A

What are the most frequent broker misconceptions about surveyors?

There are many broker misconceptions that are frequently held about the surveying process. The most common is that a valuer and the surveying process is an obstacle to achieving their goal and earning their commission. Don’t get me wrong, I completely understand the pressure brokers are under to deliver, but it is a complex process requiring many calculations and reviewing a number of documents, including planning applications and Land Registry information, to name just a few. Get it right, and everyone is happy; get it wrong, conversely, and you may end up opening Pandora’s box. Some brokers clearly feel that they can almost bully a surveyor into an incorrect valuation. Only recently, for example, I valued a property at £800,000 and the broker asked if I could bump it up to £925,000 so it could achieve its LTV. Needless to say, that didn’t happen. The best brokers respect your professional advice and work in partnership with you

30 | NACFB Magazine

to achieve a common end. The worst behave like pushy salesmen and have little or no understanding of what the process entails, trying to rush valuations through as though on a conveyor belt. I recently attended a site for a large commercial-to-residential project for around 50 flats. The purchase price was circa £3m with the eventual project value around £10m. The lender and broker were pushing for the valuation to be completed in 24 hours. There is a great deal of research required to get this type of valuation right, and to inspect and report back in one day is a monumental task. How much of the £3m, I wonder, would lenders be prepared to lose if we were to get it wrong?

Q A

What do brokers need to know?

Brokers need to understand how complex our job can be. We have to be thorough both in the countless documents we have to review, and in the inspections that we undertake. Even with something like a three-bedroom house, where we know the rough value due to

other, similar properties in the area, it can still take 48 hours to complete the valuation and have it on the lender’s desk. We have tried on a number of occasions to hold events to demonstrate to brokers what our role entails, but they do not appear to be interested. A number of solicitors have come on inspections with me in the past to see what happens, but by and large the broker community doesn’t seem to want to engage. The best brokers smooth the way and make our part as easy to play as possible. They will manage the entire process, and give us as much detail and guidance as possible to complete the task. They add real value. Sadly, there are too few of them around. In many ways, I’d like us to go back to how it was many years ago – the instructing source was the lender and the broker didn’t get involved. Brokers should trust the experts and stick to what they are best at.

SPEED MEETS CLARITY 020 7655 3388

FAST PROPERTY FINANCE At Commercial Acceptances speed alone is not enough. Speak straight to decision makers: a quick & personal service. No arrangement fees, no extension fees and no end fees. Interest charged from only 0.75% per calendar month.

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

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

Working in partnership Arwel Griffith, senior partner at Robert Sterling Surveyors, on what brokers need to know about the surveying process

Q A

What are the most frequent broker misconceptions about surveyors?

30 | NACFB Magazine

Q A

What do brokers need to know?

SPEED MEETS CLARITY 020 7655 3388

Special | features An up-to-date insight into the industry

Change-ofuse gains momentum Rishi Passi CEO Oblix Capital

t the turn of the year, Theresa May declared it her personal mission to solve Britain’s housing crisis, a vow she has made on several occasions throughout her tenure as the country’s leading politician. Thus far, though, the government’s plans to address the UK’s lingering homes shortage hasn’t lived up to expectations, with little being done to tackle the mix of high house prices, reduced lending levels and a fall in income for first-time buyers. The chancellor’s pledge to build 300,000 affordable new homes year-on-year has injected some impetus into solving the housing shortage. However, what’s arguably had more impact is the permitted development (PD) rights policy, a government initiative introduced in 2013 that allows developers to turn redundant office space into residential flats without

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the need for conventional planning permission. This has caused commercialto-residential unit conversions to soar, and there remains a sizeable opportunity for both intermediaries and developers alike. With a surplus of empty commercial units in the UK, coupled with a housing shortage, change-of-use conversions have been rising over the past five years, consistently contributing to the UK’s housing stock. The rise in office-to-residential conversions is also a by-product of changing working practices across the UK’s major cities, which have resulted in a decline in office usage. Developments in digital technology – namely cloud computing – has allowed entire offices to become completely mobile. With reduced dependence on long-term space and flexible working trending upwards, shared office spaces are fast becoming a mainstream alternative to signing long-term leases. This has been well received by UK businesses which have long suffered the contractual imbalances of landlord/tenant agreements, but has left

many properties previously used as offices unoccupied and a target for conversions.

office spaces, which might otherwise blemish the surrounding area.

London and the South East have been at the forefront of residential conversions, accounting for more than a fifth of new housing added to the capital in 2016/17 – 16% in the rest of country. These statistics are likely to be the result of larger housing demand, appetite in financing and the availability of commercial space suitable for conversion.

Despite the continued year-on-year growth, change-of-use conversions have been met with some resistance. Some mortgage lenders have been unwilling to lend against certain PD units due to worries around future demand. This is because many of the converted buildings were purely designed to be offices and are situated in the middle of commercial sites, such as suburban office parks.

