M
A
G
A
Z
I
N
E
Issue 63 October 2018
The magazine for the National Association of Commercial Finance Brokers
Expanding your horizons How specialist and challenger banks’ investment in the industry can only benefit brokers and their clients
In this issue
Is buy-to-let levelling out across the UK?
Changes in the BTL market and what’s next for landlords
Late payment epidemic
Thousands of SMEs risk closing their doors
Examining the impact of a slowing sales cycle Appetite in the UK has taken a dive
Welcome | NACFB Taking a flexible approach to your clients lending requirements is what we do best. Take our Short Term range for example, delivering rapid funding options to support tactical investment opportunities for Ltd companies, LLPs and individuals. ■ ■ ■
■
Exit development finance Auction purchases Commercial to residential under permitted development Access up to 100% of the project refurbishment costs
Contact our award winning team
0330 123 4521 salesdesk@shawbrook.co.uk shawbrook.co.uk
O
ctober is in full swing and the long, hot summer we all enjoyed now seems like a distant memory. Whilst it is still too early to look back on the year, I am pleased with the trajectory of the Association. We continue to grow and are now the largest we have ever been (more on p.4) Our size and independence enable us to focus entirely on the needs of the commercial finance professional, and when we represent our community in the corridors of power we can do so safe in the knowledge that we are representing the needs of the community at large. Last month brought encouraging news as the small business minister put forward new laws aimed at allowing small businesses to access invoice finance (more on p.6). We were pleased to see this as a step in the right direction in enabling SMEs’ greater access to growth finance and welcome further regulatory changes targeting UK businesses. This year’s AGM (more on p.6) will be my second as CEO and will take place at Credit Strategy’s Commercial Finance Conference, part of Lending Summit 2018. We hope to see as many of you there as possible as it represents the ideal forum to share your thoughts and shape the future of your Association.
Proudly different. Proudly different THIS ADVERTISEMENT IS FOR INTERMEDIARIES ONLY AND SHOULD NOT BE DISTRIBUTED TO POTENTIAL CLIENTS NACFB - GC_CP_CLB_NACFBA4Ad_20180822_1
The NACFB Gala Dinner and Awards Ceremony will also be returning to the Park Plaza Westminster for the fifth year on 29th November 2018. An extremely limited number of individual seats remain for the event which provides an opportunity to showcase and recognise excellence in the sector. If you’re attending either the AGM or our Gala Dinner and we haven’t already met, please be sure to introduce yourself; if we are already acquainted, please do update me with your thoughts on how you think we are doing. Until next month. Graham Toy
Graham Toy CEO NACFB
In this October issue NACFB News 4-6 8
In the news Notes from our sponsor
Compliance Update 10-12 Is company culture important?
Commercial Finance 14-15 Essential news bites
Cover Story 16-21 Specialist and challenger banks are expanding brokers’ horizons
Top Story 22
SMEs receive over £15m through bank referral scheme
Introducing 24
Barclays and Homes England launch £1bn housing development fund
Case Studies 26-28 A property investor’s best friend 30 Commercial property finance facilitates manufacturer’s growth 32-34 UTB integral to familyowned house builder’s success story
Patron Profile 36-37 Fleximize
Ask the Expert 38
Jenny Tooth
Special Features 40-41 Is buy-to-let levelling out across the UK? 42-43 Behind the success of Aldermore’s Broker Academy 44 Bridging lenders offering development finance good for the market right now 46-48 Late payment epidemic hits majority of small businesses
Industry Guides 50-51 10 steps to submitting better proposals
Opinion & Commentary 54
Cutting through the red tape 56-57 Examining the impact of a slowing sales cycle 58 Connecting to the digital customer
For further information Kieran Jones, communications manager t. 020 7101 0359 33 Eastcheap, London EC3M 1DT Email: Kieran.Jones@nacfb.org.uk
ADVERTISING & EDITING: Medianett t. 0203 818 0163 www.medianett.co.uk DESIGN & PRODUCTION: Carbide Finger Ltd t. 0845 812 8206
NACFB Magazine | 3
Welcome | NACFB Taking a flexible approach to your clients lending requirements is what we do best. Take our Short Term range for example, delivering rapid funding options to support tactical investment opportunities for Ltd companies, LLPs and individuals. ■ ■ ■
■
Exit development finance Auction purchases Commercial to residential under permitted development Access up to 100% of the project refurbishment costs
Contact our award winning team
0330 123 4521 salesdesk@shawbrook.co.uk shawbrook.co.uk
O
ctober is in full swing and the long, hot summer we all enjoyed now seems like a distant memory. Whilst it is still too early to look back on the year, I am pleased with the trajectory of the Association. We continue to grow and are now the largest we have ever been (more on p.4) Our size and independence enable us to focus entirely on the needs of the commercial finance professional, and when we represent our community in the corridors of power we can do so safe in the knowledge that we are representing the needs of the community at large. Last month brought encouraging news as the small business minister put forward new laws aimed at allowing small businesses to access invoice finance (more on p.6). We were pleased to see this as a step in the right direction in enabling SMEs’ greater access to growth finance and welcome further regulatory changes targeting UK businesses. This year’s AGM (more on p.6) will be my second as CEO and will take place at Credit Strategy’s Commercial Finance Conference, part of Lending Summit 2018. We hope to see as many of you there as possible as it represents the ideal forum to share your thoughts and shape the future of your Association.
Proudly different. Proudly different THIS ADVERTISEMENT IS FOR INTERMEDIARIES ONLY AND SHOULD NOT BE DISTRIBUTED TO POTENTIAL CLIENTS NACFB - GC_CP_CLB_NACFBA4Ad_20180822_1
The NACFB Gala Dinner and Awards Ceremony will also be returning to the Park Plaza Westminster for the fifth year on 29th November 2018. An extremely limited number of individual seats remain for the event which provides an opportunity to showcase and recognise excellence in the sector. If you’re attending either the AGM or our Gala Dinner and we haven’t already met, please be sure to introduce yourself; if we are already acquainted, please do update me with your thoughts on how you think we are doing. Until next month. Graham Toy
Graham Toy CEO NACFB
In this October issue NACFB News 4-6 8
In the news Notes from our sponsor
Compliance Update 10-12 Is company culture important?
Commercial Finance 14-15 Essential news bites
Cover Story 16-21 Specialist and challenger banks are expanding brokers’ horizons
Top Story 22
SMEs receive over £15m through bank referral scheme
Introducing 24
Barclays and Homes England launch £1bn housing development fund
Case Studies 26-28 A property investor’s best friend 30 Commercial property finance facilitates manufacturer’s growth 32-34 UTB integral to familyowned house builder’s success story
Patron Profile 36-37 Fleximize
Ask the Expert 38
Jenny Tooth
Special Features 40-41 Is buy-to-let levelling out across the UK? 42-43 Behind the success of Aldermore’s Broker Academy 44 Bridging lenders offering development finance good for the market right now 46-48 Late payment epidemic hits majority of small businesses
Industry Guides 50-51 10 steps to submitting better proposals
Opinion & Commentary 54
Cutting through the red tape 56-57 Examining the impact of a slowing sales cycle 58 Connecting to the digital customer
For further information Kieran Jones, communications manager t. 020 7101 0359 33 Eastcheap, London EC3M 1DT Email: Kieran.Jones@nacfb.org.uk
ADVERTISING & EDITING: Medianett t. 0203 818 0163 www.medianett.co.uk DESIGN & PRODUCTION: Carbide Finger Ltd t. 0845 812 8206
NACFB Magazine | 3
NACFB | in the news Association news and updates for October 2018
Your trade Association is bigger than ever
A full house. F
or the first time in our 26-year history, the NACFB now works with the direct support of over 874 commercial finance broking firms. This equates to approximately 1630 individual brokers proudly operating their brokerage under the NACFB kitemark – an alltime record for the Association. We have grown by an extra 50 membership firms in 2018 alone, ensuring that we remain by far the largest independent and non-profit trade body dedicated solely to the modern commercial finance professional. The Association now works with over 140 Patrons, a figure which has nearly doubled since our previous peak in 2007. We have also
onboarded several dynamic Patrons since the start of the year, despite turning down many more lenders because they could not meet or were not ready for our entry criteria. The NACFB is reaching these high figures not by relaxing membership standards, but by rigorously applying the best standards in the industry. We set the bar very high for transparency of funding lines and for processes and, for that reason, each week we turn down not only lenders but brokers, too. We are working to onboard brokerages that were initially turned away, for example, those which, for various reasons, failed to meet requirements such as holding professional indemnity insurance or the ability to provide suitable references.
The NACFB’s growth in 2018 demonstrates the willingness of commercial finance brokers and lenders to achieve the highest professional standards and to proudly display the NACFB logo that demonstrates these standards to SMEs.
From bridging to buy-to-let, play your best hand with our broad range of property finance.
Paul Goodman, Chairman of the NACFB, said: “2018’s growth is testimony to the great work that continues behind the scenes and is confirmation that the NACFB and our members continue to be the place to go for commercial finance. There are exciting times ahead as the Association continues to influence the direction of regulatory travel to the benefit of our Members, Patrons and ultimately UK SMEs”.
Call us on 020 7118 1133 or visit intermediaries.lendinvest.com. LendInvest Limited is registered at 8 Mortimer Street, London, W1T 3JJ (Company 08146929). ICO number ZA179467. Your client’s property may be repossessed if they do not keep up repayments on their mortgage. For intermediaries only.
4 | NACFB Magazine
NACFB | in the news Association news and updates for October 2018
Your trade Association is bigger than ever
A full house. F
or the first time in our 26-year history, the NACFB now works with the direct support of over 874 commercial finance broking firms. This equates to approximately 1630 individual brokers proudly operating their brokerage under the NACFB kitemark – an alltime record for the Association. We have grown by an extra 50 membership firms in 2018 alone, ensuring that we remain by far the largest independent and non-profit trade body dedicated solely to the modern commercial finance professional. The Association now works with over 140 Patrons, a figure which has nearly doubled since our previous peak in 2007. We have also
onboarded several dynamic Patrons since the start of the year, despite turning down many more lenders because they could not meet or were not ready for our entry criteria. The NACFB is reaching these high figures not by relaxing membership standards, but by rigorously applying the best standards in the industry. We set the bar very high for transparency of funding lines and for processes and, for that reason, each week we turn down not only lenders but brokers, too. We are working to onboard brokerages that were initially turned away, for example, those which, for various reasons, failed to meet requirements such as holding professional indemnity insurance or the ability to provide suitable references.
The NACFB’s growth in 2018 demonstrates the willingness of commercial finance brokers and lenders to achieve the highest professional standards and to proudly display the NACFB logo that demonstrates these standards to SMEs.
From bridging to buy-to-let, play your best hand with our broad range of property finance.
Paul Goodman, Chairman of the NACFB, said: “2018’s growth is testimony to the great work that continues behind the scenes and is confirmation that the NACFB and our members continue to be the place to go for commercial finance. There are exciting times ahead as the Association continues to influence the direction of regulatory travel to the benefit of our Members, Patrons and ultimately UK SMEs”.
Call us on 020 7118 1133 or visit intermediaries.lendinvest.com. LendInvest Limited is registered at 8 Mortimer Street, London, W1T 3JJ (Company 08146929). ICO number ZA179467. Your client’s property may be repossessed if they do not keep up repayments on their mortgage. For intermediaries only.
4 | NACFB Magazine
NACFB NEWS
Have your say on changes to the Association at the 2018 AGM The NACFB is partnering with Credit Strategy to support the Commercial Finance Conference which will also host our AGM on Thursday 8th November. You will soon receive your NACFB Annual Reports, Accounts & AGM Agenda which will outline a year of progress at the Association and provide you with an outline of the proposed resolutions. This year’s AGM forms part of the Commercial Finance
Conference, one of three conferences at the Lending Summit 2018 hosted at London’s Hilton Bankside. The Commercial Finance Conference’s agenda will feature guest speakers and panel sessions alongside the NACFB’s AGM. Find out more, and book your attendance at an exclusively discounted rate for both NACFB Members and Patrons, via NACFB.org.
#LendingSummit
Dates for your diary Compliance Workshop – Social Media in Business When: 10 October – 10:00 -15:00 Where: NACFB, 33 Eastcheap London, EC3M 1DT
Strategic insight for consumer and commercial finance professionals
Cashflow Finance Day When: 11 October – 9:30 -14:30 Where: Radisson Blu Birmingham City Centre, 12 Holloway Circus, Queensway, Birmingham B1 1BT Development Finance Day When: 23 October – 9:30 - 14:30 Where: Radisson Blu Hotel Leeds, No 1 The Light, The Headrow, Leeds, LS1 8TL Asset Finance Day When: 1 November – 9:30 - 14:30 Where: Radisson Blu Edwardian, Vanderbilt 68-86 Cromwell Road, London, SW7 5BT
Join us this November at the Commercial Finance Conference 2018
Compliance Workshop – Social Media in Business When: 7 November – 10:00-15:00 Where: Bristol, Venue TBC
The NACFB is partnering with Credit Strategy to support the Commercial Finance Conference which will also host our AGM on Thursday 8th November.
Lending Summit: Commercial Finance Conference & NACFB AGM When: 8 November - 8:50 - 17:10 Where: Hilton London Bankside, 2-8 Great Suffolk St, London SE1 0UG
NACFB welcomes plans for increased SME invoice finance access September brought welcome news as small business minister Kelly Tolhurst put forward new laws aimed at allowing small businesses to access invoice finance. The proposals, part of the government’s industrial strategy initiative, should make it easier for companies to raise money from unpaid invoices.
an invoice. This assignment is essential for invoice finance to operate. Restrictive contract terms are often used by larger businesses to maintain a hold over their suppliers, with small suppliers often unable to negotiate changes to the proposed contract because they lack requisite clout in the marketplace.
Currently, a small supplier’s contract with a larger company may prevent it from securing invoice finance from providers such as banks and other investors.
Under the new proposed laws, any such contractual restrictions entered into after 31 December 2018, with certain exceptions, would have no effect and could be disregarded by small businesses and finance providers, which will help stop larger businesses from abusing their market position.
The proposed laws come as several larger businesses stop their suppliers from assigning ‘receivables’ – the right to receive the proceeds from
The Commercial Finance Conference will form one of three strands at the Lending Summit 2018 hosted at London’s Hilton Bankside. The conference’s agenda will feature guest speakers, panel sessions and host the NACFB’s Annual General Meeting.
Compliance Workshop - Social Media in Business When: 13 November – 10:00-15:00 Where: Leeds, Venue TBC
Exclusively discounted rate for both NACFB Members and Patrons.
Compliance Workshop – Social Media in Business When: 20 November – 10:00 -15:00 Where: Birmingham, Venue TBC NACFB Gala Dinner & Awards When: 29 November – 18:30 - late Where: Park Plaza Westminster Bridge, 200 Westminster Bridge Rd, London, SE1 7UT Commercial Mortgages Financial Day When: 4 December – 9:30 -14:30 Where: Radisson Blu Edwardian Vanderbilt, 68-86 Cromwell Road, London, SW7 5BT
creditstrategy.co.uk/events Sponsors
Event supporter:
Helping Fund UK Business
6 | NACFB Magazine
Hosted by:
NACFB NEWS
Have your say on changes to the Association at the 2018 AGM The NACFB is partnering with Credit Strategy to support the Commercial Finance Conference which will also host our AGM on Thursday 8th November. You will soon receive your NACFB Annual Reports, Accounts & AGM Agenda which will outline a year of progress at the Association and provide you with an outline of the proposed resolutions. This year’s AGM forms part of the Commercial Finance
Conference, one of three conferences at the Lending Summit 2018 hosted at London’s Hilton Bankside. The Commercial Finance Conference’s agenda will feature guest speakers and panel sessions alongside the NACFB’s AGM. Find out more, and book your attendance at an exclusively discounted rate for both NACFB Members and Patrons, via NACFB.org.
#LendingSummit
Dates for your diary Compliance Workshop – Social Media in Business When: 10 October – 10:00 -15:00 Where: NACFB, 33 Eastcheap London, EC3M 1DT
Strategic insight for consumer and commercial finance professionals
Cashflow Finance Day When: 11 October – 9:30 -14:30 Where: Radisson Blu Birmingham City Centre, 12 Holloway Circus, Queensway, Birmingham B1 1BT Development Finance Day When: 23 October – 9:30 - 14:30 Where: Radisson Blu Hotel Leeds, No 1 The Light, The Headrow, Leeds, LS1 8TL Asset Finance Day When: 1 November – 9:30 - 14:30 Where: Radisson Blu Edwardian, Vanderbilt 68-86 Cromwell Road, London, SW7 5BT
Join us this November at the Commercial Finance Conference 2018
Compliance Workshop – Social Media in Business When: 7 November – 10:00-15:00 Where: Bristol, Venue TBC
The NACFB is partnering with Credit Strategy to support the Commercial Finance Conference which will also host our AGM on Thursday 8th November.
Lending Summit: Commercial Finance Conference & NACFB AGM When: 8 November - 8:50 - 17:10 Where: Hilton London Bankside, 2-8 Great Suffolk St, London SE1 0UG
NACFB welcomes plans for increased SME invoice finance access September brought welcome news as small business minister Kelly Tolhurst put forward new laws aimed at allowing small businesses to access invoice finance. The proposals, part of the government’s industrial strategy initiative, should make it easier for companies to raise money from unpaid invoices.
an invoice. This assignment is essential for invoice finance to operate. Restrictive contract terms are often used by larger businesses to maintain a hold over their suppliers, with small suppliers often unable to negotiate changes to the proposed contract because they lack requisite clout in the marketplace.
Currently, a small supplier’s contract with a larger company may prevent it from securing invoice finance from providers such as banks and other investors.
Under the new proposed laws, any such contractual restrictions entered into after 31 December 2018, with certain exceptions, would have no effect and could be disregarded by small businesses and finance providers, which will help stop larger businesses from abusing their market position.
The proposed laws come as several larger businesses stop their suppliers from assigning ‘receivables’ – the right to receive the proceeds from
The Commercial Finance Conference will form one of three strands at the Lending Summit 2018 hosted at London’s Hilton Bankside. The conference’s agenda will feature guest speakers, panel sessions and host the NACFB’s Annual General Meeting.
Compliance Workshop - Social Media in Business When: 13 November – 10:00-15:00 Where: Leeds, Venue TBC
Exclusively discounted rate for both NACFB Members and Patrons.
Compliance Workshop – Social Media in Business When: 20 November – 10:00 -15:00 Where: Birmingham, Venue TBC NACFB Gala Dinner & Awards When: 29 November – 18:30 - late Where: Park Plaza Westminster Bridge, 200 Westminster Bridge Rd, London, SE1 7UT Commercial Mortgages Financial Day When: 4 December – 9:30 -14:30 Where: Radisson Blu Edwardian Vanderbilt, 68-86 Cromwell Road, London, SW7 5BT
creditstrategy.co.uk/events Sponsors
Event supporter:
Helping Fund UK Business
6 | NACFB Magazine
Hosted by:
NACFB NEWS
Notes from our sponsor Andy Bishop UK Director of Business Development Lloyds Bank
Overall lending figures are testament to Lloyds Bank’s commitment to its flourishing broker channel. Andy Bishop, UK Director of Business Development, SME Banking at Lloyds Bank, looks at how the bank has been supporting brokers and what lies ahead.
channel and the commercial broker market, which itself has changed noticeably. There has been very rapid professionalisation and brokers are a credible, alternative source of obtaining finance for businesses. We’re now dealing with much more sophisticated and high value clients, and the information we get from brokers is far more robust and detailed. We’re showing our support for them in a number of ways.
T
Our proposition Lloyds Bank has been involved with brokers for many years, but over the last three we’ve increased the focus and created a bespoke package for them with our Business Development team working in tandem with our Asset Finance and Invoice Finance product partners. We now have a multi-channel offering where we can deal with the smallest to the largest brokerages. In invoice and asset finance, smaller, one-off transactions can be supported by our multiproduct Business Development teams whilst the larger, higher volume brokerages are dealt with directly by our specialist product teams. This approach gives us fantastic coverage of the broker market. In addition, for wider banking relationships, our Business Development teams can deal personally with introductions and have experience and knowledge across a range of industry sectors including healthcare, manufacturing and real estate.
So, how has this been achieved? The results are very much down to our commitment to both the broker
Our channels Around 80 Business Development Managers work in the broker channel across lending, asset finance, invoice finance and traditional banking. With this connection brokers can access a whole range of commercial finance and working capital solutions, from the traditional to the more complex. We are dedicated to supporting them whilst they find the correct solution for their clients.
he latest figures from the Lloyds Bank broker channel show £0.8 billion in new SME term lending through broker referrals. In the first half of the year, asset finance lending has grown 36% and new invoice finance clients have grown by 35%, both year on year. We were delighted to receive the Innovation in Market Development award for our Invoice Finance broker proposition in the Business Money Receivables 2017 awards.
8 | NACFB Magazine
Broker support To support brokers we’ve developed a range of bespoke literature dedicated to helping brokers identify opportunities and solutions for their clients. We’re committed to supporting brokers and want to ensure they can easily understand what we offer and how, in turn, this supports their clients. A simple process For brokers who want to get involved with Lloyds Bank, the process is very simple. They can reach out to us either via the website, the NACFB or directly to a Lloyds Bank Business Development Manager. We will check their regulatory position, and then bring them on board with the relevant terms and conditions. We don’t limit the number of brokers on our panel, and we have everything from one-manbands to the largest broking firms. Sustainable income Brokers were telling us that a lot of their income was transactional: they made a deal with the bank, and then got paid a fee, but they wanted to generate a sustained income. So, under invoice finance we bought in a scheme where brokers are paid monthly, so they get paid for as long as the client is with us, giving them a sustained income. Continued investment We’re looking to invest heavily into the broker channel from a digital perspective as well as in new products and new product development; this will support the strong relationships between our Business Development Managers and our Commercial Finance Brokers. We’re listening to the requirements of brokers and what they’re telling us about products and services and, just as we are committed to clients in banking through the cycle, we are committed to brokers in the same way.
Commercial mortgages without the hassle No nonsense, no red tape We’ve got commercial mortgages covered. We’re breaking through barriers to give your customers a decision in principle within 24 hours. Loans from as low as 5.9%.
Welcome to fast, flexible finance
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.
NACFB NEWS
Notes from our sponsor Andy Bishop UK Director of Business Development Lloyds Bank
Overall lending figures are testament to Lloyds Bank’s commitment to its flourishing broker channel. Andy Bishop, UK Director of Business Development, SME Banking at Lloyds Bank, looks at how the bank has been supporting brokers and what lies ahead.
channel and the commercial broker market, which itself has changed noticeably. There has been very rapid professionalisation and brokers are a credible, alternative source of obtaining finance for businesses. We’re now dealing with much more sophisticated and high value clients, and the information we get from brokers is far more robust and detailed. We’re showing our support for them in a number of ways.
T
Our proposition Lloyds Bank has been involved with brokers for many years, but over the last three we’ve increased the focus and created a bespoke package for them with our Business Development team working in tandem with our Asset Finance and Invoice Finance product partners. We now have a multi-channel offering where we can deal with the smallest to the largest brokerages. In invoice and asset finance, smaller, one-off transactions can be supported by our multiproduct Business Development teams whilst the larger, higher volume brokerages are dealt with directly by our specialist product teams. This approach gives us fantastic coverage of the broker market. In addition, for wider banking relationships, our Business Development teams can deal personally with introductions and have experience and knowledge across a range of industry sectors including healthcare, manufacturing and real estate.
So, how has this been achieved? The results are very much down to our commitment to both the broker
Our channels Around 80 Business Development Managers work in the broker channel across lending, asset finance, invoice finance and traditional banking. With this connection brokers can access a whole range of commercial finance and working capital solutions, from the traditional to the more complex. We are dedicated to supporting them whilst they find the correct solution for their clients.
he latest figures from the Lloyds Bank broker channel show £0.8 billion in new SME term lending through broker referrals. In the first half of the year, asset finance lending has grown 36% and new invoice finance clients have grown by 35%, both year on year. We were delighted to receive the Innovation in Market Development award for our Invoice Finance broker proposition in the Business Money Receivables 2017 awards.
8 | NACFB Magazine
Broker support To support brokers we’ve developed a range of bespoke literature dedicated to helping brokers identify opportunities and solutions for their clients. We’re committed to supporting brokers and want to ensure they can easily understand what we offer and how, in turn, this supports their clients. A simple process For brokers who want to get involved with Lloyds Bank, the process is very simple. They can reach out to us either via the website, the NACFB or directly to a Lloyds Bank Business Development Manager. We will check their regulatory position, and then bring them on board with the relevant terms and conditions. We don’t limit the number of brokers on our panel, and we have everything from one-manbands to the largest broking firms. Sustainable income Brokers were telling us that a lot of their income was transactional: they made a deal with the bank, and then got paid a fee, but they wanted to generate a sustained income. So, under invoice finance we bought in a scheme where brokers are paid monthly, so they get paid for as long as the client is with us, giving them a sustained income. Continued investment We’re looking to invest heavily into the broker channel from a digital perspective as well as in new products and new product development; this will support the strong relationships between our Business Development Managers and our Commercial Finance Brokers. We’re listening to the requirements of brokers and what they’re telling us about products and services and, just as we are committed to clients in banking through the cycle, we are committed to brokers in the same way.
Commercial mortgages without the hassle No nonsense, no red tape We’ve got commercial mortgages covered. We’re breaking through barriers to give your customers a decision in principle within 24 hours. Loans from as low as 5.9%.
Welcome to fast, flexible finance
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.
Compliance | update The latest from our in-house compliance team
Good business culture is the foundation of effective governance
Company culture: leading by example James Hinch (AICA) Adv. CERT (Comp) Compliance consultant NACFB Compliance
C
ompany culture has been a critical element within businesses for many years, especially within the financial sector. The UK regulator, the Financial Conduct Authority (FCA), has published several papers on culture within business. It is a priority piece of work in the FCA business plan which will continue to be a principle objective. A question we hear some brokers asking is: why does company culture matter so much? Culture within a business relates directly to the working practices within a firm and therefore drives how it behaves. Once this ‘behavior’ is understood and
10 | NACFB Magazine
defined, it allows a business to work to its known strengths and to manage any weaknesses.
From this you may be able to identify the individuals who do not align with your company culture and put at risk the positivity of others.
For a culture to thrive, all staff must align and follow the same cultural vision, therefore you will often hear the term “tone from the top”. Employees are much more likely to adapt to a cultural environment where they can visibly see the example set by senior management demonstrating the behaviours embedded into their corporate identity. The quicker staff adapt and adopt company culture, the more they will enjoy their time at work, which in turn should drive quality and productivity.
How important is company culture? Examples of bad culture can be easily sourced, you need only to look at some of the largest companies in the world. Social media giant Facebook – currently used by 2.19 billion subscribers around the world - is seen as the platform on which users can meet and connect, but it found itself embroiled in a cultural scandal when it became apparent that personal data was being harvested by a third-party company, Cambridge Analytica.
Just like at a comedy show, the more people laugh, the more likely those around them are to laugh harder; the right infectious behaviors can positively affect the overall culture of your business.
Facebook is now facing fines and tasked with changing its culture around the handling of users’ data. You may, if you are a user, have already noticed such changes. For example, there are
NACFB Magazine | 11
Compliance | update The latest from our in-house compliance team
Good business culture is the foundation of effective governance
Company culture: leading by example James Hinch (AICA) Adv. CERT (Comp) Compliance consultant NACFB Compliance
C
ompany culture has been a critical element within businesses for many years, especially within the financial sector. The UK regulator, the Financial Conduct Authority (FCA), has published several papers on culture within business. It is a priority piece of work in the FCA business plan which will continue to be a principle objective. A question we hear some brokers asking is: why does company culture matter so much? Culture within a business relates directly to the working practices within a firm and therefore drives how it behaves. Once this ‘behavior’ is understood and
10 | NACFB Magazine
defined, it allows a business to work to its known strengths and to manage any weaknesses.
From this you may be able to identify the individuals who do not align with your company culture and put at risk the positivity of others.
For a culture to thrive, all staff must align and follow the same cultural vision, therefore you will often hear the term “tone from the top”. Employees are much more likely to adapt to a cultural environment where they can visibly see the example set by senior management demonstrating the behaviours embedded into their corporate identity. The quicker staff adapt and adopt company culture, the more they will enjoy their time at work, which in turn should drive quality and productivity.
How important is company culture? Examples of bad culture can be easily sourced, you need only to look at some of the largest companies in the world. Social media giant Facebook – currently used by 2.19 billion subscribers around the world - is seen as the platform on which users can meet and connect, but it found itself embroiled in a cultural scandal when it became apparent that personal data was being harvested by a third-party company, Cambridge Analytica.
Just like at a comedy show, the more people laugh, the more likely those around them are to laugh harder; the right infectious behaviors can positively affect the overall culture of your business.
Facebook is now facing fines and tasked with changing its culture around the handling of users’ data. You may, if you are a user, have already noticed such changes. For example, there are
NACFB Magazine | 11
COMPLIANCE
it is the CEO who is the individual responsible for setting a company’s culture, but all business figureheads have a vital role to play
new adverts in newsfeeds outlining a shift in cultural approach. Forbes magazine published an article which highlighted that respondents to a survey on business practices agreed that corporate culture, however defined, can make a real difference to a company’s performance and value. More than 90% of respondents said that culture was important at their firms. 92% said they believed improving their firm’s corporate culture would improve the value of the company. More than 50% said corporate culture influences productivity, creativity, profitability, firm value and growth rates. Only 15% said their firm’s corporate culture was where it needed to be
If the culture of a firm is driven by the behaviours of its people in their delivery of the company’s working practices, there must be a clear link to the firm’s corporate governance programme and, therefore, through this interrelationship we can state that a good business culture is the foundation of effective governance. Challenges to this ‘culture model’ can often come about when businesses must consider how to embed change (such as regulatory) within a firm, in particular the way in which changes, and their effect on the businesses culture, can be monitored and, where appropriate, corrected. How does a company improve its culture? As outlined previously, “tone from the top” – leadership – is absolutely key in ensuring that the desired culture flows through a company. Usually it is the
NACFB Compliance support is available to all NACFB Members. Our team will provide you and your Brokerage with the guidance, training and support necessary to remain fully compliant with both regulatory requirements and the NACFB Minimum Standards.
CEO who is the individual responsible for setting a company’s culture, but all business figureheads have a vital role to play in establishing the values that best support the desired cultural outcome from the firm, and, they must ensure their own working practices and interactions with the company are consistent with prevailing values and corporate strategy. Leading by example will ensure the right behaviors can be seen by all with an interest in your business, from clients to staff and regulators alike. It is clear from the FCA’s position that this subject will not meander and filter away, evidenced by new regulation such as the Senior Managers and Certifcation Regime (SMCR) becoming a part in our sector’s overall culture.
25 Years Sector Experience
Members of the NACFB benefit from access to a wide range of bespoke template documents, help-desk support, regulatory updates, targeted workshops and access to our MyNACFB training portal.
Patron Engagement
Promoting a kitemark of quality and trust before the regulator, clients and lenders maintaining sector confidence
Facilitating harmonisation between key stakeholders when new regulation is introduced.
Calendar of Workshops Centralised Personal Support
Hosting bespoke workshops, training sessions and webinars on a diverse range of industry matters.
Delivering high-quality expert insight via email and telephone as well as consultations in person.
Model Office & Pragmatic Support Providing a full suite of the latest customisable working documents for your business.
w. t. e. a. 12 | NACFB Magazine
nacfbcompliance.co.uk 02071010359 compliance@nacfb.org.uk 33 Eastcheap, London, EC3M 1DT
Regulatory Dialogue & Future Insight Maintaining a dialogue with the regulator keeping ahead of the curve.
@NACFBCompliance linkedin.com/in/nacfb
COMPLIANCE
it is the CEO who is the individual responsible for setting a company’s culture, but all business figureheads have a vital role to play
new adverts in newsfeeds outlining a shift in cultural approach. Forbes magazine published an article which highlighted that respondents to a survey on business practices agreed that corporate culture, however defined, can make a real difference to a company’s performance and value. More than 90% of respondents said that culture was important at their firms. 92% said they believed improving their firm’s corporate culture would improve the value of the company. More than 50% said corporate culture influences productivity, creativity, profitability, firm value and growth rates. Only 15% said their firm’s corporate culture was where it needed to be
If the culture of a firm is driven by the behaviours of its people in their delivery of the company’s working practices, there must be a clear link to the firm’s corporate governance programme and, therefore, through this interrelationship we can state that a good business culture is the foundation of effective governance. Challenges to this ‘culture model’ can often come about when businesses must consider how to embed change (such as regulatory) within a firm, in particular the way in which changes, and their effect on the businesses culture, can be monitored and, where appropriate, corrected. How does a company improve its culture? As outlined previously, “tone from the top” – leadership – is absolutely key in ensuring that the desired culture flows through a company. Usually it is the
NACFB Compliance support is available to all NACFB Members. Our team will provide you and your Brokerage with the guidance, training and support necessary to remain fully compliant with both regulatory requirements and the NACFB Minimum Standards.
CEO who is the individual responsible for setting a company’s culture, but all business figureheads have a vital role to play in establishing the values that best support the desired cultural outcome from the firm, and, they must ensure their own working practices and interactions with the company are consistent with prevailing values and corporate strategy. Leading by example will ensure the right behaviors can be seen by all with an interest in your business, from clients to staff and regulators alike. It is clear from the FCA’s position that this subject will not meander and filter away, evidenced by new regulation such as the Senior Managers and Certifcation Regime (SMCR) becoming a part in our sector’s overall culture.
25 Years Sector Experience
Members of the NACFB benefit from access to a wide range of bespoke template documents, help-desk support, regulatory updates, targeted workshops and access to our MyNACFB training portal.
Patron Engagement
Promoting a kitemark of quality and trust before the regulator, clients and lenders maintaining sector confidence
Facilitating harmonisation between key stakeholders when new regulation is introduced.
Calendar of Workshops Centralised Personal Support
Hosting bespoke workshops, training sessions and webinars on a diverse range of industry matters.
Delivering high-quality expert insight via email and telephone as well as consultations in person.
Model Office & Pragmatic Support Providing a full suite of the latest customisable working documents for your business.
w. t. e. a. 12 | NACFB Magazine
nacfbcompliance.co.uk 02071010359 compliance@nacfb.org.uk 33 Eastcheap, London, EC3M 1DT
Regulatory Dialogue & Future Insight Maintaining a dialogue with the regulator keeping ahead of the curve.
@NACFBCompliance linkedin.com/in/nacfb
Commercial Finance
LendInvest secures £30.5m investment LendInvest has completed a Series C debt and equity funding round for around $39.5m (approximately £30.5m). The funding was positioned by the online property finance platform as pre-IPO funding and sees Atomico increase its investment in the company. LendInvest also secured new investors, including a fund associated with the technology investment bank GP Bullhound, and Tiger Management.
Knowledge Bank adds bridging and commercial categories Knowledge Bank has announced that brokers will now be able to search for bridging and commercial finance criteria on its system. The criteria sourcing provider has added over 9,000 individual bridging and commercial criteria to its system, taking total criteria to over 70,000. This includes previously unpublished criteria and policy information, across all lending types.
Mortgages for Business uses robotics to automate BTL applications
Fintech skills academy launches in Scotland
Together loan book reaches £3bn Together has announced that its loan book has reached a new high of £3bn for the year ended 30th June 2018, up 32% on the previous period. The specialist lender also saw annual loan originations increase by 40% to £1.7bn over the past 12 months. It has also said that lending in June reached £169.2m, its highest ever month of lending.