PD rights policy was proposed to accelerate new developments that look to meet the UK’s ambitious house building targets, and since the policy’s inception, change-of-use conversions have gone some way to meeting these goals. There has been a duty-bound effort from councils to support these conversion projects, and the numbers speak for themselves: change-of-use conversions increased by 48 per cent between 2015 and 2016 with 41 per cent of these being office conversions. More importantly, new residential units have been formed from unwanted or unfit

In 2014, a well-publicised example occurred in Islington where the council decided to issue article 4 directions across the whole borough. This decision was blocked by the planning minister on the grounds that it had been applied disproportionately, resulting in a direction that covered specific clusters of office space rather than the entire borough.

this, developers do not need to go through the traditional costly and time-consuming planning process, providing a much faster process of fulfilling the demand in housing. Oblix Capital has financed multiple change-of-use projects over the past three years, with conversions ranging from office to residential, student accommodation and semi-commercial. Recent cases include an 80-unit office-to-residential conversion in Manchester, a 77-unit office-to-residential conversion in St Albans and a 75-unit office-to-student conversion in Leicester. With a large number of commercial sites still free for conversion, the industry must continue to support change-of-use – enabling the PD policy to achieve what it set out to.

The government’s stance on PD rights has been welcomed by developers, especially with capital values and housing demand growing much more quickly for residential property than for commercial. Further to

NACFB Magazine | 33

Special | features An up-to-date insight into the industry

Change-ofuse gains momentum Rishi Passi CEO Oblix Capital

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many properties previously used as offices unoccupied and a target for conversions.

office spaces, which might otherwise blemish the surrounding area.

NACFB Magazine | 33

SPECIAL FEATURES

Why it’s time to embrace expat mortgages

Paul Brett Managing director of intermediaries Landbay

lmost five million Britons live or work outside the UK, and many of them don’t want to give up property ownership in their homeland. Typically, these people are professionals employed by multinational corporations or specialist supporting companies with premium salaries and a greater disposable income, keen to invest in buy-to-let property, while living overseas as a way to provide an additional income. Some simply want to earn money from their home until they eventually return. Liquid Expat Mortgages recently demonstrated the growing demand from expats looking for buy-to-let mortgages to purchase property in the UK, with enquiries from overseas investors increasing by 90% on the previous year. Despite this, there remains a reluctance within the mainstream mortgage industry to lend to expats, largely stemming from complications around guaranteeing financial stability. A range of regulatory and policy changes introduced in recent years has made things harder than ever for potential borrowers to access the finance they need, and this becomes even tougher when it comes to lending to expats.

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However, these complexities are resulting in missed opportunities for lenders, brokers and expats alike, and it’s time to re-evaluate how risky the demographic actually is.

catering to expats than brokers may think, so they shouldn’t be afraid to look around and further their understanding of the criteria for each.

Fluctuating exchange rates can undeniably impact income, and it can be more difficult to identify and communicate with employers who are based abroad. However, safeguards such as high deposits and thorough checks and balances can help to mitigate the risks involved. Expats paid in a foreign currency are already bound by closer scrutiny and assessment by mortgage underwriters under European rules. We must trust these extra precautions to do their job to protect brokers and lenders from fraud or unexpected market volatility. What’s more, this protection, combined with the steadily rising demand for expat buy-to-let mortgages, means the rewards can well outweigh the risks.

Though some might worry about the implications of Brexit on this form of investment, the industry must not let uncertainty around Brexit stop us from embracing the opportunities offered by expat lending. Two-thirds of expats are living outside the EU, with Saudi Arabia having the most Brits abroad at this point in time, and India having the fastest rate of citizens expatriating. As such, the significance of the Brexit legislation on the mortgage industry is arguably curtailed. Even for those within the EU, the benefits reaped from the devaluation of the pound seem to have outweighed recent changes to legislation, including the rise of UK stamp duty, so demand for expat mortgages continues to grow.

Growth in interest from expats is only expected to continue. Lenders who invest in the ability to underwrite and administer due diligence on expat applications will now stand out and be ahead of the curve as expat buy-to-let mortgages begin to move into the mainstream. Expat lending is still extremely specialised, and lenders are likely to only have relationships with a small panel of firms. This is to the benefit of brokers whose expert advice then becomes paramount to those looking to access the finance they need. There are more products

To allow overly risk-averse behaviour to alienate expats from the buy-to-let mortgage industry would be a disservice to lenders, brokers and expats simultaneously. In spite of increasing initiatives by the UK government to dampen buy-to-let purchases, the demand for expat buy-tolet mortgages shows no signs of slowing down. As a sector, we need to embrace the opportunities presented by this growing market of British investors abroad.

SPECIAL FEATURES

Why it’s time to embrace expat mortgages

Paul Brett Managing director of intermediaries Landbay

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However, these complexities are resulting in missed opportunities for lenders, brokers and expats alike, and it’s time to re-evaluate how risky the demographic actually is.

catering to expats than brokers may think, so they shouldn’t be afraid to look around and further their understanding of the criteria for each.