14 | NACFB Magazine
STB cuts rates across 70 products Secure Trust Bank Mortgages has cut prices across 70 of its products and introduced a new £0 product fee range. A two-year fixed rate on this product up to 75% LTV has been cut by 0.85% to 3.74%, while the same product now costs 3.64% up to 70% LTV and 3.54% up to 65% LTV.
ThinCats reveals £300m funding agreement
UK commercial property capital values rise 0.1% UK commercial property capital values increased by 0.1% across the UK in August, according to the latest research. The CBRE monthly index revealed that commercial property rental values were flat during the month. The industrial sector saw capital values rise 0.7% during the same period, outperforming the other main sectors.
Mortgages for Business has automated the buy-tolet mortgage application submission process with Kent Reliance and Paragon. The specialist BTL broker has adopted robotic technology, which has freed its mortgage advisers from a lengthy, manual task and has also improved turnaround times for customers. The robot generates an agreement in principle and, if good to go, proceeds with a full mortgage application. Connect to bolster commercial lending team Connect for Intermediaries has announced that Gareth Norman will be joining its commercial team. The commercial lending specialist will join Connect this month from Atom bank, where he was a BDM. Gareth’s role at Connect will be to provide extra help and support to its brokers who are faced with clients who need a commercial mortgage.
A consortium of international fintech companies together with Fife Council, Fife College and Fintech Scotland have launched a fintech skills academy. The collaboration – which included Renovite Technologies and Ingenico Group – officially launched the academy at the premises of Paywizard in Kirkcaldy. The academy aims to provide a steady flow of highly qualified applicants for the rising number of specialist roles in fintech in the region and to avoid a potential skills gap developing.
ThinCats has announced a new programme for up to £300m with global asset manager Insight Investment to fund UK SMEs with commercial loans. The SME lender revealed that on top of the £300m from existing investors, it now had a potential £600m to fund UK businesses across the full risk spectrum in all regions and sectors. Damon Walford, chief development officer at ThinCats, said that this new programme put it right in the mix with traditional lenders.
JLG Group joins AllParty Parliamentary Group on fair business banking
Keystone relaunches specialist BTL offering
Keystone Property Finance has relaunched its specialist buy-tolet mortgage lender offering. The intermediary-only lender has moved into its new offices in Kings Hill, West Malling, as part of the relaunch. In addition, Keystone has appointed Elise Coole as its new operations director who will be supported by an enlarged team of BDMs, underwriters and case managers.
JLG Group PLC – the parent company of Just Cash Flow PLC – has become an associate member of the All-Party Parliamentary Group (APPG) on fair business banking. John Davies, CEO at JLG Group said that it felt it was very important that this crossparty group – with members from both the House of Commons and House of Lords – understood the views of alternative lenders.
Masthaven introduces business savings account Masthaven has announced the launch of its business savings account. Business customers can save between £5,000 and £500,000 from six months to five years, while choosing exactly when their account matures through Masthaven’s option to ‘set your own term’, with rates for the one-year account offering 1.65%.
Karen Bennett to leave Shawbrook Shawbrook Bank has announced that Karen Bennett will be stepping down from her role as managing director of commercial mortgages. The bank said Karen was stepping down to pursue other opportunities. Karen has been at Shawbrook for over seven years and held a number of senior management positions.
STB Commercial Finance provides £13.5m to Go Plant Fleet Services Secure Trust Bank (STB) Commercial Finance has supported Go Plant Fleet Services with a £13.5m receivables and plant and machinery facility. The Leicestershire-based provider of specialist commercial vehicle hire and fleet management services will use the funding to expand its national footprint by investing in depots and acquiring outsourced fleet contracts in new regions.
NACFB Magazine | 15
Commercial Finance
LendInvest secures £30.5m investment LendInvest has completed a Series C debt and equity funding round for around $39.5m (approximately £30.5m). The funding was positioned by the online property finance platform as pre-IPO funding and sees Atomico increase its investment in the company. LendInvest also secured new investors, including a fund associated with the technology investment bank GP Bullhound, and Tiger Management.
Knowledge Bank adds bridging and commercial categories Knowledge Bank has announced that brokers will now be able to search for bridging and commercial finance criteria on its system. The criteria sourcing provider has added over 9,000 individual bridging and commercial criteria to its system, taking total criteria to over 70,000. This includes previously unpublished criteria and policy information, across all lending types.
Mortgages for Business uses robotics to automate BTL applications
Fintech skills academy launches in Scotland
Together loan book reaches £3bn Together has announced that its loan book has reached a new high of £3bn for the year ended 30th June 2018, up 32% on the previous period. The specialist lender also saw annual loan originations increase by 40% to £1.7bn over the past 12 months. It has also said that lending in June reached £169.2m, its highest ever month of lending.
14 | NACFB Magazine
STB cuts rates across 70 products Secure Trust Bank Mortgages has cut prices across 70 of its products and introduced a new £0 product fee range. A two-year fixed rate on this product up to 75% LTV has been cut by 0.85% to 3.74%, while the same product now costs 3.64% up to 70% LTV and 3.54% up to 65% LTV.
ThinCats reveals £300m funding agreement
UK commercial property capital values rise 0.1% UK commercial property capital values increased by 0.1% across the UK in August, according to the latest research. The CBRE monthly index revealed that commercial property rental values were flat during the month. The industrial sector saw capital values rise 0.7% during the same period, outperforming the other main sectors.
Mortgages for Business has automated the buy-tolet mortgage application submission process with Kent Reliance and Paragon. The specialist BTL broker has adopted robotic technology, which has freed its mortgage advisers from a lengthy, manual task and has also improved turnaround times for customers. The robot generates an agreement in principle and, if good to go, proceeds with a full mortgage application. Connect to bolster commercial lending team Connect for Intermediaries has announced that Gareth Norman will be joining its commercial team. The commercial lending specialist will join Connect this month from Atom bank, where he was a BDM. Gareth’s role at Connect will be to provide extra help and support to its brokers who are faced with clients who need a commercial mortgage.
A consortium of international fintech companies together with Fife Council, Fife College and Fintech Scotland have launched a fintech skills academy. The collaboration – which included Renovite Technologies and Ingenico Group – officially launched the academy at the premises of Paywizard in Kirkcaldy. The academy aims to provide a steady flow of highly qualified applicants for the rising number of specialist roles in fintech in the region and to avoid a potential skills gap developing.
ThinCats has announced a new programme for up to £300m with global asset manager Insight Investment to fund UK SMEs with commercial loans. The SME lender revealed that on top of the £300m from existing investors, it now had a potential £600m to fund UK businesses across the full risk spectrum in all regions and sectors. Damon Walford, chief development officer at ThinCats, said that this new programme put it right in the mix with traditional lenders.
JLG Group joins AllParty Parliamentary Group on fair business banking
Keystone relaunches specialist BTL offering
Keystone Property Finance has relaunched its specialist buy-tolet mortgage lender offering. The intermediary-only lender has moved into its new offices in Kings Hill, West Malling, as part of the relaunch. In addition, Keystone has appointed Elise Coole as its new operations director who will be supported by an enlarged team of BDMs, underwriters and case managers.
JLG Group PLC – the parent company of Just Cash Flow PLC – has become an associate member of the All-Party Parliamentary Group (APPG) on fair business banking. John Davies, CEO at JLG Group said that it felt it was very important that this crossparty group – with members from both the House of Commons and House of Lords – understood the views of alternative lenders.
Masthaven introduces business savings account Masthaven has announced the launch of its business savings account. Business customers can save between £5,000 and £500,000 from six months to five years, while choosing exactly when their account matures through Masthaven’s option to ‘set your own term’, with rates for the one-year account offering 1.65%.
Karen Bennett to leave Shawbrook Shawbrook Bank has announced that Karen Bennett will be stepping down from her role as managing director of commercial mortgages. The bank said Karen was stepping down to pursue other opportunities. Karen has been at Shawbrook for over seven years and held a number of senior management positions.
STB Commercial Finance provides £13.5m to Go Plant Fleet Services Secure Trust Bank (STB) Commercial Finance has supported Go Plant Fleet Services with a £13.5m receivables and plant and machinery facility. The Leicestershire-based provider of specialist commercial vehicle hire and fleet management services will use the funding to expand its national footprint by investing in depots and acquiring outsourced fleet contracts in new regions.
NACFB Magazine | 15
Cover Story | feature
Expanding your horizons Brokers have plenty of choice in 2018. As of 31st August, 155 banks are incorporated in the UK, according to the Bank of England’s list of banks. It also shows that 160 more banks are incorporated outside the EEA but are authorised to accept deposits through a branch in the UK.
16 | NACFB Magazine
NACFB Magazine | 17
Cover Story | feature
Expanding your horizons Brokers have plenty of choice in 2018. As of 31st August, 155 banks are incorporated in the UK, according to the Bank of England’s list of banks. It also shows that 160 more banks are incorporated outside the EEA but are authorised to accept deposits through a branch in the UK.
16 | NACFB Magazine
NACFB Magazine | 17
COVER STORY
COVER STORY
Theo Osborn Reporter Specialist Banking
S
o, in what ways have these new banks made an impact on commercial finance brokers? Well, not only have they had an effect in offering different products and services, but they’re forming key relationships with the intermediary industry. Specialist bank offerings Hampshire Trust Bank has introduced several services for introducers, including a new tool on its web portal – which it launched in June – enabling broker partners to automatically generate documentation. Jon Maycock, managing director of asset finance at Hampshire Trust Bank (HTB), said: “Specialist banks are investing heavily in the industry and its various distribution channels. We provide training to the broker community and advise on the regulatory landscape. “Here at HTB, we run a series of broker roundtables on a variety of topics, ranging from GDPR to the future of the FCA and have a number of experts available to speak to our broker community.” Simon Welling, director of sales and marketing at Wesleyan Bank, believed that specialist banks could provide fast, digital-based processes to introducers as well as possessing deep, domain knowledge of specific sectors from experience. “This enables [specialist banks] to provide bespoke solutions, competitive, productmatched pricing and a single point of contact for a deal from start to finish. “Specialist funders can often bring in new digital-based processes quicker than high street banks, such as giving brokers access to online portals for proposal submission, which link directly into underwriting.”
18 | NACFB Magazine
NACFB Magazine | 19
COVER STORY
COVER STORY
Theo Osborn Reporter Specialist Banking
S
o, in what ways have these new banks made an impact on commercial finance brokers? Well, not only have they had an effect in offering different products and services, but they’re forming key relationships with the intermediary industry. Specialist bank offerings Hampshire Trust Bank has introduced several services for introducers, including a new tool on its web portal – which it launched in June – enabling broker partners to automatically generate documentation. Jon Maycock, managing director of asset finance at Hampshire Trust Bank (HTB), said: “Specialist banks are investing heavily in the industry and its various distribution channels. We provide training to the broker community and advise on the regulatory landscape. “Here at HTB, we run a series of broker roundtables on a variety of topics, ranging from GDPR to the future of the FCA and have a number of experts available to speak to our broker community.” Simon Welling, director of sales and marketing at Wesleyan Bank, believed that specialist banks could provide fast, digital-based processes to introducers as well as possessing deep, domain knowledge of specific sectors from experience. “This enables [specialist banks] to provide bespoke solutions, competitive, productmatched pricing and a single point of contact for a deal from start to finish. “Specialist funders can often bring in new digital-based processes quicker than high street banks, such as giving brokers access to online portals for proposal submission, which link directly into underwriting.”
18 | NACFB Magazine
NACFB Magazine | 19
COVER STORY
COVER STORY
Specialist bank Aldermore announced this year that its 500th broker had graduated through its training academy.
In August, the Competition and Markets Authority released survey results ranking banks on their quality of service.
ago, with many challenger banks now seen as established lenders in their chosen areas of lending.
Launched in 2014, the academy provides free workshops to educate intermediaries about new products in the market, changing regulation and varying customer needs.
In the league tables for business banking, 14 banks with over 20,000 or more business account customers in the UK were ranked.
“The high streets offer wider full-service banking propositions, which quite often a business isn’t seeking, simply just a funding facility to cover capex.”
It awards an NACFB certificate for participation, which counts towards their CPD. Carl D’Ammassa, group managing director of business finance at Aldermore, stated: “Brokers play a crucial role in ensuring that companies have access to the products that truly meet their individual needs. “Aldermore will always value the role that brokers play in the industry and will continue to do what we can to support that partnership to deliver the best possible service to UK SMEs.” Service quality More competition in the banking market has impacted the industry by furthering choice for brokers and can therefore lead to better outcomes for customers.
The high street banks offer wider full-service banking propositions, which quite often a business isn’t seeking, simply just a funding facility to cover capex
For overall service quality, challenger banks Metro and Handelsbanken ranked first and second respectively. Jon believed that specialist banks could offer better service to brokers due to their smaller size. “At HTB, we are dedicated to delivering for our broker network. Our heavy investment in our broker portal has enabled us to deliver fast decisions, real-time information and a speedy service, which means we have the ability to deliver credit decisions in minutes and guaranteed SLAs for payments.” However, Simon argued that level of service depends on what the customer was looking for. “The market has changed dramatically since the wider banking crisis a decade
A broker’s best friend on buy-to-let With deals that won’t drive you barking
Whether these league tables translate to broker service is unknown, but service across the board is improved through competition. Working together Successful relationships are never a one-way street, and brokers can offer equal benefits to specialist banks. Masthaven are among those that have been added to intermediary panels. Earlier this year, the bank announced a partnership with Brilliant Solutions, giving brokers access to a range of products. Matt Andrews, head of mortgages at Masthaven, said: “Our mission is to make the specialist market more accessible for
brokers and customers alike, and expanding distribution is a key part of that effort.” Simon believed it was important to build trust between specialist lenders and brokers. “[This], of course, takes time and is driven from a positive experience of the deal process from initial proposal submission through to delivery.
A study by Legal & General found that 46% of borrowers see value in brokers’ ability to give them access to a wider range of products and deals. Specialist banks are another avenue in which intermediaries can provide borrowers with this wider range of services. They have offered more options for brokers, something that can only benefit the customer.
“As the high street lenders’ products are more vanilla by nature, smaller specialist banks must maintain the ability to be flexible, provide quality service and build mutual respect over time with their partner introducers.” Jon commented that specialist banks and brokers worked in partnership to identify new ideas and different ways of doing business. However, he believed developments in technology should be taken advantage of by specialist banks to leverage data to provide better customer outcomes and enhance their service to SMEs.
At Octopus Property, we’re specialists in buy-to-let. Which means we specialise in meeting broker and client needs. Particularly with unconventional cases. From foreign nationals, first time buyers, semi-commercial properties, expats to portfolio landlords, we are here to help.
Give a case a home at octopusproperty.com
For Professional Intermediaries Only. Octopus Property is the trading name of Bridgeco Ltd (Reg No 6629989), Fern Trading Ltd (Reg Registered Office: 33 Holborn, London EC1N 2HT, registered in England and Wales and Dragonfly Finance S.ar.l. (Reg No B189290)Registered Lending Ltd and Octopus Co-Lend Ltd are authorised and regulated by the Financial Conduct Authority.
No 6447318), Nino Ltd (Reg No 9015082), Octopus Property Lending Ltd (Reg No 7531926) and Octopus Co-Lend Ltd (Reg No 8913299), Office: Parc d’Activité Syrdall, 6 Rue Gabriel Lippmann, L-5365, Munsbach, Luxembourg registered in Luxembourg. Octopus Property
COVER STORY
COVER STORY
Specialist bank Aldermore announced this year that its 500th broker had graduated through its training academy.
In August, the Competition and Markets Authority released survey results ranking banks on their quality of service.
ago, with many challenger banks now seen as established lenders in their chosen areas of lending.
Launched in 2014, the academy provides free workshops to educate intermediaries about new products in the market, changing regulation and varying customer needs.
In the league tables for business banking, 14 banks with over 20,000 or more business account customers in the UK were ranked.
“The high streets offer wider full-service banking propositions, which quite often a business isn’t seeking, simply just a funding facility to cover capex.”
It awards an NACFB certificate for participation, which counts towards their CPD. Carl D’Ammassa, group managing director of business finance at Aldermore, stated: “Brokers play a crucial role in ensuring that companies have access to the products that truly meet their individual needs. “Aldermore will always value the role that brokers play in the industry and will continue to do what we can to support that partnership to deliver the best possible service to UK SMEs.” Service quality More competition in the banking market has impacted the industry by furthering choice for brokers and can therefore lead to better outcomes for customers.
The high street banks offer wider full-service banking propositions, which quite often a business isn’t seeking, simply just a funding facility to cover capex
For overall service quality, challenger banks Metro and Handelsbanken ranked first and second respectively. Jon believed that specialist banks could offer better service to brokers due to their smaller size. “At HTB, we are dedicated to delivering for our broker network. Our heavy investment in our broker portal has enabled us to deliver fast decisions, real-time information and a speedy service, which means we have the ability to deliver credit decisions in minutes and guaranteed SLAs for payments.” However, Simon argued that level of service depends on what the customer was looking for. “The market has changed dramatically since the wider banking crisis a decade
A broker’s best friend on buy-to-let With deals that won’t drive you barking
Whether these league tables translate to broker service is unknown, but service across the board is improved through competition. Working together Successful relationships are never a one-way street, and brokers can offer equal benefits to specialist banks. Masthaven are among those that have been added to intermediary panels. Earlier this year, the bank announced a partnership with Brilliant Solutions, giving brokers access to a range of products. Matt Andrews, head of mortgages at Masthaven, said: “Our mission is to make the specialist market more accessible for
brokers and customers alike, and expanding distribution is a key part of that effort.” Simon believed it was important to build trust between specialist lenders and brokers. “[This], of course, takes time and is driven from a positive experience of the deal process from initial proposal submission through to delivery.
A study by Legal & General found that 46% of borrowers see value in brokers’ ability to give them access to a wider range of products and deals. Specialist banks are another avenue in which intermediaries can provide borrowers with this wider range of services. They have offered more options for brokers, something that can only benefit the customer.