SPECIAL FEATURES

Getting into the heads of SMEs Late in 2017, Close Brothers asked almost 1,000 SME business owners across the UK about their trading conditions, their challenges and who they look to for advice. Ian Aitchison Managing director Close Brothers Business Finance

Trading conditions

Financial support and advice

Over half of UK SMEs (54%) expected their business to perform as it did in the previous 12 months, with 16% hoping to expand against 9% predicting contraction. Only 3% said they would close their doors for business before the end of 2018; nearly a fifth of those respondents (18%) were ‘unsure’ of their prospects.

For SMEs in the UK, the most popular source of financial support and advice was their family (24%), followed by their accountant (21%), online sources (16%) and financial adviser (15%).

Of those surveyed, 22% felt trading conditions had improved over the past 12 months and 54% were of the view that things were no different than 2016, while trading had become worse for 9%. In addition, 11% expressed an element of frustration by stating that while they had identified opportunities, they couldn’t access the finance to make them happen.

Peers (2%) Other (7%) Solicitor/lawyer (2%)

How are you finding current trading conditions compared with 12 months ago? Business is improving

22%

I see opportunities but can’t 11% access the finance to make them happen

Where do you mainly go for financial support and advice?

Friends/family (24%)

Bank manager (13%) Financial advisor (15%)

Accountant (21%) Online (16%)

Slow payments

Less than a third of firms (31%) truly understood what ‘personal data’ meant, while 19% admitted that they did not; the remaining 50% were unsure of its meaning.

Late compensation was also a real problem for firms in the UK, with a significant number of firms (66%) going so far as to say that there was a culture of slow payments in the UK. Nearly one in four businesses (24%) has been forced to seek legal advice because of the issue.

Keeping customer data secure is becoming one of the key issues of our times with the new General Data Protection Regulation (GDPR) coming into force in May and it’s vital that businesses of all sizes understand the rights customers have when it comes to collecting and utilising their personal information. Currently only half of SMEs (48%) understand customers’ new, extended rights and another 42% don’t have the right levels of permissions to contact their customers under the new requirements of GDPR.

Are you affected by slow payment by debtors? Yes (34%)

No (66%)

Does suitable legislation exist in support of SMEs to counteract slow payment by debtors? Yes (26%)

No (74%)

Do you understand the rights customers have when it comes to collecting and utilising their personal information Yes (48%)

Is there a culture of slow payments in the UK? Yes (66%)

No (34%)

No different to last year

54%

Things have gotten worse in the last year but we’re still trading

Have you ever had to seek legal advice due to slow payment?

I am worried that my business may be forced to close down

Yes (24%)

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Customer data and their rights

Over one third of firms (34%) were affected by slow payments, while 74% felt that current legislation did not support SMEs to counteract slow payment by debtors.

No (52%)

Do you have the right levels of permissions to contact your customers under the new requirements of GDPR Yes (58%)

No (42%)

Apprenticeship schemes

The majority of SMEs (82%) felt that apprenticeships were all or part of the solution to the UK’s skills gap. Firm owners also strongly believe that apprenticeships were a viable alternative to university, with more than three-quarters (76%) agreeing with the statement ‘apprenticeships are a valuable alternative to university’. A fifth of companies (20%) had their own apprenticeship scheme, while 58% said it wasn’t right for them. The remainder (22%) cited a lack of affordability as the reason why they didn’t have one of their own. Close to half of business owners (49%) answered ‘yes’ to the question: ‘If assistance was available from either the government or the private sector, would you participate in an apprenticeship scheme?’ Do you have your own apprenticeship scheme?

No, because I can’t afford it (22%)

Yes (20%)

Conducting business online

Almost half of firms (47%) conducted some form of business online, with 35% having seen growth in online trade, although in 46% of cases, growth was limited to 0-20%. Only 11% of firms saw more than an 80% expansion of online business. Significantly, 56% of those surveyed felt that online would play an increasing role in coming years. For many companies – especially those at the smaller end of the spectrum – there will likely continue to be a reliance on traditional channels for business development. In percentage terms, how much more business are you doing online compared with 12 months ago? 100% more (100)

Over 80% (90)

Over 60% (70)

Over 40% (50)

10%

Over 20% (30)

26%

0% more (10)

46%

No (76%)

No, it’s not right for my business (58%)

NACFB Magazine | 37

SPECIAL FEATURES

Trading conditions

Financial support and advice

For SMEs in the UK, the most popular source of financial support and advice was their family (24%), followed by their accountant (21%), online sources (16%) and financial adviser (15%).

Peers (2%) Other (7%) Solicitor/lawyer (2%)

How are you finding current trading conditions compared with 12 months ago? Business is improving

22%

I see opportunities but can’t 11% access the finance to make them happen

Where do you mainly go for financial support and advice?