“As the high street lenders’ products are more vanilla by nature, smaller specialist banks must maintain the ability to be flexible, provide quality service and build mutual respect over time with their partner introducers.” Jon commented that specialist banks and brokers worked in partnership to identify new ideas and different ways of doing business. However, he believed developments in technology should be taken advantage of by specialist banks to leverage data to provide better customer outcomes and enhance their service to SMEs.
At Octopus Property, we’re specialists in buy-to-let. Which means we specialise in meeting broker and client needs. Particularly with unconventional cases. From foreign nationals, first time buyers, semi-commercial properties, expats to portfolio landlords, we are here to help.
Give a case a home at octopusproperty.com
For Professional Intermediaries Only. Octopus Property is the trading name of Bridgeco Ltd (Reg No 6629989), Fern Trading Ltd (Reg Registered Office: 33 Holborn, London EC1N 2HT, registered in England and Wales and Dragonfly Finance S.ar.l. (Reg No B189290)Registered Lending Ltd and Octopus Co-Lend Ltd are authorised and regulated by the Financial Conduct Authority.
No 6447318), Nino Ltd (Reg No 9015082), Octopus Property Lending Ltd (Reg No 7531926) and Octopus Co-Lend Ltd (Reg No 8913299), Office: Parc d’Activité Syrdall, 6 Rue Gabriel Lippmann, L-5365, Munsbach, Luxembourg registered in Luxembourg. Octopus Property
Top | story Our pick of the latest Patron news
SMEs receive over £15m through bank referral scheme Tom Belger Senior reporter Bridging and Commercial
S
ince its launch in November 2016, the government’s bank referral scheme has helped to secure over £15m of funding for SMEs turned down for loans by high street banks. Over the past 12 months, 670 businesses have raised over £12m of funding through the scheme, four times the amount sourced in the previous year. The bank referral scheme requires the UK’s biggest banks to pass on the details of small businesses they have turned down for loans to online credit brokers, who then help those businesses to secure funding from alternative sources.
“Small businesses are the backbone of Britain, yet many give up on their plans to expand if they can’t get a loan from their bank,” said John Glen, economic secretary to the Treasury. “Now, however, thanks to our matchmaking scheme, they have another shot.” Under the scheme, rejected businesses are automatically offered the opportunity to be referred to three online credit brokers: Alternative Business Funding, Funding Options and Funding Xchange. Each platform provides access to a range of lenders and products, including business loans, revolving credit, asset and invoice finance.
Alice Hu-Wagner, managing director for strategy, economics and business development at the British Business Bank, said that one of its key objectives was to encourage SMEs to seek the finance which best suited their needs. “Just over half of smaller businesses consider only one provider when they need funding, however, with over a quarter putting their plans on hold or giving up altogether if they aren’t offered the full amount they were seeking. “That’s why we’re pleased to provide ongoing support for the government’s bank referral scheme, which is enabling an increasing number of smaller businesses to explore additional options if they are unsuccessful in their original application.”
Loans from the scheme have ranged from £100 to £1.3m, with the average loan size being £17,285.
Our support for your broker business goes beyond finance. We can connect you with the right people, with the right knowledge, to boost your clients’ businesses and help them grow. Thanks to our matchmaking scheme, small businesses have another shot
22 | NACFB Magazine
A bank of knowledge not simply a bank of money
Search: NatWest Brokers
Top | story Our pick of the latest Patron news
SMEs receive over £15m through bank referral scheme Tom Belger Senior reporter Bridging and Commercial
S
ince its launch in November 2016, the government’s bank referral scheme has helped to secure over £15m of funding for SMEs turned down for loans by high street banks. Over the past 12 months, 670 businesses have raised over £12m of funding through the scheme, four times the amount sourced in the previous year. The bank referral scheme requires the UK’s biggest banks to pass on the details of small businesses they have turned down for loans to online credit brokers, who then help those businesses to secure funding from alternative sources.
“Small businesses are the backbone of Britain, yet many give up on their plans to expand if they can’t get a loan from their bank,” said John Glen, economic secretary to the Treasury. “Now, however, thanks to our matchmaking scheme, they have another shot.” Under the scheme, rejected businesses are automatically offered the opportunity to be referred to three online credit brokers: Alternative Business Funding, Funding Options and Funding Xchange. Each platform provides access to a range of lenders and products, including business loans, revolving credit, asset and invoice finance.
Alice Hu-Wagner, managing director for strategy, economics and business development at the British Business Bank, said that one of its key objectives was to encourage SMEs to seek the finance which best suited their needs. “Just over half of smaller businesses consider only one provider when they need funding, however, with over a quarter putting their plans on hold or giving up altogether if they aren’t offered the full amount they were seeking. “That’s why we’re pleased to provide ongoing support for the government’s bank referral scheme, which is enabling an increasing number of smaller businesses to explore additional options if they are unsuccessful in their original application.”
Loans from the scheme have ranged from £100 to £1.3m, with the average loan size being £17,285.
Our support for your broker business goes beyond finance. We can connect you with the right people, with the right knowledge, to boost your clients’ businesses and help them grow. Thanks to our matchmaking scheme, small businesses have another shot
22 | NACFB Magazine
A bank of knowledge not simply a bank of money
Search: NatWest Brokers
Introducing New and refreshed offerings for NACFB brokers on behalf of Patrons and Members
When Rob decided to ride solo and buy his own bike shop, we were right behind him with a bridging loan.
Barclays and Homes England launch £1bn housing development fund
B
arclays has announced that it will team up with Homes England to provide £1bn of development finance to help build thousands of new homes across England. The loans – which will range from £5m-£100m – will be competitively priced and available to developers and housebuilders who are able to demonstrate the necessary experience and track record to undertake and complete their proposed project. A key priority of the housing delivery fund is to support SMEs to develop homes for rent or sale including social housing, retirement living and the private rented sector, while also supporting innovation in the model of delivery such as brownfield land and urban regeneration projects. Commenting on the launch of the fund, John McFarlane, chairman at Barclays, said that there was a vital need to build more good quality homes across the country.
James Brokenshire, housing secretary, added: “My priority as housing secretary is to get Britain building the homes our country needs.
more active role in the housing market and do things differently to increase the pace, scale and quality of delivering new homes.
“This new fund – partnering Homes England with Barclays – is a further important step by giving smaller builders access to the finance they need to get housing developments off the ground.
“The housing delivery fund demonstrates Barclays’ commitment to the residential sector and will provide a new funding stream for SME developers to help progress sites and deliver more affordable homes across England.”
“This £1bn fund is about helping to do exactly that by showing firms in the business of housebuilding that the right finance is available for projects that help meet this urgent need.
“This is a fantastic opportunity to not only get more homes built, but also promote new and innovative approaches to construction and design that exist across the housing market.”
“We are very pleased to be working with government to get the country building more homes, more quickly.”
Sir Ed Lister, chairman of Homes England, added: “Homes England has been established to play a
Of the £1bn fund, Barclays is providing £875m, while Homes England will contribute £125m. Martin Greenland Reporter Development Finance Today
At Together our experience spans over decades and tens of thousands of bridging loans. So being self-employed and buying a property for commercial use, is perfectly normal to us. To find out more about bridging loans and our flexible approach to lending call or have a look online.
Call us on 0333 455 1178 or visit togethermoney.com/bridging For professional intermediary use only. ‘Rob’ has been used for illustrative purposes only.
24 | NACFB Magazine
Introducing New and refreshed offerings for NACFB brokers on behalf of Patrons and Members
When Rob decided to ride solo and buy his own bike shop, we were right behind him with a bridging loan.
Barclays and Homes England launch £1bn housing development fund
B
arclays has announced that it will team up with Homes England to provide £1bn of development finance to help build thousands of new homes across England. The loans – which will range from £5m-£100m – will be competitively priced and available to developers and housebuilders who are able to demonstrate the necessary experience and track record to undertake and complete their proposed project. A key priority of the housing delivery fund is to support SMEs to develop homes for rent or sale including social housing, retirement living and the private rented sector, while also supporting innovation in the model of delivery such as brownfield land and urban regeneration projects. Commenting on the launch of the fund, John McFarlane, chairman at Barclays, said that there was a vital need to build more good quality homes across the country.
James Brokenshire, housing secretary, added: “My priority as housing secretary is to get Britain building the homes our country needs.
more active role in the housing market and do things differently to increase the pace, scale and quality of delivering new homes.
“This new fund – partnering Homes England with Barclays – is a further important step by giving smaller builders access to the finance they need to get housing developments off the ground.
“The housing delivery fund demonstrates Barclays’ commitment to the residential sector and will provide a new funding stream for SME developers to help progress sites and deliver more affordable homes across England.”
“This £1bn fund is about helping to do exactly that by showing firms in the business of housebuilding that the right finance is available for projects that help meet this urgent need.
“This is a fantastic opportunity to not only get more homes built, but also promote new and innovative approaches to construction and design that exist across the housing market.”
“We are very pleased to be working with government to get the country building more homes, more quickly.”
Sir Ed Lister, chairman of Homes England, added: “Homes England has been established to play a
Of the £1bn fund, Barclays is providing £875m, while Homes England will contribute £125m. Martin Greenland Reporter Development Finance Today
At Together our experience spans over decades and tens of thousands of bridging loans. So being self-employed and buying a property for commercial use, is perfectly normal to us. To find out more about bridging loans and our flexible approach to lending call or have a look online.
Call us on 0333 455 1178 or visit togethermoney.com/bridging For professional intermediary use only. ‘Rob’ has been used for illustrative purposes only.
24 | NACFB Magazine
Case Studies Completion highlights from a selection of our Patrons and Members
A property investor’s best friend When it comes to completing a property purchase, access to capital is vital. However, the stringent measures imposed by mainstream lenders has made it increasingly difficult for prospective homebuyers to complete on a sale.
Paresh Raja CEO MFS
E
arlier this year, Market Financial Solutions (MFS) commissioned an independent survey among more than 2,000 UK adults to explore the extent of the issue. We found that nearly a third of those who have had an offer accepted on a property in the last decade (31%) had experienced the deal falling through
26 | NACFB Magazine
before completion. Delving into the specific reasons why, 33% said this was due to the prolonged delays encountered in acquiring a mortgage from a bank. A further 16% stated their purchase had fallen through as the result of a traditional lender deciding not to deliver a mortgage that was agreed to in principle. Having witnessed first-hand the difficulties faced by our clients using traditional routes of finance to expand their property portfolio, this research underlined just how widespread
and common these experiences were across the UK. Thankfully, the rise of bridging finance as an alternative form of capital has made new opportunities accessible to investors. Fast and flexible by their very nature, bridging loans ensure investors can act confidently and quickly without the risk of a property purchase falling through at the final stages of completion, while they wait for their mortgage to arrive.
Case Study 1 Auction properties MFS is renowned for its ability to resolve complex cases. We deliver tailored bridging loans with integrity and speed, so that our clients can overcome the delays encountered from traditional lenders. This is particularly important when it comes to buying a property through auction. We were recently approached by an auction buyer who had only 14 days to complete on a property transaction. Having already committed a 10% deposit, the buyer faced the real risk of losing out on the investment property due to the traditional lender they were dealing with deciding not to issue a loan. Within hours of receiving the inquiry, MFS reviewed the case and we instructed our solicitors to expedite the completion process. With the market value of the property offered as a security standing at £650,000, MFS issued a £400,000 loan. This gave the buyer enough funds to complete on the house purchase – and then to refurbish the house – without losing their deposit.
NACFB Magazine | 27
Case Studies Completion highlights from a selection of our Patrons and Members
A property investor’s best friend When it comes to completing a property purchase, access to capital is vital. However, the stringent measures imposed by mainstream lenders has made it increasingly difficult for prospective homebuyers to complete on a sale.
Paresh Raja CEO MFS
E
arlier this year, Market Financial Solutions (MFS) commissioned an independent survey among more than 2,000 UK adults to explore the extent of the issue. We found that nearly a third of those who have had an offer accepted on a property in the last decade (31%) had experienced the deal falling through
26 | NACFB Magazine
before completion. Delving into the specific reasons why, 33% said this was due to the prolonged delays encountered in acquiring a mortgage from a bank. A further 16% stated their purchase had fallen through as the result of a traditional lender deciding not to deliver a mortgage that was agreed to in principle. Having witnessed first-hand the difficulties faced by our clients using traditional routes of finance to expand their property portfolio, this research underlined just how widespread
and common these experiences were across the UK. Thankfully, the rise of bridging finance as an alternative form of capital has made new opportunities accessible to investors. Fast and flexible by their very nature, bridging loans ensure investors can act confidently and quickly without the risk of a property purchase falling through at the final stages of completion, while they wait for their mortgage to arrive.
Case Study 1 Auction properties MFS is renowned for its ability to resolve complex cases. We deliver tailored bridging loans with integrity and speed, so that our clients can overcome the delays encountered from traditional lenders. This is particularly important when it comes to buying a property through auction. We were recently approached by an auction buyer who had only 14 days to complete on a property transaction. Having already committed a 10% deposit, the buyer faced the real risk of losing out on the investment property due to the traditional lender they were dealing with deciding not to issue a loan. Within hours of receiving the inquiry, MFS reviewed the case and we instructed our solicitors to expedite the completion process. With the market value of the property offered as a security standing at £650,000, MFS issued a £400,000 loan. This gave the buyer enough funds to complete on the house purchase – and then to refurbish the house – without losing their deposit.
NACFB Magazine | 27
CASE STUDIES
Case Study 2 Avoiding delays Similarly, bridging loans can be issued to support multiple property transactions, which can be extremely difficult to manage when dealing with traditional lenders. MFS was approached by a client who had exchanged on three property purchases in South East England, but was at risk of losing out on these lucrative investment opportunities due to delays in acquiring finance from a traditional lender. The client needed fast finance to complete on all three acquisitions; failing this, they risked losing their deposit. MFS acted swiftly to ensure the client was able to complete on the property purchases and prevent the loss of their deposit. We contacted our panel of surveyors and arranged for a valuation of all three properties a day after the inquiry was made. We assessed the market value of the asset being offered as security to be £1m, and agreed to provide a loan of £580,000. By working quickly with our solicitors and surveyor, MFS was able to issue the loan needed for the client to complete on all three transactions and expand their existing real estate portfolio. To take advantage of the UK’s highly sought-after property investment opportunities, bridging providers offer buyers a fast and flexible new way to complete on both residential and commercial acquisitions. Bridging finance safeguards homebuyers so that they are not at risk of losing a deposit at the final stages of completion due to the delays encountered from traditional lenders that are beyond their control, and instead presenting an alternative form of finance that can be delivered in a matter of days.
Opening the door to our next opportunit OFFERING FREE VALUATIONS ON
MFS
E perts in fast
®
RESIDENTIAL BRIDGING LOANS
e i le and espo e ridging loans
M S is a specialist in short term ridging nance. e pride oursel es on transparenc and speed deli ering fast loans catered to the re uirements of the indi idual case. Loan amounts: to million Rates: from . L : up to 8 enerous pac ages for intermediaries
+44(0)20 7060 1234 info mfsu .com www.mfsu .com 28 | NACFB Magazine
CASE STUDIES
Case Study 2 Avoiding delays Similarly, bridging loans can be issued to support multiple property transactions, which can be extremely difficult to manage when dealing with traditional lenders. MFS was approached by a client who had exchanged on three property purchases in South East England, but was at risk of losing out on these lucrative investment opportunities due to delays in acquiring finance from a traditional lender. The client needed fast finance to complete on all three acquisitions; failing this, they risked losing their deposit. MFS acted swiftly to ensure the client was able to complete on the property purchases and prevent the loss of their deposit. We contacted our panel of surveyors and arranged for a valuation of all three properties a day after the inquiry was made. We assessed the market value of the asset being offered as security to be £1m, and agreed to provide a loan of £580,000. By working quickly with our solicitors and surveyor, MFS was able to issue the loan needed for the client to complete on all three transactions and expand their existing real estate portfolio. To take advantage of the UK’s highly sought-after property investment opportunities, bridging providers offer buyers a fast and flexible new way to complete on both residential and commercial acquisitions. Bridging finance safeguards homebuyers so that they are not at risk of losing a deposit at the final stages of completion due to the delays encountered from traditional lenders that are beyond their control, and instead presenting an alternative form of finance that can be delivered in a matter of days.
Opening the door to our next opportunit OFFERING FREE VALUATIONS ON
MFS
E perts in fast
®
RESIDENTIAL BRIDGING LOANS
e i le and espo e ridging loans
M S is a specialist in short term ridging nance. e pride oursel es on transparenc and speed deli ering fast loans catered to the re uirements of the indi idual case. Loan amounts: to million Rates: from . L : up to 8 enerous pac ages for intermediaries
+44(0)20 7060 1234 info mfsu .com www.mfsu .com 28 | NACFB Magazine
CASE STUDIES
Commercial property finance facilitates manufacturer’s growth
Tom Every Business manager Barclays
G
lasgow furniture maker Aquapac is seeing huge benefits after moving to a new building, with Barclays financing helping to drive further growth. Furniture manufacturer Aquapac Ltd has seen a surge in growth since relocating in 2017, with further expansion on the cards as it looks to maximise the potential its new premises is providing. Much of the fuel for Aquapac’s strong trading is coming from £890,000 worth of successful financing, which has provided working capital to invest in the business. “We purchased a dilapidated property and renovated it, then approached Barclays for a mortgage on it,” says Stephen Connachan, Managing Director of Aquapac. “The financing released all the money we’d spent on our building and it’s really helping us to grow to the next level.” Expanding through investment Before the relocation, Aquapac was primarily a niche manufacturer of furniture for the pet sector, producing aquarium cabinets and other items such as reptile enclosures. Now, the company has expanded into contract furnishing for a range
30 | NACFB Magazine
of markets, including hospitals, hotels and student accommodation. It’s also increased its export business and recently moved into the bespoke kitchen, bedroom and bathroom market. From a standing start it is now producing 25 bespoke kitchens a week. The ability to take on so many new projects is partly down to the way the business has used the funds provided by Barclays. These helped to pay for an office refurbishment, a viewing platform from which they could see the production line and state-ofthe-art equipment to help increase production and drive efficiencies. “We invested heavily in computerised machinery,” says Stephen. “Customers can commission us for a project, we visualise it on our system so they can see what it looks like, and it then automatically programs all our machinery to make the product. They can even see it being built through our new viewing platform. We’re getting huge efficiency savings while increasing our production.” Building the relationship Another benefit for Stephen is the relationship he has with Barclays, which was recommended to Aquapac through a Commercial Finance Broker. “After our first meeting, we realised that we could incorporate some of the other smaller finance arrangements Aquapac had into our facility,” says Tom Every,
Aquapac’s Business Manager. “It reduced the monthly outgoings, and we knew that having one facility over a longer period of time would help the business’s cash flow.” “Whenever I need any help Tom is available to support me, and both he and the Area Business Manager have been out to see us,” says Stephen. “It’s great to see them showing such an interest in the company and demonstrates that they believe in our business.” The next steps include plans to increase staff numbers from 32 to 40 over the next 18 months, while Aquapac is also discussing another financing arrangement with Barclays to help it purchase a new warehouse. “Our business is growing so well that it’s given us more confidence,” says Stephen. “We want to make further efficiencies by moving some of the raw materials out of the manufacturing building, which would give us more space. It will allow us to do more contract furnishing and more kitchens – we want to get up to 50 kitchens a week. “Aquapac’s substantial growth, over a relatively short period, is down to having a strong plan, employing great people and making sure that everybody is engaged in the vision for its future”.
The AWARDS 2018
SHORTLISTED
CASE STUDIES
Commercial property finance facilitates manufacturer’s growth
Tom Every Business manager Barclays
G
lasgow furniture maker Aquapac is seeing huge benefits after moving to a new building, with Barclays financing helping to drive further growth. Furniture manufacturer Aquapac Ltd has seen a surge in growth since relocating in 2017, with further expansion on the cards as it looks to maximise the potential its new premises is providing. Much of the fuel for Aquapac’s strong trading is coming from £890,000 worth of successful financing, which has provided working capital to invest in the business. “We purchased a dilapidated property and renovated it, then approached Barclays for a mortgage on it,” says Stephen Connachan, Managing Director of Aquapac. “The financing released all the money we’d spent on our building and it’s really helping us to grow to the next level.” Expanding through investment Before the relocation, Aquapac was primarily a niche manufacturer of furniture for the pet sector, producing aquarium cabinets and other items such as reptile enclosures. Now, the company has expanded into contract furnishing for a range
30 | NACFB Magazine
of markets, including hospitals, hotels and student accommodation. It’s also increased its export business and recently moved into the bespoke kitchen, bedroom and bathroom market. From a standing start it is now producing 25 bespoke kitchens a week. The ability to take on so many new projects is partly down to the way the business has used the funds provided by Barclays. These helped to pay for an office refurbishment, a viewing platform from which they could see the production line and state-ofthe-art equipment to help increase production and drive efficiencies. “We invested heavily in computerised machinery,” says Stephen. “Customers can commission us for a project, we visualise it on our system so they can see what it looks like, and it then automatically programs all our machinery to make the product. They can even see it being built through our new viewing platform. We’re getting huge efficiency savings while increasing our production.” Building the relationship Another benefit for Stephen is the relationship he has with Barclays, which was recommended to Aquapac through a Commercial Finance Broker. “After our first meeting, we realised that we could incorporate some of the other smaller finance arrangements Aquapac had into our facility,” says Tom Every,
Aquapac’s Business Manager. “It reduced the monthly outgoings, and we knew that having one facility over a longer period of time would help the business’s cash flow.” “Whenever I need any help Tom is available to support me, and both he and the Area Business Manager have been out to see us,” says Stephen. “It’s great to see them showing such an interest in the company and demonstrates that they believe in our business.” The next steps include plans to increase staff numbers from 32 to 40 over the next 18 months, while Aquapac is also discussing another financing arrangement with Barclays to help it purchase a new warehouse. “Our business is growing so well that it’s given us more confidence,” says Stephen. “We want to make further efficiencies by moving some of the raw materials out of the manufacturing building, which would give us more space. It will allow us to do more contract furnishing and more kitchens – we want to get up to 50 kitchens a week. “Aquapac’s substantial growth, over a relatively short period, is down to having a strong plan, employing great people and making sure that everybody is engaged in the vision for its future”.
The AWARDS 2018
SHORTLISTED
CASE STUDIES
CASE STUDIES
UTB integral to family-owned housebuilder’s success story Adam Bovingdon Property development director UTB
Peter James Homes is a Midlands housebuilding success story.
32 | NACFB Magazine
F
ormed just five years ago as a subsidiary of established, family-owned civil and electrical engineering firm J McCann & Co, The Nottingham-based housebuilder has progressed from its first development of six homes in 2013 to acquiring a site for 173 new homes in Ambergate, Derbyshire with support from United Trust Bank (UTB). J McCann & Co was formed around 50 years ago by managing director John McCann’s father. From fairly humble beginnings, John has built a thriving civil and electrical engineering business delivering major infrastructure projects throughout the
These sold quickly and the company went on to acquire a substantially bigger 28-unit site in East Leake (pictured) as their next build.
Realising that many of the skills and services within J McCann & Co could be transferable to a house building company, John and Simon Gardiner saw an opportunity to establish a new business in the residential development sector – and subsequently created Peter James Homes in 2013 with Simon as managing director.
Simon said: “When we were first introduced to UTB we had one small, self-funded development under our belts and were partway through building our second, again selffunded, using profits from the first build and cash from the business. Our experience of dealing with development lenders to that point had been somewhat disappointing. Having engaged with several of the high street banks to discuss future projects, we found them to be extremely cautious and inflexible, even bearing in mind the strength of J McCann & Co. They couldn’t see the opportunity we saw for a new house building business.
The new company’s first project was a self-funded development of six new homes in Ravenshead.
“Our dealings with Adam Bovingdon, one of UTB’s property development directors, were the opposite of what
UK, including road and infrastructure services as a sub-contractor on residential developments.
we’d experienced from the large lenders. “Seeing that we had already committed a considerable amount of our own capital to reach this stage, Adam suggested that UTB would consider not only funding the remainder of the build costs but would release some of the equity tied up in the partially completed site so that we could acquire another site we had our eye on. This positivity and willingness to lend was refreshing. I don’t think many lenders at the time would have offered to support us to that degree, but Adam and UTB were true to their word and very soon after that initial meeting we were able to acquire another site with approval for 91 homes at Giltbrook.” Adam saw straight away that Peter James Homes was just the sort of
housebuilder UTB wants to support: “They didn’t have a long track record in residential development, but they had a very professional set-up and a strong management team. They also had a thorough understanding of the local market and a demonstrable ability to build high quality homes people wanted to buy. “Having many transferable skills from their established parent company was an added-bonus. We also felt they would really benefit from our involvement, not just financially but also from the knowledge and experience UTB brings to a project. We are keen to contribute to the regeneration of the SME housebuilder sector, and with Peter James Homes, we could see from their drive and enthusiasm that they had the potential
NACFB Magazine | 33
CASE STUDIES
CASE STUDIES
UTB integral to family-owned housebuilder’s success story Adam Bovingdon Property development director UTB
Peter James Homes is a Midlands housebuilding success story.
32 | NACFB Magazine
F
ormed just five years ago as a subsidiary of established, family-owned civil and electrical engineering firm J McCann & Co, The Nottingham-based housebuilder has progressed from its first development of six homes in 2013 to acquiring a site for 173 new homes in Ambergate, Derbyshire with support from United Trust Bank (UTB). J McCann & Co was formed around 50 years ago by managing director John McCann’s father. From fairly humble beginnings, John has built a thriving civil and electrical engineering business delivering major infrastructure projects throughout the
These sold quickly and the company went on to acquire a substantially bigger 28-unit site in East Leake (pictured) as their next build.
Realising that many of the skills and services within J McCann & Co could be transferable to a house building company, John and Simon Gardiner saw an opportunity to establish a new business in the residential development sector – and subsequently created Peter James Homes in 2013 with Simon as managing director.
Simon said: “When we were first introduced to UTB we had one small, self-funded development under our belts and were partway through building our second, again selffunded, using profits from the first build and cash from the business. Our experience of dealing with development lenders to that point had been somewhat disappointing. Having engaged with several of the high street banks to discuss future projects, we found them to be extremely cautious and inflexible, even bearing in mind the strength of J McCann & Co. They couldn’t see the opportunity we saw for a new house building business.
The new company’s first project was a self-funded development of six new homes in Ravenshead.
“Our dealings with Adam Bovingdon, one of UTB’s property development directors, were the opposite of what
UK, including road and infrastructure services as a sub-contractor on residential developments.
we’d experienced from the large lenders. “Seeing that we had already committed a considerable amount of our own capital to reach this stage, Adam suggested that UTB would consider not only funding the remainder of the build costs but would release some of the equity tied up in the partially completed site so that we could acquire another site we had our eye on. This positivity and willingness to lend was refreshing. I don’t think many lenders at the time would have offered to support us to that degree, but Adam and UTB were true to their word and very soon after that initial meeting we were able to acquire another site with approval for 91 homes at Giltbrook.” Adam saw straight away that Peter James Homes was just the sort of
housebuilder UTB wants to support: “They didn’t have a long track record in residential development, but they had a very professional set-up and a strong management team. They also had a thorough understanding of the local market and a demonstrable ability to build high quality homes people wanted to buy. “Having many transferable skills from their established parent company was an added-bonus. We also felt they would really benefit from our involvement, not just financially but also from the knowledge and experience UTB brings to a project. We are keen to contribute to the regeneration of the SME housebuilder sector, and with Peter James Homes, we could see from their drive and enthusiasm that they had the potential
NACFB Magazine | 33
CASE STUDIES
planning for 173 new homes, which we’ll start work on in Q2 2019.” In the last year, UTB has expanded its development finance team and now has more originators looking after more housebuilder’s in more areas of England and Wales than ever before.
to grow into a sizeable regional force in a relatively short time. They have proved us right on that.”
my experience, dealing with many development lenders is hard work. With UTB it’s an absolute pleasure.”
Improvements to the infrastructure around Nottingham presented opportunities for investment in new housing, which Peter James Homes was now able to take advantage of. The nine-acre, 91-unit development it acquired in Giltbrook comprised a mix of two to four-bedroomed private homes. Sloping on two sides, the site came with complex challenges in the groundworks. However, Peter James Homes was able to contract the parent company, J McCann & Co, which had the necessary skills and experience to overcome the problems and successfully complete over £3.5m of infrastructure and groundworks.
Simon added: “As well as funding the Giltbrook development, we have also purchased a new site at Bestwood for 48 homes and one in Gedling, which will provide a further 14 highquality homes; all with the help of UTB. We’ve also just completed the acquisition of a 22-acre site with
Phase one of the development achieved a strong level of early sales and this prompted the builders to accelerate their plans for the next phases. Having initially received funding from UTB for the first phase, Simon returned to the bank for additional funding and approval was quickly given to increase the facility. “The close relationship we have with Adam and the team is very important to us,” explained Simon. “We can always get them on the phone, they know us straight away so we don’t have to explain ourselves every time we get in contact and they make credit decisions swiftly. From
On why UTB is reaching out to regional housebuilder’s despite the residential property market, and the wider economy, looking somewhat uncertain, Adam said: “We’re a through-the-cycle lender with experience of all manner of property markets. It’s vital that SME housebuilder’s continue to receive financial support from lenders that understand the ups and downs and can adapt to changing circumstances. UK-wide house price indices paint a fairly grim picture at the moment, if you only look at the headline figures, but they bely the fact that there are parts of the country, and even individual developments, where there’s a really strong demand from buyers. “We’re always happy to support housebuilder’s who can demonstrate that they’re capable of building great quality homes in the right places and for the right prices, and have a desire to grow their businesses.
We’re redefining standard
We’ve put a lot of thought into our newly extended suite of short-term lending products. In an increasingly diverse world we know brokers need maximum flexibility to handle the widest possible range of client scenarios.
Standard bridging that’s anything but standard • • • • •
Prime Bridging Standard Bridging Light Development Development Commercial
Are you ready to rethink what standard means?
masthaven.co.uk Masthaven Bank Limited is a company registered in England & Wales with registration number 09660012 and whose registered office is at: 11 Soho Street, London W1D 3AD. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority (Firm reference number 719354).
34 | NACFB Magazine
The “Masthaven” name and logos and all other brands, names, logos, marks and slogans on this document are the trademarks or service marks of us or our licensors.
CASE STUDIES
planning for 173 new homes, which we’ll start work on in Q2 2019.” In the last year, UTB has expanded its development finance team and now has more originators looking after more housebuilder’s in more areas of England and Wales than ever before.
to grow into a sizeable regional force in a relatively short time. They have proved us right on that.”
my experience, dealing with many development lenders is hard work. With UTB it’s an absolute pleasure.”
Improvements to the infrastructure around Nottingham presented opportunities for investment in new housing, which Peter James Homes was now able to take advantage of. The nine-acre, 91-unit development it acquired in Giltbrook comprised a mix of two to four-bedroomed private homes. Sloping on two sides, the site came with complex challenges in the groundworks. However, Peter James Homes was able to contract the parent company, J McCann & Co, which had the necessary skills and experience to overcome the problems and successfully complete over £3.5m of infrastructure and groundworks.
Simon added: “As well as funding the Giltbrook development, we have also purchased a new site at Bestwood for 48 homes and one in Gedling, which will provide a further 14 highquality homes; all with the help of UTB. We’ve also just completed the acquisition of a 22-acre site with
Phase one of the development achieved a strong level of early sales and this prompted the builders to accelerate their plans for the next phases. Having initially received funding from UTB for the first phase, Simon returned to the bank for additional funding and approval was quickly given to increase the facility. “The close relationship we have with Adam and the team is very important to us,” explained Simon. “We can always get them on the phone, they know us straight away so we don’t have to explain ourselves every time we get in contact and they make credit decisions swiftly. From
On why UTB is reaching out to regional housebuilder’s despite the residential property market, and the wider economy, looking somewhat uncertain, Adam said: “We’re a through-the-cycle lender with experience of all manner of property markets. It’s vital that SME housebuilder’s continue to receive financial support from lenders that understand the ups and downs and can adapt to changing circumstances. UK-wide house price indices paint a fairly grim picture at the moment, if you only look at the headline figures, but they bely the fact that there are parts of the country, and even individual developments, where there’s a really strong demand from buyers. “We’re always happy to support housebuilder’s who can demonstrate that they’re capable of building great quality homes in the right places and for the right prices, and have a desire to grow their businesses.
We’re redefining standard
We’ve put a lot of thought into our newly extended suite of short-term lending products. In an increasingly diverse world we know brokers need maximum flexibility to handle the widest possible range of client scenarios.
Standard bridging that’s anything but standard • • • • •
Prime Bridging Standard Bridging Light Development Development Commercial
Are you ready to rethink what standard means?
masthaven.co.uk Masthaven Bank Limited is a company registered in England & Wales with registration number 09660012 and whose registered office is at: 11 Soho Street, London W1D 3AD. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority (Firm reference number 719354).
34 | NACFB Magazine
The “Masthaven” name and logos and all other brands, names, logos, marks and slogans on this document are the trademarks or service marks of us or our licensors.
Patron | profile
A unique blended offering that breaks the mould
W
e are all aware of the constraints that SMEs experience when approaching traditional high street lenders for cashflow and growth funding. The hardening of these institutions’ lending appetites, the lengthy application processes and more recently, survey findings published by the Competition and Markets Authority highlighted the importance of a quality, personal experience being provided to SMEs.
Our core product is an unsecured business loan up to £250,000 over a term of up to 36 months. We lend to companies with as little as six months’ trading history and base our maximum credit limit around a company’s revenue (typically one to two times their monthly revenue) as opposed to traditional profitability ratios or LTV of tangible security on offer.
Fleximize opened its doors to clients in January 2014, born from the idea to make finance for UK SMEs flexible, accessible and fast, with an added personal touch. Since then, we have lent over £80m to SMEs all over the UK and grown the operation to over 45 staff based at our Ipswich headquarters.
By recognising the constraints of traditional assessments, we have created affordability checks based on a business’s ability to effectively manage its cashflow, enabling us to provide much-needed credit lines for sustainable growth. This allows us to assess a wide variety of different sectors, levels of losses and profit, without the need to have tangible assets on the balance sheet.
We utilise industry-leading tech, coupled with dedicated client relationship managers to provide businesses with a seamless application process. We believe that there is a better way to predict a company’s growth and success than a computer-says-no algorithm or a traditional bank assessment.
For instance, Polly Thompson, founder of the UK’s first dedicated bridesmaid dress shop, NABBD, has become an esteemed client. Polly came to us after being turned away by high street banks and an impersonal experience with another online lender. She had only been trading for 12 months prior to approaching
36 | NACFB Magazine
us for finance, had made losses in her first financial year after initial investment into a retail outlet and required funds to support the growing sales of the business. A combination of a short trading history, minimal stock and losses meant that Polly was unable to qualify on debt service cover ratios with traditional lenders. She was able to control her working capital cycle, manage her cash and confidently explain the difficulties the business had experienced. The relationship manager has enjoyed the journey of the business since December 2014 with various funding solutions and helped her establish a thriving and profitable business, which has become the premier choice for bridesmaid dresses in the UK. In late 2016 we launched a new, secured loan offering after recognising the need for a more flexible secured product in the alternative finance sector. Backed by a new senior debt line, we were able to increase our loan amounts to £500,000 and our terms up to 48 months, while keeping the spirit of relationship-driven, fast and flexible funding running
through this product. Traditionally, secured business loans have taken anywhere from two to eight weeks to facilitate, with expensive valuation and legal fees. A combination of desktop valuations and opting to secure over property using an agreed notice (equitable charge) rather than legal charge has allowed us to reduce this process to as little as 48 hours from application to funding, costing as little as £715. We have found that this product works particularly well as a short-term bridge for property developers and construction companies that don’t have enough cash available to put into their next project, as it can be structured over a longer term to keep monthly repayments low and can be paid back early without penalty. On the other hand, it has also been utilised by businesses that require a longer-term solution, such as a large printing business based in the South East that wanted to take advantage of discounted printing equipment available at auction. They had acquired several short-term highinterest loans in quick succession and fell into arrears with HMRC.