Friends/family (24%)

Bank manager (13%) Financial advisor (15%)

Accountant (21%) Online (16%)

Slow payments

Less than a third of firms (31%) truly understood what ‘personal data’ meant, while 19% admitted that they did not; the remaining 50% were unsure of its meaning.

Are you affected by slow payment by debtors? Yes (34%)

No (66%)

Does suitable legislation exist in support of SMEs to counteract slow payment by debtors? Yes (26%)

No (74%)

Do you understand the rights customers have when it comes to collecting and utilising their personal information Yes (48%)

Is there a culture of slow payments in the UK? Yes (66%)

No (34%)

No different to last year

54%

Things have gotten worse in the last year but we’re still trading

Have you ever had to seek legal advice due to slow payment?

I am worried that my business may be forced to close down

Yes (24%)

36 | NACFB Magazine

Customer data and their rights

Over one third of firms (34%) were affected by slow payments, while 74% felt that current legislation did not support SMEs to counteract slow payment by debtors.

No (52%)

Do you have the right levels of permissions to contact your customers under the new requirements of GDPR Yes (58%)

No (42%)

Apprenticeship schemes

No, because I can’t afford it (22%)

Yes (20%)

Conducting business online

Over 80% (90)

Over 60% (70)

Over 40% (50)

10%

Over 20% (30)

26%

0% more (10)

46%

No (76%)

No, it’s not right for my business (58%)

NACFB Magazine | 37

SPECIAL FEATURES

Measuring success What is the ideal team size for a specialist lender?

SPECIAL FEATURES

The continual movement of lenders entering and exiting the market has led to a diverse range of options for brokers when it comes to selecting the right partner. Here, three directors weigh in on the subject of size.

Accountability comes to every member of a small team since there is no one else to pass a task on to. Small team members are always responsible for their actions. This produces team members who are more focused, ensuring a more efficient and friendly service to the broker. It can be easy when working in large teams to transfer a call to someone else, however, in a small team, all actions are fully on display to everyone in the office, so there is little chance of procrastination.

Mark Johnson Chief operating officer, Credit4 As a small, relationship-led lender, we feel the benefits a small team can provide to brokers include optimal communications, accountability and personality. Optimal communications come from the fact that questions and queries can be answered immediately with a hands-on attitude and without having to pass the broker on to other departments or having to wait for a return call. Small teams work in the same proximity, therefore, most members know the up-to-date position of pipeline cases and existing client accounts, meaning any member of the team can usually answer a query.

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Human beings are naturally emotional sponges, and their moods easily affect others. In a small team, working closely together, emotions can affect the mood of others. Most of the time this is highly motivational, and brokers pick up the â&#x20AC;&#x2DC;office buzzâ&#x20AC;&#x2122; when they call in, which endorses that this lender provides a warm and caring customer experience. As a team grows larger, the human motivational effect is steadily diluted, resulting in less warmth. When a broker calls, they can receive a more sanitised/colder (some would say professional) experience, ie missing that individual touch. In essence, smaller teams have great personality, focus and awareness of current business, which we feel adds that extra element to the broker: lender relationship, personality and trust.

NACFB Magazine | 39

SPECIAL FEATURES

Measuring success What is the ideal team size for a specialist lender?

SPECIAL FEATURES

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NACFB Magazine | 39

Assetz Capital, more than a partnership

SPECIAL FEATURES

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

Richard Deacon Sales director, Masthaven Bank Brokers that use lenders with many staff will benefit from a much bigger pool of knowledge: with more staff available, there will undoubtedly be more experience on board and, therefore, should provide a better experience. At Masthaven, we are big on ownership of a deal and empowerment of staff to ensure that they can handle a new case, new enquiry or general query through to resolution. I believe this sense of team work emanates throughout the team and gives the broker that feeling of comfort when they deal with us.

the client transaction. A problem with the valuation? Who you gonna call? Yes, the broker – the same broker you rang when you first enquired, and the same broker who has emailed you day, night and weekend to keep you updated on how the application is proceeding. Clients really, really appreciate that level of emotional attachment.

But in my opinion, the key factor is unrelated to the size of the lender’s team. It’s about individual relationships. If a broker has a strong and solid relationship with one or more individuals in the firm, this is much more important than how many staff they may or may not have. Picking up the phone and speaking to a human being – someone who knows about your case – is the single most important aspect of a completion both sides of the agreement can wish for.