In late 2016 we launched a new, secured loan offering after recognising the need for a more flexible secured product in the alternative finance sector
This deterred other lenders and they recognised it was not sustainable from a cashflow perspective. After discussing the circumstances with the director, they opted to take a secured offer to meet their total requirement of £260,000, wrapping up all the borrowing into one manageable monthly payment over the longest loan term possible, resulting in a saving of £15,000 per month. Operating in both the unsecured and secured market allows us to structure bespoke funding lines that blend both products and break the mould on the usual LTV limits within the secured lending market – offering LTVs over 100% in some cases.
Peter Tuvey Co-founder Fleximize
NACFB Magazine | 37
Patron | profile
A unique blended offering that breaks the mould
W
e are all aware of the constraints that SMEs experience when approaching traditional high street lenders for cashflow and growth funding. The hardening of these institutions’ lending appetites, the lengthy application processes and more recently, survey findings published by the Competition and Markets Authority highlighted the importance of a quality, personal experience being provided to SMEs.
Our core product is an unsecured business loan up to £250,000 over a term of up to 36 months. We lend to companies with as little as six months’ trading history and base our maximum credit limit around a company’s revenue (typically one to two times their monthly revenue) as opposed to traditional profitability ratios or LTV of tangible security on offer.
Fleximize opened its doors to clients in January 2014, born from the idea to make finance for UK SMEs flexible, accessible and fast, with an added personal touch. Since then, we have lent over £80m to SMEs all over the UK and grown the operation to over 45 staff based at our Ipswich headquarters.
By recognising the constraints of traditional assessments, we have created affordability checks based on a business’s ability to effectively manage its cashflow, enabling us to provide much-needed credit lines for sustainable growth. This allows us to assess a wide variety of different sectors, levels of losses and profit, without the need to have tangible assets on the balance sheet.
We utilise industry-leading tech, coupled with dedicated client relationship managers to provide businesses with a seamless application process. We believe that there is a better way to predict a company’s growth and success than a computer-says-no algorithm or a traditional bank assessment.
For instance, Polly Thompson, founder of the UK’s first dedicated bridesmaid dress shop, NABBD, has become an esteemed client. Polly came to us after being turned away by high street banks and an impersonal experience with another online lender. She had only been trading for 12 months prior to approaching
36 | NACFB Magazine
us for finance, had made losses in her first financial year after initial investment into a retail outlet and required funds to support the growing sales of the business. A combination of a short trading history, minimal stock and losses meant that Polly was unable to qualify on debt service cover ratios with traditional lenders. She was able to control her working capital cycle, manage her cash and confidently explain the difficulties the business had experienced. The relationship manager has enjoyed the journey of the business since December 2014 with various funding solutions and helped her establish a thriving and profitable business, which has become the premier choice for bridesmaid dresses in the UK. In late 2016 we launched a new, secured loan offering after recognising the need for a more flexible secured product in the alternative finance sector. Backed by a new senior debt line, we were able to increase our loan amounts to £500,000 and our terms up to 48 months, while keeping the spirit of relationship-driven, fast and flexible funding running
through this product. Traditionally, secured business loans have taken anywhere from two to eight weeks to facilitate, with expensive valuation and legal fees. A combination of desktop valuations and opting to secure over property using an agreed notice (equitable charge) rather than legal charge has allowed us to reduce this process to as little as 48 hours from application to funding, costing as little as £715. We have found that this product works particularly well as a short-term bridge for property developers and construction companies that don’t have enough cash available to put into their next project, as it can be structured over a longer term to keep monthly repayments low and can be paid back early without penalty. On the other hand, it has also been utilised by businesses that require a longer-term solution, such as a large printing business based in the South East that wanted to take advantage of discounted printing equipment available at auction. They had acquired several short-term highinterest loans in quick succession and fell into arrears with HMRC.
In late 2016 we launched a new, secured loan offering after recognising the need for a more flexible secured product in the alternative finance sector
This deterred other lenders and they recognised it was not sustainable from a cashflow perspective. After discussing the circumstances with the director, they opted to take a secured offer to meet their total requirement of £260,000, wrapping up all the borrowing into one manageable monthly payment over the longest loan term possible, resulting in a saving of £15,000 per month. Operating in both the unsecured and secured market allows us to structure bespoke funding lines that blend both products and break the mould on the usual LTV limits within the secured lending market – offering LTVs over 100% in some cases.
Peter Tuvey Co-founder Fleximize
NACFB Magazine | 37
We are the people for Commercial Bridging
Ask | the expert Your questions answered by the most knowledgeable industry insiders
Jenny Tooth, CEO at UKBAA A geographically-skewed funding deficit is ring-fencing national and Londonbased investors from SME opportunities outside of the capital
C
M
Y
Q A
Are London-based SMEs prioritised over regional businesses?
In 2017, the volume and value of equity received by London-based businesses far exceeded that for the rest of the country. The Small Business Finance Markets report of 2016/17 conducted by the British Business Bank noted that 58% of all equity investment in 2017, representing a staggering 69% of investment value, occurred in London and the South East. It is undeniable that there is a geographically skewed funding deficit that is hindering the growth of SMEs who are positioned outside of the capital. The UK possesses multiple geographical regions that have blooming industries outside of the capital city – something that makes the UK incredibly unique. In spite of this, a lack of accessibility and education surrounding finance and opportunities outside of London is creating a gap between what these regions are capable of and how much they’re utilised.
Q A
Is anything being done to mend the gap?
Although a lot more focus has been given in recent years to these geographical hubs – especially in the North by the UK Business Bank and the
Northern Power House initiative – there is still a long way to go to fully utilise the untapped potential found within these areas. This can only be done when it is popularly recognised that there are significant entrepreneurial investment opportunities outside of London. To further encourage more angel investors across the UK, the British Business Bank has established a new commercial investment programme to support developing clusters of business angels outside of London. Alongside its existing programmes, the bank is providing new co-investment funds to leverage regional angel groups. It is expected that this new initiative will help increase the effectiveness of the UK’s business angel finance ecosystem, making it more accessible for entrepreneurs across the regions. This, alongside celebrations such as the Great Exhibition of the North, which provide a renewed focus on regional investment, comes at a critical time for some of the UK’s entrepreneurial areas.
Q A
How is UKBAA helping?
The UK Business Angels Association (UKBAA) is the national trade association for angel and early-stage investment, representing over 160 member organisations and around 18,000
investors. The UKBAA’s members include angel networks, syndicates, individual investors, early-stage VCs, equity crowdfunding platforms, accelerators, professional advisers and intermediaries.
CM
MY
CY
CMY
The UKBAA has launched many successful investor angel hubs outside of London that serve as a focal point for the earlystage investor community to improve regional infrastructure. It provides opportunities for networking, and increased access to market intelligence and local entrepreneurs, with the aim of closing funding gaps among investors who might otherwise not be aware of the opportunities available to them.
K
While this undoubtedly helps to increase access to investment across the North, a lot more needs to be done to promote widespread awareness of the talent that exists outside of London. I assert that despite the aforementioned initiatives, further work is required to properly redress the geographical imbalance that exists across the UK investment arena.
Let’s talk... 0208 349 5190 @ABC_Bridging sayhello@alternativebridging.co.uk alternativebridging.co.uk
38 | NACFB Magazine
We are the people for Commercial Bridging
Ask | the expert Your questions answered by the most knowledgeable industry insiders
Jenny Tooth, CEO at UKBAA A geographically-skewed funding deficit is ring-fencing national and Londonbased investors from SME opportunities outside of the capital
C
M
Y
Q A
Are London-based SMEs prioritised over regional businesses?
In 2017, the volume and value of equity received by London-based businesses far exceeded that for the rest of the country. The Small Business Finance Markets report of 2016/17 conducted by the British Business Bank noted that 58% of all equity investment in 2017, representing a staggering 69% of investment value, occurred in London and the South East. It is undeniable that there is a geographically skewed funding deficit that is hindering the growth of SMEs who are positioned outside of the capital. The UK possesses multiple geographical regions that have blooming industries outside of the capital city – something that makes the UK incredibly unique. In spite of this, a lack of accessibility and education surrounding finance and opportunities outside of London is creating a gap between what these regions are capable of and how much they’re utilised.
Q A
Is anything being done to mend the gap?
Although a lot more focus has been given in recent years to these geographical hubs – especially in the North by the UK Business Bank and the
Northern Power House initiative – there is still a long way to go to fully utilise the untapped potential found within these areas. This can only be done when it is popularly recognised that there are significant entrepreneurial investment opportunities outside of London. To further encourage more angel investors across the UK, the British Business Bank has established a new commercial investment programme to support developing clusters of business angels outside of London. Alongside its existing programmes, the bank is providing new co-investment funds to leverage regional angel groups. It is expected that this new initiative will help increase the effectiveness of the UK’s business angel finance ecosystem, making it more accessible for entrepreneurs across the regions. This, alongside celebrations such as the Great Exhibition of the North, which provide a renewed focus on regional investment, comes at a critical time for some of the UK’s entrepreneurial areas.
Q A
How is UKBAA helping?
The UK Business Angels Association (UKBAA) is the national trade association for angel and early-stage investment, representing over 160 member organisations and around 18,000
investors. The UKBAA’s members include angel networks, syndicates, individual investors, early-stage VCs, equity crowdfunding platforms, accelerators, professional advisers and intermediaries.
CM
MY
CY
CMY
The UKBAA has launched many successful investor angel hubs outside of London that serve as a focal point for the earlystage investor community to improve regional infrastructure. It provides opportunities for networking, and increased access to market intelligence and local entrepreneurs, with the aim of closing funding gaps among investors who might otherwise not be aware of the opportunities available to them.
K
While this undoubtedly helps to increase access to investment across the North, a lot more needs to be done to promote widespread awareness of the talent that exists outside of London. I assert that despite the aforementioned initiatives, further work is required to properly redress the geographical imbalance that exists across the UK investment arena.
Let’s talk... 0208 349 5190 @ABC_Bridging sayhello@alternativebridging.co.uk alternativebridging.co.uk
38 | NACFB Magazine
Fintech solutions make diverse investment easier than ever
Special | features
al nt
th ow r g
Lo nd on
Increasing HMO popularity
An up-to-date insight into the industry
re
University cities’ rental income soars
years st in 5 e w slo
Changes in regulation and legislation
fessionals’ mig ng pro ratio u o Y n
aff ec tin g
E d lan ng tE as
St ag n
Wales leads rental growth index
th n a
o
rices p e us
rns retu
Is buy-to-let levelling out across the UK?
I
Jon Goodall CEO Landbay
t has been a tumultuous few years for the buy-to-let sector in the UK. New government legislation and regulation has affected almost everyone in the market, leading to the professionalisation of landlords and a spike in demand for specialist expertise.
For those equipped to navigate the new world of buy-to-let, the property market remains an exciting proposition, built on the strong foundations of a robust asset class. The UK may have seen its fair share of political upheaval over the past year, but none of that has changed the fact that Britain will always need homes, and the growing cohort of people that can’t
40 | NACFB Magazine
buy, or don’t want to, will rely more than ever on the rental sector to house them. However, house prices have remained flat, resulting in any landlords purchasing a property today likely focusing more on yield rather than any anticipated capital appreciation. This focus on yield is driving a levelling out of buy-to-let across the UK. According to our latest rental index, rents in the UK, excluding London, rose by 1.18% in the 12 months to July 2018 – the slowest annual rental increase in five years. London rents have recently returned to positive territory, with the first annual rental increase in 18 months happening in June - but growth remains glacial. In the face of this synchronised slowdown, landlords can quickly find themselves in hot water, as associated legislative and maintenance costs climb. As a
result, many are setting their sights on HMOs or properties outside of London, where yield is typically much greater. Our latest rental index tracked the best and worst performing local authorities for rental growth on an annual basis. Monmouthshire in Wales led the pack with rental growth at 3.22%, followed by Nottingham (2.87%) and Conwy (2.71%). Four of the ten best performing areas were in Wales, while Scotland and England both had three apiece. Monmouthshire’s strong performance could be down to its favourable commuting distance to many employment centres, while being a desirable rural location for living, regularly appearing in ‘best place to live’ lists. These findings would suggest that many young professionals are moving further afield to reduce their rent burden, possibly while they save for a house of their own. The strong demand for low-rent
accommodation by long-distance city commuters is thought to be pushing up rents in East England more specifically, and in turn showing signs of increased yields for buy-to-let property in these areas. It may not be a market for everyone, but those looking for higher yields may even want to consider looking to university cities. Although the costs of maintaining HMOs are typically higher than those housing a single family, the number of homes lived in wholly by students continues to soar and the presence of a top university nearby is one way of ensuring a consistent stream of income. Leading university towns include Manchester, Bristol, Birmingham, Leeds and Nottingham – all of which saw rents increase more than four times the UK average in 2017. There are some great investment opportunities out there for people prepared to target the student market.
As a result of climbing costs, many landlords are setting their sights on HMOs or properties outside of London, where yield is typically much greater
As diversification becomes more popular, it also becomes easier. The rise of technology has made it far more accessible to invest in property outside of the area in which you live, through the growth of P2P and crowdfunding. Furthermore, there’s now a wealth of data available online about a given area’s market and factors that could affect it positively or negatively. It’s also easier to access specialist lenders like Landbay, which operate on tech-based propositions. Diversification is becoming ever more important for landlords, and brokers need to be equipped to help them expand their portfolios into new territories. Those brokers who are able to provide expert advice to landlords on regional opportunities in the UK are the ones to reap the rewards. This is likely to lead to more business further down the line, as those with the expertise stand out from the crowd.
NACFB Magazine | 41
Fintech solutions make diverse investment easier than ever
Special | features
al nt
th ow r g
Lo nd on
Increasing HMO popularity
An up-to-date insight into the industry
re
University cities’ rental income soars
years st in 5 e w slo
Changes in regulation and legislation
fessionals’ mig ng pro ratio u o Y n
aff ec tin g
E d lan ng tE as
St ag n
Wales leads rental growth index
th n a
o
rices p e us
rns retu
Is buy-to-let levelling out across the UK?
I
Jon Goodall CEO Landbay
t has been a tumultuous few years for the buy-to-let sector in the UK. New government legislation and regulation has affected almost everyone in the market, leading to the professionalisation of landlords and a spike in demand for specialist expertise.
For those equipped to navigate the new world of buy-to-let, the property market remains an exciting proposition, built on the strong foundations of a robust asset class. The UK may have seen its fair share of political upheaval over the past year, but none of that has changed the fact that Britain will always need homes, and the growing cohort of people that can’t
40 | NACFB Magazine
buy, or don’t want to, will rely more than ever on the rental sector to house them. However, house prices have remained flat, resulting in any landlords purchasing a property today likely focusing more on yield rather than any anticipated capital appreciation. This focus on yield is driving a levelling out of buy-to-let across the UK. According to our latest rental index, rents in the UK, excluding London, rose by 1.18% in the 12 months to July 2018 – the slowest annual rental increase in five years. London rents have recently returned to positive territory, with the first annual rental increase in 18 months happening in June - but growth remains glacial. In the face of this synchronised slowdown, landlords can quickly find themselves in hot water, as associated legislative and maintenance costs climb. As a
result, many are setting their sights on HMOs or properties outside of London, where yield is typically much greater. Our latest rental index tracked the best and worst performing local authorities for rental growth on an annual basis. Monmouthshire in Wales led the pack with rental growth at 3.22%, followed by Nottingham (2.87%) and Conwy (2.71%). Four of the ten best performing areas were in Wales, while Scotland and England both had three apiece. Monmouthshire’s strong performance could be down to its favourable commuting distance to many employment centres, while being a desirable rural location for living, regularly appearing in ‘best place to live’ lists. These findings would suggest that many young professionals are moving further afield to reduce their rent burden, possibly while they save for a house of their own. The strong demand for low-rent
accommodation by long-distance city commuters is thought to be pushing up rents in East England more specifically, and in turn showing signs of increased yields for buy-to-let property in these areas. It may not be a market for everyone, but those looking for higher yields may even want to consider looking to university cities. Although the costs of maintaining HMOs are typically higher than those housing a single family, the number of homes lived in wholly by students continues to soar and the presence of a top university nearby is one way of ensuring a consistent stream of income. Leading university towns include Manchester, Bristol, Birmingham, Leeds and Nottingham – all of which saw rents increase more than four times the UK average in 2017. There are some great investment opportunities out there for people prepared to target the student market.
As a result of climbing costs, many landlords are setting their sights on HMOs or properties outside of London, where yield is typically much greater
As diversification becomes more popular, it also becomes easier. The rise of technology has made it far more accessible to invest in property outside of the area in which you live, through the growth of P2P and crowdfunding. Furthermore, there’s now a wealth of data available online about a given area’s market and factors that could affect it positively or negatively. It’s also easier to access specialist lenders like Landbay, which operate on tech-based propositions. Diversification is becoming ever more important for landlords, and brokers need to be equipped to help them expand their portfolios into new territories. Those brokers who are able to provide expert advice to landlords on regional opportunities in the UK are the ones to reap the rewards. This is likely to lead to more business further down the line, as those with the expertise stand out from the crowd.
NACFB Magazine | 41
SPECIAL FEATURES
SPECIAL FEATURES
Behind the success of Aldermore’s Broker Academy
I
Patrick Jelly Commercial director – asset finance Aldermore
n 2014, Aldermore launched its Broker Training academy, and just four years later we are delighted at the graduation of the 500th broker through our programme – a significant milestone for us.