If a broker has a strong relationship with one or more individuals in the firm, this is much more important than how many staff they may have 40 | NACFB Magazine

Martin Stewart Founder, London Money I think if there was likely to be one puzzle that a well-known stable genius would struggle to solve, it would be working out the correct resource levels for a lender to reach to function properly in the mortgage market. As independent brokers, we have the luxury of using whoever we want, be they the world’s biggest bank, all the way down to the world’s smallest mutual building society. I can give anecdotal evidence that neither end of the scale has solved the puzzle. Where we win business as brokers is in the reliability factor and the continuity of direct contact with those responsible for managing

Compare that with the broker’s experience when trying to liaise with the lender. The country’s GDP would be twice as high as it is if we didn’t have to sit on hold, waiting our turn patiently, to get through to someone who doesn’t have a clue about what is going on. How many fruitless days have been lost awaiting the promised call back? What of the garbled message from overseas that doesn’t make any sense, no matter how many times you play it back with a duvet wrapped around your head to cut out the background noise? I could go on. We can’t have everything – neither cheap money from the faceless monoliths, nor bespoke underwriting from teeny-weeny building societies – without compromising one or the other along the way. If a lender does somehow conjure up a system based on personal responsibility within its walls, and akin to what we, as brokers, offer our clients – well then, we might have found our preferred lending partner.

Over £400m lent to date

Our lending solutions include SME business term loans, commercial mortgages, development finance, bridging finance, buy-to-let for landlords, renewable energy loans, 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.

Assetz Capital, more than a partnership

SPECIAL FEATURES

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

If a broker has a strong relationship with one or more individuals in the firm, this is much more important than how many staff they may have 40 | NACFB Magazine

Over £400m lent to date

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

A guide to small-ticket transactions Rev. Dr. K. Bill Dost Managing director D&D Leasing

o the unobservant eye, it can seem that there is no rhyme or reason as to why some deals are accepted and others declined when it comes to small-ticket transactions. This article will dispel that thought process. There is certainly a reason why your transaction may be approved or declined by D&D Leasing. It’s often asked if D&D is a higherrisk funder in the small-ticket space – not just with regards to the types of deals we buy, but what goes into making those deals creditworthy. In other words: how does one get their deals bought by us? Ultimately, just like any other funder, D&D needs to ensure it’s going to see the lease contract to fruition. Higher interest rates and personal guarantees can certainly mitigate transactions, but they cannot be the only reason a transaction is written. A failed transaction carries with it stigma, legal issues and the reality that there has been more work on the back end of the transaction then was hoped for. In every instance, it’s in everyone’s best interest to see a client go the full term with their lease contract. So what does D&D look for in a smallticket transaction? First and foremost we’re looking for a solid exit strategy; understanding that the above doesn’t always happen, that a client contract doesn’t go all the way through to fruition. There then must be a viable exit strategy on the equipment itself. The assets purchased need to have a value throughout the term of the lease contract and importantly, a solid resale value. Ideally, this resale value should make up the majority of the value of the nullified contract.

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Next, to mitigate any loss against the resale of the asset, a down payment at the start of the contract is required. This not only helps mitigate any losses on asset resale, but also shows that the lessee has equity to place into the contract. As a non-prime lessor, D&D is looking for lessees who understand that they must put skin in the game. It shows that the lessee understands that they need to come into the deal with more than just a first and last payment. It also shows that they have the ability to save the required funds, and can do so again over time if required for maintenance or other, unexpected issues. Finally, D&D always looks for strong personal guarantees. Unlike in a prime situation, where the strength of the customer company is enough to carry a lease covenant, the client class D&D typically reviews shows a weaker profile. Thus, D&D will look to the personal guarantee to strengthen and cover any weakness that may be seen in the company. A strong guarantee will again mitigate loss in the event of an untimely or unfortunate scenario of the lease contract failing. It will also show that the lessee understands that they need to stand behind their company and the agreement they wish to sign. For most customers, this isn’t an issue, but for some they are simply unwilling to provide the guarantee and, if that is the issue, it will put the transaction to an almost immediate halt. D&D typically requires a guarantee to complete all transactions, with rare exceptions.

A successful sub-prime, smallticket transaction is, in essence, approved by meeting the following conditions: a decent resalable asset a down payment and a viable personal guarantee. Taken together, a transaction is virtually guaranteed to be approved. However, the absence of one of these factors doesn’t preclude the acceptance either; it simply means that the other factors need to be stronger to ensure a credit approval. D&D’s job as an alternate funder is to ensure not just the best approvals for our brokers and lessees, but also that transactions that shouldn’t be approved and clients that shouldn’t receive credit, don’t. In this way we ensure fiscal responsibility when dealing with our client base, especially when we look at the higher incidence of lessees looking to borrow above and beyond their ability to repay. Companies like D&D need to stay vigilant when lending monies, more so today in this increasingly regulated environment. The transactions that will have the greatest incidence of successfully completing are sub-£200,000 lease transactions in which the assets are resalable, and commercial loan products in the same value scheme with solid personal guarantees. We’d love to see your next transaction and to have the opportunity to fund it as well. Why not give us the chance to do so?

When we say commercial, we mean commercial! Interest rates from 0.65% pcm R E TA I L

OFFICE

Loans from £250,000 up to £10m

Let’s Talk! 020 8349 5190 @ABC_Bridging sayhello@alternativebridging.co.uk alternativebridging.co.uk

We look for lessees who understand that they must put skin in the game

INDUSTRIAL

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

A guide to small-ticket transactions Rev. Dr. K. Bill Dost Managing director D&D Leasing

42 | NACFB Magazine

When we say commercial, we mean commercial! Interest rates from 0.65% pcm R E TA I L

OFFICE

Loans from £250,000 up to £10m

Let’s Talk! 020 8349 5190 @ABC_Bridging sayhello@alternativebridging.co.uk alternativebridging.co.uk

We look for lessees who understand that they must put skin in the game

INDUSTRIAL

GUIDES

Invoice disputes: prevention is better than cure Phil Chesham Sales and marketing director Positive Cashflow Finance

ith the daily news of profit warnings and mixed financial performances, businesses are under more pressure than ever. Complex supply chains are now the norm, and if any one of the businesses within the chain start to feel the squeeze, it’s easy to pass that pressure down to creditors, with a potential domino effect of late payments and disputed invoices. And for smaller businesses this can be devastating, impacting cash flow and putting a stranglehold on their growth aspirations. So how can SMEs avoid invoice disputes that may not just result in late payment, but worse still, no payment? There is often a misconception that invoice finance is purely a funding option. As a result, the broader benefits of working with a funder who can help protect businesses within the supply chain often get overlooked.

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It’s a given that suppliers have an obligation to deliver the goods or services ordered to avoid disputes, but even when they have honoured that commitment, their customers can delay or refuse to pay. Many businesses are providing interest-free, unsecured credit every day through the cash held in unpaid invoices. For a business with a turnover of £1m this could be as much as £200,000. So, who exactly is lending to whom? To begin with, let’s look at what we can do as an invoice financier to help clients understand who they are dealing with and how they can avoid disputed invoices. All too often disputes can end up in costly litigation, whereas this can be avoided by getting the basics correct at the start of the sales process. Understand the strength of who the client is working with Businesses want to grow and typically they’ll have a sales team armed with a list of prospects, hefty revenue targets and pressure to get new deals on their books, often under time constraints. It’s tough and there is a danger that corners can be cut.

It’s good to make sure they check the creditworthiness of a prospect at the first enquiry. This way, when quoting for business, appropriate terms and pricing can be offered – the stronger the prospect’s credit rating, the better the terms and vice versa. This is where invoice financiers can help. We have access to the credit rating data required to help your clients make these decisions. With fraud on the rise – and ever more complex in nature – it’s important to know who they’re dealing with. Unfortunately, and all too often, they may not actually be who they appear to be. Does the client know who placed the order? We regularly see sales ledgers with incomplete details of who has placed the order. First names, pseudonyms and obscure references may mean something to the sales person taking the order, but make it difficult to have a clear audit trail to help the finance team.

Clients can help themselves by having clear and complete details of: who has placed the order and their position in the company – and whether they have the authority to place the order the legal entity they’re dealing with – the company name, including trading and registered names and addresses, and company registration number the confirmed order in writing, ideally with a purchase order number – this can be an email or a hard copy order. Do make sure all verbal orders are backed up with paperwork – this all helps if there are any questions related to payment later. Consider bad debt protection Once the client has established who they’re dealing with, they may wish to consider bad debt protection, which will provide cover in the event of protracted default. As a funder, it’s in our interest to make sure we are protected as well, so we work with our clients in partnership.

Ensure a robust delivery paper trail Once the goods or services have been delivered, it’s essential to have the supporting documentation to avoid late/delayed payment. Having the order in writing, as outlined above, is essential. Clients should email their customers to make sure they know when the delivery will take place, and also get a signed proof of delivery. For high-value items, we recommend they take a photograph at the point of delivery and, for further confirmation, send an email with these details. If dealing with local government or other public sector bodies, this step is essential to ensure invoices are paid, especially if any questions arise once the goods have been delivered. Use professional credit controllers Another big benefit of using an invoice finance provider with a full collections service is that clients benefit from a team of professional credit controllers with years of experience to make sure delayed payments are chased up and disputed invoices resolved. Staying on top of collections is the easiest way to avoid cash flow problems, expensive legal costs and bad debts.

Stay in control We know that the client’s customers are theirs, not ours, and maintaining good working relationships is key to delivering high levels of customer service and ongoing sales. Staying in control and having clear processes and procedures means there can be no ambiguity if an invoice is disputed. We will always provide professional support and even if we must take legal action we won’t do this without our client maintaining control of their customer relationships. To sum up, prevention is better than cure. Clients should know who they’re dealing with and keep good records to make sure invoice disputes are avoided wherever possible. The invoice finance market prides itself on these fundamentals and goes beyond funding alone. Businesses can benefit from the additional support funders such as Positive Cashflow Finance offer, so invoice disputes are the exception and not the norm.