When we first designed the training programme, our goal was to support the next generation of brokers, who continue to play such an important role in the work that we do. The training was designed to help them stay at the cutting edge of the industry, educate them on new products in the market, the ever changing regulatory landscape and evolving customer needs. The programme’s aims haven’t changed, but we continually adapt our offering to ensure
42 | NACFB Magazine
that it remains up to date – this year, for example, is the first time that brokers who participate will receive a certificate from the NACFB to count towards their CPD.
businesses across the UK, are missing out on new business opportunities due to a lack of available funding – a 4% increase on the previous year.
The training programme is unique to us, completely free to brokers and covers a range of crucial topics. We have already delivered two sessions, one on sales skills and one on the principles of asset finance, and have two more planned for later in the year. In total we offered 116 places this year, and these were filled within three days.
We believe there has never been a better time to be a broker. The UK SME industry is going through an exciting period, and business owners are looking to seize the opportunities on offer through such initiatives as Open Banking. It is therefore crucial that brokers have the best possible knowledge and systems at their fingertips – and that is the role the Broker Academy is looking to play.
It is vital to realise the crucial role that the broker market plays in ensuring the UK SME industry has access to the products that truly meet their individual needs. This is made more apparent following our latest Future Attitudes report, which surveys over 1,000 UK business leaders on a quarterly basis, revealing that just under a quarter of SMEs (23%), representing 1.27 million small-and medium-sized
Brokers are vital to ensuring that businesses are connected with providers and we will always value the role that they play in the industry. With this in mind, we will continue to do what we can to support that partnership and to deliver the best possible service to the UK’s SME industry.
We believe there has never been a better time to be a broker … it is crucial that they have the best possible knowledge and systems at their fingertips - and that is the role the Broker Academy is looking to play
NACFB Magazine | 43
SPECIAL FEATURES
SPECIAL FEATURES
Behind the success of Aldermore’s Broker Academy
I
Patrick Jelly Commercial director – asset finance Aldermore
n 2014, Aldermore launched its Broker Training academy, and just four years later we are delighted at the graduation of the 500th broker through our programme – a significant milestone for us.
When we first designed the training programme, our goal was to support the next generation of brokers, who continue to play such an important role in the work that we do. The training was designed to help them stay at the cutting edge of the industry, educate them on new products in the market, the ever changing regulatory landscape and evolving customer needs. The programme’s aims haven’t changed, but we continually adapt our offering to ensure
42 | NACFB Magazine
that it remains up to date – this year, for example, is the first time that brokers who participate will receive a certificate from the NACFB to count towards their CPD.
businesses across the UK, are missing out on new business opportunities due to a lack of available funding – a 4% increase on the previous year.
The training programme is unique to us, completely free to brokers and covers a range of crucial topics. We have already delivered two sessions, one on sales skills and one on the principles of asset finance, and have two more planned for later in the year. In total we offered 116 places this year, and these were filled within three days.
We believe there has never been a better time to be a broker. The UK SME industry is going through an exciting period, and business owners are looking to seize the opportunities on offer through such initiatives as Open Banking. It is therefore crucial that brokers have the best possible knowledge and systems at their fingertips – and that is the role the Broker Academy is looking to play.
It is vital to realise the crucial role that the broker market plays in ensuring the UK SME industry has access to the products that truly meet their individual needs. This is made more apparent following our latest Future Attitudes report, which surveys over 1,000 UK business leaders on a quarterly basis, revealing that just under a quarter of SMEs (23%), representing 1.27 million small-and medium-sized
Brokers are vital to ensuring that businesses are connected with providers and we will always value the role that they play in the industry. With this in mind, we will continue to do what we can to support that partnership and to deliver the best possible service to the UK’s SME industry.
We believe there has never been a better time to be a broker … it is crucial that they have the best possible knowledge and systems at their fingertips - and that is the role the Broker Academy is looking to play
NACFB Magazine | 43
SPECIAL FEATURES
Bridging lenders funding development projects is good for the market right now
T
he growing popularity of bridging finance to fund development projects shouldn’t be surprising given mainstream banks’ apparent reluctance to embrace development finance.
properties outright – it also demonstrates just how valuable short-term finance has become for property developers looking to secure funding – especially those that aren’t being served by mainstream banks.
When we talk about bridging finance, we tend to associate it first and foremost with buying property. While bridging loans are certainly used for this purpose – helping borrowers secure homes – it’s becoming increasingly clear that they should be viewed as versatile products that suit all kinds of different uses.
Ask a small property developer or building firm what’s holding them back from kick-starting new projects, and they will likely tell you that securing finance from high street lenders is one of the biggest challenges they face.
Research from the Association of Short Term Lenders (ASTL), for example, highlights the growing popularity of short-term finance to fund property development projects. In the first three months of 2018 alone, ASTL members lent out a whopping £242.2m in bridging finance – short-term loans that were specifically for development projects.
All this comes at an incredibly important time for the UK property sector. The government has pledged one million new homes by 2020 and developers are crying out for help – yet you’d be hard pressed to find a mainstream bank offering development finance. In effect, this is side-lining developers and locking them out of funding channels.
All in all, there’s been a 22% increase in bridging development loans for ASTL members since the end of 2017 – a significant increase by any margin.
But clearly, those who have been listening and understand the realities of the market are specialist lenders, stepping in to offer flexible financial products that are, on the evidence of the ASTL research, propelling property development and building.
While this highlights a growing trend for the renovation of properties in order to add value – rather than purchasing new
Specialist lending is emerging, then, as lending that is supporting and driving the UK’s property development arena.
44 | NACFB Magazine
With high street lenders choosing not to engage, new, specialist lenders with interesting products, progressive assessment models and, refreshingly, actual people available to speak to on the phone, are stepping in to help out. As Benson Hersch, CEO at the ASTL, said: “While SME building firms continue to be locked out of mainstream channels, they will increasingly rely on different sources of finance such as short-term funding solutions. “These alternative forms of finance are providing a solution and allowing small developers to play their part in housing delivery.” In essence, bridging finance is rightly moving from niche hinterlands into the mainstream. More and more developers are becoming aware of alternative, specialist lenders and the range of innovative, bespoke products they offer.
James Bloom MD – Short-term lending Masthaven
SPECIAL FEATURES
Bridging lenders funding development projects is good for the market right now
T
he growing popularity of bridging finance to fund development projects shouldn’t be surprising given mainstream banks’ apparent reluctance to embrace development finance.
properties outright – it also demonstrates just how valuable short-term finance has become for property developers looking to secure funding – especially those that aren’t being served by mainstream banks.
When we talk about bridging finance, we tend to associate it first and foremost with buying property. While bridging loans are certainly used for this purpose – helping borrowers secure homes – it’s becoming increasingly clear that they should be viewed as versatile products that suit all kinds of different uses.
Ask a small property developer or building firm what’s holding them back from kick-starting new projects, and they will likely tell you that securing finance from high street lenders is one of the biggest challenges they face.
Research from the Association of Short Term Lenders (ASTL), for example, highlights the growing popularity of short-term finance to fund property development projects. In the first three months of 2018 alone, ASTL members lent out a whopping £242.2m in bridging finance – short-term loans that were specifically for development projects.
All this comes at an incredibly important time for the UK property sector. The government has pledged one million new homes by 2020 and developers are crying out for help – yet you’d be hard pressed to find a mainstream bank offering development finance. In effect, this is side-lining developers and locking them out of funding channels.
All in all, there’s been a 22% increase in bridging development loans for ASTL members since the end of 2017 – a significant increase by any margin.
But clearly, those who have been listening and understand the realities of the market are specialist lenders, stepping in to offer flexible financial products that are, on the evidence of the ASTL research, propelling property development and building.
While this highlights a growing trend for the renovation of properties in order to add value – rather than purchasing new
Specialist lending is emerging, then, as lending that is supporting and driving the UK’s property development arena.
44 | NACFB Magazine
With high street lenders choosing not to engage, new, specialist lenders with interesting products, progressive assessment models and, refreshingly, actual people available to speak to on the phone, are stepping in to help out. As Benson Hersch, CEO at the ASTL, said: “While SME building firms continue to be locked out of mainstream channels, they will increasingly rely on different sources of finance such as short-term funding solutions. “These alternative forms of finance are providing a solution and allowing small developers to play their part in housing delivery.” In essence, bridging finance is rightly moving from niche hinterlands into the mainstream. More and more developers are becoming aware of alternative, specialist lenders and the range of innovative, bespoke products they offer.
James Bloom MD – Short-term lending Masthaven
SPECIAL FEATURES
SPECIAL FEATURES
Late payment epidemic hits majority of small businesses At a critical moment in the economic cycle, we need to ensure that small businesses continue to be the engine room to our country’s growth and prosperity - late payment directly threatens this. Gavin Wraith-Carter Managing director Hitachi Capital Business Finance
O
ur recent quarterly research has shown us that more than three in five small businesses (63%) are dealing with late payment issues - and the smallest businesses are those most at risk of dealing with non-payment. With reports that 50,000 SMEs a year close their doors as a result of late payment – and with calls for legislation to protect Britain’s SME community – our latest research looked to quantify the seriousness of the late payment epidemic across UK regions and sectors. We asked a representative sample of 1,201 business decision makers to report on the invoices they had sent customers and suppliers that were due for payment at the start of June 2018. Some of the key findings were as follows: Only three in ten small businesses (30%) said all their invoices had been paid on time. 63% were dealing with late payment: 48% of respondents reported having invoices paid a week late, 46% had invoices paid
46 | NACFB Magazine
a month late and 35% said they were having to wait for more than a month to have some invoices settled in full.
where one might expect customers to pay on time. In contrast, decision makers in hospitality and agriculture reported the lowest levels of late payment.
Alarmingly, 29% of business leaders surveyed were dealing with non-payment issues from their clients and customers. We estimate there is around £50bn of cash locked up in late payments and this disproportionately affects the small business community, not to mention the valuable time and resources small business divert from the production line to needlessly chase late payments. The old chestnut of the big firms paying small firms late appears to ring true and for small ventures it could be more than just a short-term cash flow issue. Our research found that smaller businesses (those with an annual turnover or less than £1m) were those most at risk of serious non-payment they were most likely to have invoices paid more than a month late (26%) and most likely to have bad debt risks from nonpayment (25%). In total, 20% of the UK’s smallest businesses said they were living with non-payment for 20% of their invoices. Our findings further revealed that the sector most affected by late payment was manufacturing, followed by small businesses in the legal sector – a sector
Net % dealing with late & nonpayment
% dealing with nonpayment issues
Manufacturing
81%
37%
Legal
79%
45%
Transport & distribution
76%
28%
Media & marketing
71%
32%
IT & telecoms
67%
31%
Construction
66%
35%
Finance & accounting
66%
35%
Medical & health
58%
24%
Retail
54%
30%
Real estate
53%
23%
Agriculture
50%
17%
Hospitality & leisure
45%
21%
NACFB Magazine | 47
SPECIAL FEATURES
SPECIAL FEATURES
Late payment epidemic hits majority of small businesses At a critical moment in the economic cycle, we need to ensure that small businesses continue to be the engine room to our country’s growth and prosperity - late payment directly threatens this. Gavin Wraith-Carter Managing director Hitachi Capital Business Finance
O
ur recent quarterly research has shown us that more than three in five small businesses (63%) are dealing with late payment issues - and the smallest businesses are those most at risk of dealing with non-payment. With reports that 50,000 SMEs a year close their doors as a result of late payment – and with calls for legislation to protect Britain’s SME community – our latest research looked to quantify the seriousness of the late payment epidemic across UK regions and sectors. We asked a representative sample of 1,201 business decision makers to report on the invoices they had sent customers and suppliers that were due for payment at the start of June 2018. Some of the key findings were as follows: Only three in ten small businesses (30%) said all their invoices had been paid on time. 63% were dealing with late payment: 48% of respondents reported having invoices paid a week late, 46% had invoices paid
46 | NACFB Magazine
a month late and 35% said they were having to wait for more than a month to have some invoices settled in full.
where one might expect customers to pay on time. In contrast, decision makers in hospitality and agriculture reported the lowest levels of late payment.
Alarmingly, 29% of business leaders surveyed were dealing with non-payment issues from their clients and customers. We estimate there is around £50bn of cash locked up in late payments and this disproportionately affects the small business community, not to mention the valuable time and resources small business divert from the production line to needlessly chase late payments. The old chestnut of the big firms paying small firms late appears to ring true and for small ventures it could be more than just a short-term cash flow issue. Our research found that smaller businesses (those with an annual turnover or less than £1m) were those most at risk of serious non-payment they were most likely to have invoices paid more than a month late (26%) and most likely to have bad debt risks from nonpayment (25%). In total, 20% of the UK’s smallest businesses said they were living with non-payment for 20% of their invoices. Our findings further revealed that the sector most affected by late payment was manufacturing, followed by small businesses in the legal sector – a sector
Net % dealing with late & nonpayment
% dealing with nonpayment issues
Manufacturing
81%
37%
Legal
79%
45%
Transport & distribution
76%
28%
Media & marketing
71%
32%
IT & telecoms
67%
31%
Construction
66%
35%
Finance & accounting
66%
35%
Medical & health
58%
24%
Retail
54%
30%
Real estate
53%
23%
Agriculture
50%
17%
Hospitality & leisure
45%
21%
NACFB Magazine | 47
SPECIAL FEATURES
We want to ensure the UK’s small businesses get the correct level and quality of support they deserve Our research also extends across the UK, giving us a regional heat map of where small business are suffering the most due to the last payment epidemic. Those in in London were most affected by late payment (70%), followed by those in the South East (67%) and both the East and West Midlands (67% respectively). The urban heartlands of London and the North West were also the regions where small businesses were most likely to be facing non-payment issues (36% and 33% respectively). In the digital age with a new generation of young people starting up their own businesses - a wave of millennial
entrepreneurs - the research revealed that younger bosses were more likely to be experiencing late payment issues. 70% of small business decision makers under the age of 35 reported late payment issues with some invoices (70%) compared to 61% of those aged 55 or over. A sign perhaps that despite advances in technology and immediate payments that the problem of late payment could in fact be getting worse. It’s time for change and we fully support policy changes that protect the welfare and economic growth of small businesses – and by implication – the country at large. Hitachi Capital have
been working with the small businesses community for more than 30 years and fully understand the damaging effects late payments can have on plans to grow. We want to ensure the UK’s small businesses get the correct level and quality of support they deserve, from skilled professionals that have an understanding on how hard it is for them to keep up with larger businesses. While we can’t control what our customers do, we can ensure small businesses don’t sit with their heads in the sand ignoring the problems that can arise from invoices being paid late.
What are the biggest challenges facing your business? 60%
50%
40%
30%
20%
10%
0 Competition
48 | NACFB Magazine
Regulation
Infrastructure
Economy
Quantity and No. of applicants
Credit and underwriting
Other
SPEED MEETS KNOWLEDGE 020 7655 3388
Fast property finance At Commercial Acceptances speed alone is not enough. Speak straight to decision makers: a quick and personal service. No arrangement fees, no extension fees and no end fees. Interest charged from only 0.75% per calendar month.
Your property may be repossessed if you do not keep up on your mortgage repayments or any other debt secured on it. A rate from 0.75% will be chargeable on the amount borrowed every calendar month. However rates are subject to change and will increase or decrease in line with movements in 3m LIBOR (The London Inter-Bank Offered Rate For Three Month Sterling Deposits). Rates will be adjusted on each calendar month anniversary of the facility. The overall cost for comparison is 10.6% APR.
SPECIAL FEATURES
We want to ensure the UK’s small businesses get the correct level and quality of support they deserve Our research also extends across the UK, giving us a regional heat map of where small business are suffering the most due to the last payment epidemic. Those in in London were most affected by late payment (70%), followed by those in the South East (67%) and both the East and West Midlands (67% respectively). The urban heartlands of London and the North West were also the regions where small businesses were most likely to be facing non-payment issues (36% and 33% respectively). In the digital age with a new generation of young people starting up their own businesses - a wave of millennial
entrepreneurs - the research revealed that younger bosses were more likely to be experiencing late payment issues. 70% of small business decision makers under the age of 35 reported late payment issues with some invoices (70%) compared to 61% of those aged 55 or over. A sign perhaps that despite advances in technology and immediate payments that the problem of late payment could in fact be getting worse. It’s time for change and we fully support policy changes that protect the welfare and economic growth of small businesses – and by implication – the country at large. Hitachi Capital have
been working with the small businesses community for more than 30 years and fully understand the damaging effects late payments can have on plans to grow. We want to ensure the UK’s small businesses get the correct level and quality of support they deserve, from skilled professionals that have an understanding on how hard it is for them to keep up with larger businesses. While we can’t control what our customers do, we can ensure small businesses don’t sit with their heads in the sand ignoring the problems that can arise from invoices being paid late.
What are the biggest challenges facing your business? 60%
50%
40%
30%
20%
10%
0 Competition
48 | NACFB Magazine
Regulation
Infrastructure
Economy
Quantity and No. of applicants
Credit and underwriting
Other
SPEED MEETS KNOWLEDGE 020 7655 3388
Fast property finance At Commercial Acceptances speed alone is not enough. Speak straight to decision makers: a quick and personal service. No arrangement fees, no extension fees and no end fees. Interest charged from only 0.75% per calendar month.
Your property may be repossessed if you do not keep up on your mortgage repayments or any other debt secured on it. A rate from 0.75% will be chargeable on the amount borrowed every calendar month. However rates are subject to change and will increase or decrease in line with movements in 3m LIBOR (The London Inter-Bank Offered Rate For Three Month Sterling Deposits). Rates will be adjusted on each calendar month anniversary of the facility. The overall cost for comparison is 10.6% APR.
Industry | guides Insider tips from the Association’s Patrons and Members
I
10 steps to submitting better proposals With the volume of short-term lending transactions steadily increasing year-on-year, it is now more important than ever to understand fully what is required from all parties right the way through the bridging process, from start to completion. Failure to commit to this, be that by lender, broker or applicant, can result in a very disappointing and costly result both in terms of time and money. John Hardman Head of sales Bridging Finance Solutions
have spent over 30 years in the UK banking investment and property market, analysing a broad spectrum of funding arrangements and solutions for clients wishing to purchase and/ or develop property.
provided. If there is adverse credit or a ‘story’ behind a deal, we are very relaxed about this and can act commercially to overcome these, but we do need to see these factors at the beginning rather than part way through.