NACFB Magazine | 45

GUIDES

Invoice disputes: prevention is better than cure Phil Chesham Sales and marketing director Positive Cashflow Finance

44 | NACFB Magazine

NACFB Magazine | 45

Opinion | & commentary Thought leadership from our Patrons and Members

What can Conister do for you... Wholesale Funding Asset Finance Block Discounting Commercial Loans

Think potential, not pinch points Rob Mercer Senior regional director Ashley Finance

t Ashley Finance, we like to say that we are in the ‘yes’ business. We try to keep an open mind and see the positives, allowing us to say ‘yes’ to more small businesses in need of help. Of course, it would be easy to have very rigid criteria and turn away any small company that didn’t have a perfect record. However, I believe that there is actually a strong commercial reason to give more small businesses a chance. This is because you can often find that a company may become a strong financial performer – it just hasn’t organised itself very well in the early days. Really, it’s a question of providing a little support and guidance where needed, so the business can instil more discipline into its processes and administration in order to keep a better handle on cash flow and the work pipeline. After all, a plumbing firm or a bakery doesn’t go into business because they are good at keeping books and working out their bank balance. They go into business because they are good plumbers or bakers and know they can make a living from it.

46 | NACFB Magazine

A broker’s job, then, is to help them do that. It’s to recognise that they are strong in their chosen profession – and therefore sound financial prospects – and help them with the credit or facilities they need to run the business and make it grow. Of course, it’s important to take into account a company’s credit history and payment information. But you shouldn’t rule a business out because of one or two blemishes. The fact is that any business, especially in its early days, can run into financial pinch points. Late payments, for example, continue to be a scourge for many. According to the Federation of Small Businesses (FSB), larger firms not paying on time owe on average of over £6,000 to small businesses. On top of this, FSB research shows that 37% of small businesses have run into cash flow difficulties, 30% have been forced to use an overdraft and 20% have said late payments have led to a slowdown in profit growth. Meanwhile, a study by Ormsby Street has found that four in 10 small businesses won’t make it beyond five years. I’m not saying we should all be in the business of propping up failing companies. If something is not going to work, it’s not going to work. But what I am in the business of – and more brokers should

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be – is supporting small and growing businesses which have much to offer if they can just get themselves set up in the right way. I like to think of them as ‘businesses on the rise’ – they may have taken a couple of wrong turns at the beginning, but they have the genuine potential to grow and go on to great things. All of this also means that at Ashley, we look at our relationship with clients as more than just providing funds. It really is about understanding them as a business, getting to know them and providing some support where needed. Brokers are in an excellent position to do this too. I’m sure many will have come across a client who they knew was a great business prospect – they just needed to get the right processes embedded into the business so that they could run it more effectively. Perhaps brokers gave them some advice on simple accounting software or spreadsheets to model cash flows in and out. So, my message to brokers is not to write a business off because they’ve had early cash flow struggles. Look at the quality of the business itself and the potential of its owners. Get to know them and understand their challenges. If you’re convinced the business has a great future, we probably will be too.

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

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Think potential, not pinch points Rob Mercer Senior regional director Ashley Finance

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OPINION & COMMENTARY

The P2P species is evolving - for the better Stuart Lunn Founder and CEO LendingCrowd

harles Darwin may not have coined the term “survival of the fittest” – we owe philosopher Herbert Spencer for that – but the father of evolutionary theory embraced the phrase and eventually introduced it to the fifth edition of his groundbreaking work ‘On the Origin of Species’, published more than 150 years ago. Initially greeted with hostility even among his fellow Victorian scientists, Darwin’s theory sparked a revolution in biology by explaining how evolution and life’s “beautiful and harmonious diversity” is caused by organisms adapting to their environment, with only the strongest species thriving.

On the investor side, the drive for diversity suffered a setback last year when Funding Circle withdrew its manual lending option – a move that means the UK’s big three P2P providers now offer purely passive investment products. At LendingCrowd, we believe that active investing is an important part of the mix, but passive products tend to force greater diversification and that will benefit the sector as a whole. Passive investments are also likely to be viewed more favorably by independent financial advisers and wealth managers, which will help to boost adoption in the mass market. In turn, SME borrowers will be able to access a broader spectrum of individual investors.

Evolution doesn’t stop, and in its November 2017 Financial Stability Report, the Bank of England noted that peer-to-peer (P2P) lenders were seeking to “evolve and diversify” their business models. To paraphrase Darwin, the more diversified that those lenders become, the better their chances will be of succeeding in the “battle of life”.

Currently, the largest borrower product types are covered by the bigger platforms, which tend to offer a single product focusing on clearly defined markets, such as consumers, small businesses or property. To remain competitive and diversify their product ranges, we believe that, over the next few years, platforms will launch into adjacent categories. From an SME-lending perspective, that could see term loans offered alongside bridging loans, interest-only loans and alternative amortisation structures, such as a 15-year profile over a five-year term.

P2P lending has only been around since 2005, but in that short space of time the sector has expanded rapidly, evolving from a consumer-focused lending proposition to one that now encompasses active and passive investing models, Innovative Finance Isas and funding streams for SMEs that include assetbacked term loans and invoice financing.

These additional products would provide flexibility in addressing the needs of borrowers and better position platforms against traditional lenders that are multiproduct providers. On the other side of the equation, this product diversification would offer different risk-return characteristics for investors, who could access a wider range of investment opportunities in one place.

Ultimately, we think that competition will drive consolidation in the sector, and likely bedfellows are platforms with complementary offerings. Instead of carving out their own niche in a particular category, platforms could acquire specialist providers in fields such as export and trade finance. We believe that offering a broader suite of products will drive further growth in the P2P sector, which generates real benefits for the economy by providing access to finance for small businesses who may struggle to secure funding from banks. According to the Bank of England, the flow of P2P business lending accelerated to about £1bn during the first half of last year – almost double the level seen two years previously. “P2P lending could improve financial stability by providing an alternative source of finance for consumers and small businesses,” the Bank said in its report, and the sector is now keenly awaiting the FCA’s final report into the P2P market, which is expected to be published this year. The continued evolution and strengthening of the regulatory regime is a key element of a thriving market, which will no doubt continue to adapt in line with investor and borrower demands.

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Or, as Darwin put it: “From so simple a beginning endless forms most beautiful and most wonderful have been, and are being, evolved.”

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OPINION & COMMENTARY

The P2P species is evolving - for the better Stuart Lunn Founder and CEO LendingCrowd

Or, as Darwin put it: “From so simple a beginning endless forms most beautiful and most wonderful have been, and are being, evolved.”

48 | NACFB Magazine

OPINION & COMMENTARY

More buy to let solutions now available from Precise Mortgages

Three simple ways to leave your mark Martin Stewart Founder London Money

spend a lot of time talking to brokers, although I am not too sure how much time they actually spend listening. One of the favourite topics of conversation I engage in is ascertaining how a peer intends to exit the industry. We all know how we got into financial services, but not many people seem to know how they will get out of it. Another interesting line of conversation which generally gets people thinking is one that starts with the question: “As a broking business, what do you actually own?” The short answer is, not a lot. Your car and office are likely to be leased. You might have some IT hardware which will be collapsing in value quicker than bitcoin, and while you may legitimately lay claim to some teaspoons in the kitchen, apart from that we don’t own much. No, not even our client bank. If you don’t believe me, turn your phone off for six months and see what happens to them. Trust me, they won’t hang around and wait for you to turn it back on again. We build no assets in the broking sector and – unlike our IFA counterparts – we have no residual income, aside from a few term assurance policies and GI contracts. Some people say they intend to carry on for ever and don’t want to retire – people will always need mortgages, they say. Possibly, but I guarantee that – at some point in the 1970s – Arthur Scargill said the same to his union members about coal.

I once had a meeting with a broker who was looking to leave the industry and he was offering his client bank to me for £300,000. I left the room and came back with a local phone directory and asked him if he would give me £300,000 for that instead. The meeting ended shortly after. So, how do we counter what – in many respects – is a cottage industry? My personal answer is to create a brand. Brand is an overused word (mainly by me), but the following, widely used definition is a good one, and holds the clue as to why we should consider building one: “A brand is a name, term, design, symbol or other feature that distinguishes an organisation or product from its rivals in the eyes of the customer.” See, you need to stand out, be apart from the herd, be different. Do that and throw in some scale, some profitability and some name awareness and who knows, you may one day be sat on a beach, never having to contemplate doing a Gabriel return ever again.

So here are three quick and easy wins if you want to create something of note: 1. Think big. Whatever you are thinking about, double it, triple it, quadruple it and then times it by two. Then do it again. Start with the end in mind. Unless your name is Rolls, Royce, Marks or Spencer, don’t name your business after yourself. It will likely mean nothing in the long run. Your name will end up on your gravestone, but can you see your name listed on the London Stock Exchange? If you’re not thinking big, you won’t build anything big. 2. Collaborate. Find others to work with who share your vision, who are willing to sacrifice income today in return for capital tomorrow. Your DNA needs to drive your business, but it doesn’t need to be imprinted on everything. Recognise what you are good at and do nothing but that. Recognise where others are better than you and ask them to do the same. You can be an individual and a team player at the same time. 3. Get yourself on social media. We are lucky to live in a time when our businesses have a shop window that the whole world can look into. If you are not taking advantage of Twitter, LinkedIn or Facebook, then your competitors are stealing a march on you. If you want to see a great example of how far shameless self-promotion can get you in life, then look no further than who currently resides at 1600 Pennsylvania Avenue. Good luck. Think big, think brand, think beach!

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OPINION & COMMENTARY

More buy to let solutions now available from Precise Mortgages

Three simple ways to leave your mark Martin Stewart Founder London Money

0800 116 4385

Visit us

precisemortgages.co.uk

50 | NACFB Magazine

FOR INTERMEDIARY USE ONLY.

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* Please note, we will not consider income in support of Limited Company, HMO, first time buyer or portfolio landlord applications.

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