In my current role, I oversee millions of pounds worth of ventures of differing sizes each year, and have been able to draw upon this experience to create this list of factors to ensure a successful bridging/ development loan completion.
4. Cash stake While additional property can be used to enable 100% funding on some cases, it is always wise to have flexibility in the form of cash, should the path not run true to plan in the coming months.
1. A well thought-out proposal Whether it is development or auction purchase, applicants who have studied in depth – not just the purchase, but the following 12 months plan in detail – are typically the ones where we have the best outcomes for all parties.
5. Astute professional team Where property development is concerned, a client’s direct experience is not crucial to us at BFS, but we always like to see a strong team surrounding them, which will ensure the project is a success.
2. Credible exit strategy If exit is sale, then great, but this, in all probability, will not happen within three months, making default on any shortterm bridging finance arranged a real possibility. At BFS, we try to arrange all facilities over 12-18 months to give the client maximum flexibility. 3. Honesty Sounds obvious, but as a principal lender, the ability to provide very quick (and accurate) decisions is based on the information we are
50 | NACFB Magazine
6. Good solicitor A client needs to ensure that their solicitor is active in the short-term bridging and development market; this ensures a timely execution in the most cost-effective manner. 7. Knowledgeable broker Where a client intends to use a finance broker for their proposal, it is always worth checking that the broker is well drilled in short-term funding. This means being proactive from the initial enquiry through to assisting
both lender and client when it comes to the legal process. 8. Additional documents At BFS, we continue to streamline our processes and ensure our due diligence is not too onerous. That said, a client will always need to have documents to hand such as proof of cash stake, ID and bank statements, so it always makes sense to organise this early on in the process. 9. Personal service At BFS, we ensure that the client or broker has a dedicated point of contact and we will meet, where possible, each applicant. The ability to transact with a person directly ensures that there is a level of trust very early on in matters and avoids frustration from a client’s perspective. 10. Consistency and clarity It is essential that any bridging loan or development loan has absolute clarity from the get-go. We have the ability to make credit decisions instantly for a bridge and, in respect of development, we ensure that 100% of development costs can be covered after fees and charges before we push forward – we would never enter into a contract that looked likely to fail or fall short.
NACFB Magazine | 51
Industry | guides Insider tips from the Association’s Patrons and Members
I
10 steps to submitting better proposals With the volume of short-term lending transactions steadily increasing year-on-year, it is now more important than ever to understand fully what is required from all parties right the way through the bridging process, from start to completion. Failure to commit to this, be that by lender, broker or applicant, can result in a very disappointing and costly result both in terms of time and money. John Hardman Head of sales Bridging Finance Solutions
have spent over 30 years in the UK banking investment and property market, analysing a broad spectrum of funding arrangements and solutions for clients wishing to purchase and/ or develop property.
provided. If there is adverse credit or a ‘story’ behind a deal, we are very relaxed about this and can act commercially to overcome these, but we do need to see these factors at the beginning rather than part way through.
In my current role, I oversee millions of pounds worth of ventures of differing sizes each year, and have been able to draw upon this experience to create this list of factors to ensure a successful bridging/ development loan completion.
4. Cash stake While additional property can be used to enable 100% funding on some cases, it is always wise to have flexibility in the form of cash, should the path not run true to plan in the coming months.
1. A well thought-out proposal Whether it is development or auction purchase, applicants who have studied in depth – not just the purchase, but the following 12 months plan in detail – are typically the ones where we have the best outcomes for all parties.
5. Astute professional team Where property development is concerned, a client’s direct experience is not crucial to us at BFS, but we always like to see a strong team surrounding them, which will ensure the project is a success.
2. Credible exit strategy If exit is sale, then great, but this, in all probability, will not happen within three months, making default on any shortterm bridging finance arranged a real possibility. At BFS, we try to arrange all facilities over 12-18 months to give the client maximum flexibility. 3. Honesty Sounds obvious, but as a principal lender, the ability to provide very quick (and accurate) decisions is based on the information we are
50 | NACFB Magazine
6. Good solicitor A client needs to ensure that their solicitor is active in the short-term bridging and development market; this ensures a timely execution in the most cost-effective manner. 7. Knowledgeable broker Where a client intends to use a finance broker for their proposal, it is always worth checking that the broker is well drilled in short-term funding. This means being proactive from the initial enquiry through to assisting
both lender and client when it comes to the legal process. 8. Additional documents At BFS, we continue to streamline our processes and ensure our due diligence is not too onerous. That said, a client will always need to have documents to hand such as proof of cash stake, ID and bank statements, so it always makes sense to organise this early on in the process. 9. Personal service At BFS, we ensure that the client or broker has a dedicated point of contact and we will meet, where possible, each applicant. The ability to transact with a person directly ensures that there is a level of trust very early on in matters and avoids frustration from a client’s perspective. 10. Consistency and clarity It is essential that any bridging loan or development loan has absolute clarity from the get-go. We have the ability to make credit decisions instantly for a bridge and, in respect of development, we ensure that 100% of development costs can be covered after fees and charges before we push forward – we would never enter into a contract that looked likely to fail or fall short.
NACFB Magazine | 51
Your winning team We went pro and started lending our own capital back in 2009.
From kick-off to completion, you win with Amicus:
Over a long career in the game, we’ve built a team that’s known for speed, efficiency and excellent deal control, guided by hands-on management.
• Lending to cover all angles
• NET LTV lending – when we say it’s 70%, it’s 70%* • Dedicated drawdown team for quick results • We don’t move the goalposts – when we say we’ll do something, we do it.
Just Cashflow – helping businesses develop and grow. Just Cashflow works hard to support ambitious businesses grow and develop. They also work together with brokers and intermediaries to help them meet their clients funding needs. This is the story of how Just Cashflow worked with Gable Asset Finance to support a number of their clients. Gable Asset Finance is a business finance brokerage specialising in asset and equipment finance. They work with businesses of all sizes and in a number of commercial sectors to finance assets, machinery and equipment. Richard Sorsky has worked with Just Cashflow using their funding solutions for several of his clients. Case Study 1 In this instance one of Richard’s clients, a nightclub owner whose business is very seasonal due to its location in the student district of the city, was requiring funding to support cash flow during the quiet university holidays months. Richard discussed the issue with the nightclub owner and concluded that the best solution was the Revolving Credit Facility, which works just like a traditional overdraft.
This was an excellent solution as it allowed him to sustain his business through the university holidays when attendance to the club was quiet. Case Study 2 This Gable Asset Finance client is a barrister who finds cash flow difficult when he is involved in long trials where remuneration is not forthcoming until the final outcome of the trial. During these long periods the barrister still has to pay his overheads resulting in difficulties in cash flow. The Revolving Credit Facility was also identified as a solution for the barrister. This allows him to draw down funds as and when he needs to and access to the facility gives him peace of mind during lengthy legal processes. Case Study 3 A third client, an equipment rental company, needed funds to assist them in purchasing new equipment to rent out to their customers. Richard recommended Business Builder, a flexible loan which works in the same way as a traditional bank loan and is great for businesses who need funds for
longer periods and who want certainty on their payments. Interest is charged on a monthly basis with payment terms from 24 months to 60 months. In this particular case Richard’s client was able to use the funds to make the purchases needed, giving him certainly on this monthly payments and at the same time giving the business an advantage over their competitors. Of Just Cashflow, Richard says “The speed of process cannot be faulted. From the outset of the initial application the staff were professional and quick to respond. The underwriters are knowledgeable and professional and the highest standard I have come across in the industry.” He went on to say “Commission was paid immediately. It is a pleasure to deal with Just Cashflow. The staff were a pleasure to deal with, professional, knowledgeable and quick to respond.” High praise for the lender indeed. Just Cashflow can help you get your clients funding deals across the finishing line – call them today on 0121 227 6450
Fast & flexible funding for your clients from Just Cashflow... Fast, flexible funding solutions from £10k to £500k Simple application process
Range of solutions to meet differing client needs Only pay interest on the amount drawn down
A strong underwriting team and broker relations team to support you and your clients needs *Unregulated products only. Fees and interest added to the loan amount. All loans subject to underwriting criteria.
Just call us now
Tel: 020 3540 5120
0121 418 5037
Alternatively, find out more
justcashflow.com/partner
Discover more at amicuspropertyfinance.co.uk/lending/your-winning-team For professional intermediary use only. Loans offered subject to underwriting criteria. Amicus Property Finance is a trading name of Amicus Finance Plc which is registered for anti-money laundering purposes, our FCA Registration Number is 735544. You can confirm our registration on the FCA’s website www.fca.org.uk or by contacting the FCA on 0800 111 6768. Registered in England & Wales, no. 06994954. Registered office: 7 Air Street, London W1B 5AD.
Patron Member FS668057
BCMS668054
Just Cash Flow PLC is registered at 1 Charterhouse Mews, Farringdon, London EC1M 6BB under Company number 08508165 © Just Cash Flow PLC 2018
Your winning team We went pro and started lending our own capital back in 2009.
From kick-off to completion, you win with Amicus:
Over a long career in the game, we’ve built a team that’s known for speed, efficiency and excellent deal control, guided by hands-on management.
• Lending to cover all angles
• NET LTV lending – when we say it’s 70%, it’s 70%* • Dedicated drawdown team for quick results • We don’t move the goalposts – when we say we’ll do something, we do it.
Just Cashflow – helping businesses develop and grow. Just Cashflow works hard to support ambitious businesses grow and develop. They also work together with brokers and intermediaries to help them meet their clients funding needs. This is the story of how Just Cashflow worked with Gable Asset Finance to support a number of their clients. Gable Asset Finance is a business finance brokerage specialising in asset and equipment finance. They work with businesses of all sizes and in a number of commercial sectors to finance assets, machinery and equipment. Richard Sorsky has worked with Just Cashflow using their funding solutions for several of his clients. Case Study 1 In this instance one of Richard’s clients, a nightclub owner whose business is very seasonal due to its location in the student district of the city, was requiring funding to support cash flow during the quiet university holidays months. Richard discussed the issue with the nightclub owner and concluded that the best solution was the Revolving Credit Facility, which works just like a traditional overdraft.
This was an excellent solution as it allowed him to sustain his business through the university holidays when attendance to the club was quiet. Case Study 2 This Gable Asset Finance client is a barrister who finds cash flow difficult when he is involved in long trials where remuneration is not forthcoming until the final outcome of the trial. During these long periods the barrister still has to pay his overheads resulting in difficulties in cash flow. The Revolving Credit Facility was also identified as a solution for the barrister. This allows him to draw down funds as and when he needs to and access to the facility gives him peace of mind during lengthy legal processes. Case Study 3 A third client, an equipment rental company, needed funds to assist them in purchasing new equipment to rent out to their customers. Richard recommended Business Builder, a flexible loan which works in the same way as a traditional bank loan and is great for businesses who need funds for
longer periods and who want certainty on their payments. Interest is charged on a monthly basis with payment terms from 24 months to 60 months. In this particular case Richard’s client was able to use the funds to make the purchases needed, giving him certainly on this monthly payments and at the same time giving the business an advantage over their competitors. Of Just Cashflow, Richard says “The speed of process cannot be faulted. From the outset of the initial application the staff were professional and quick to respond. The underwriters are knowledgeable and professional and the highest standard I have come across in the industry.” He went on to say “Commission was paid immediately. It is a pleasure to deal with Just Cashflow. The staff were a pleasure to deal with, professional, knowledgeable and quick to respond.” High praise for the lender indeed. Just Cashflow can help you get your clients funding deals across the finishing line – call them today on 0121 227 6450
Fast & flexible funding for your clients from Just Cashflow... Fast, flexible funding solutions from £10k to £500k Simple application process
Range of solutions to meet differing client needs Only pay interest on the amount drawn down
A strong underwriting team and broker relations team to support you and your clients needs *Unregulated products only. Fees and interest added to the loan amount. All loans subject to underwriting criteria.
Just call us now
Tel: 020 3540 5120
0121 418 5037
Alternatively, find out more
justcashflow.com/partner
Discover more at amicuspropertyfinance.co.uk/lending/your-winning-team For professional intermediary use only. Loans offered subject to underwriting criteria. Amicus Property Finance is a trading name of Amicus Finance Plc which is registered for anti-money laundering purposes, our FCA Registration Number is 735544. You can confirm our registration on the FCA’s website www.fca.org.uk or by contacting the FCA on 0800 111 6768. Registered in England & Wales, no. 06994954. Registered office: 7 Air Street, London W1B 5AD.
Patron Member FS668057
BCMS668054
Just Cash Flow PLC is registered at 1 Charterhouse Mews, Farringdon, London EC1M 6BB under Company number 08508165 © Just Cash Flow PLC 2018
Opinion | & commentary Thought leadership from our Patrons and Members
Cutting through the red tape Michael Strange Managing director Funding 365
A
t Funding 365, we read with great interest a recent article on the top 10 most common causes of shortterm finance delays.
To recap the article, a law firm audited 200 short-term finance cases, deciding what caused delays to each of them. Here are the findings, ranked in descending order: third party external factors lender red tape borrower naivety/inexperience borrower delay in funding initial costs and valuation fees miscommunication by the intermediary title/legal issues requiring solution borrower solicitor inefficiency valuation provided late in the process, raising issues requiring legal and other investigation change in terms/revised offers use of third party firms for ID verification. Looking at just one reason, I’m genuinely surprised that lender red tape was found to be the second most common cause of delays. The word ‘fast’ is bandied about by so many bridging and development lenders that one would be forgiven for believing
54 | NACFB Magazine
that red tape is something that belongs solely to term lenders and high street banks. If this audit is to be believed and lender delays are prevalent, it would appear that some short-term lenders are being less than honest about how fast they can move. Before I go any further, it’s important to note that this survey was conducted by solicitors. I bet that if you picked one of the delayed cases at random and asked the borrower, their lawyer, the intermediary, the lender and their lawyer what caused the delay, they wouldn’t all give the same reason. Plus, short-term finance transactions can be complex, so there may be multiple reasons for any hold ups. However, 200 cases make a solid sample size by any standard, so the survey’s findings must hold some truth. Since Funding 365’s processes are highly efficient we’re able to complete in a few days if all other parties play ball. We’ve completed a huge number of bridging deals – including some complex, multimillion-pound, multi-property portfolio cases – in three working days or less. We processed one particularly pressing deal (worth over £6m) over a weekend. So what might other lenders be doing differently that slows them down? The law firm identified three examples for lender delays. First, lack of empowerment at underwriting level. At Funding 365 our underwriters are unusual in that they are decision makers who are empowered to see each case through from initial enquiry to completion and beyond. This means that intermediaries are able to have just one point of contact if they wish to. Adding
more people into the process (such as BDMs, additional underwriters, credit officers etc) does invariably slow it down. Second, credit committee approvals. Funding 365 doesn’t have a credit committee as such. Our directors are always on hand to give immediate decisions on the bigger enquiries that are above the remits of our underwriters. Much larger firms may need more structure than this to function properly, however, which is why credit committees exist. The onus here is on intermediaries to advise their clients on which lenders can move quickly and which can’t. However, lenders must help by being transparent about their systems and processes, as clearly not all lenders work in the same way. Finally, leaving issues identified early in the process until final credit approval stage. I think that we can all agree that there’s no excuse for this from any party. I concur with the law firm’s final comment in the article: “It’s incumbent on all the stakeholders, including lenders, lawyers, valuers and intermediaries, to look inwards. Are their processes as efficient and streamlined as they believe them to be?” No one should rest on their laurels. At Funding 365 we continually assess our processes. The lenders that do things a bit differently and a bit better will drive the changes that will define the shape of the future short-term finance market. In the jungle it isn’t the large that eat the small – it’s the fast that eat the slow.
Opinion | & commentary Thought leadership from our Patrons and Members
Cutting through the red tape Michael Strange Managing director Funding 365
A
t Funding 365, we read with great interest a recent article on the top 10 most common causes of shortterm finance delays.
To recap the article, a law firm audited 200 short-term finance cases, deciding what caused delays to each of them. Here are the findings, ranked in descending order: third party external factors lender red tape borrower naivety/inexperience borrower delay in funding initial costs and valuation fees miscommunication by the intermediary title/legal issues requiring solution borrower solicitor inefficiency valuation provided late in the process, raising issues requiring legal and other investigation change in terms/revised offers use of third party firms for ID verification. Looking at just one reason, I’m genuinely surprised that lender red tape was found to be the second most common cause of delays. The word ‘fast’ is bandied about by so many bridging and development lenders that one would be forgiven for believing
54 | NACFB Magazine
that red tape is something that belongs solely to term lenders and high street banks. If this audit is to be believed and lender delays are prevalent, it would appear that some short-term lenders are being less than honest about how fast they can move. Before I go any further, it’s important to note that this survey was conducted by solicitors. I bet that if you picked one of the delayed cases at random and asked the borrower, their lawyer, the intermediary, the lender and their lawyer what caused the delay, they wouldn’t all give the same reason. Plus, short-term finance transactions can be complex, so there may be multiple reasons for any hold ups. However, 200 cases make a solid sample size by any standard, so the survey’s findings must hold some truth. Since Funding 365’s processes are highly efficient we’re able to complete in a few days if all other parties play ball. We’ve completed a huge number of bridging deals – including some complex, multimillion-pound, multi-property portfolio cases – in three working days or less. We processed one particularly pressing deal (worth over £6m) over a weekend. So what might other lenders be doing differently that slows them down? The law firm identified three examples for lender delays. First, lack of empowerment at underwriting level. At Funding 365 our underwriters are unusual in that they are decision makers who are empowered to see each case through from initial enquiry to completion and beyond. This means that intermediaries are able to have just one point of contact if they wish to. Adding
more people into the process (such as BDMs, additional underwriters, credit officers etc) does invariably slow it down. Second, credit committee approvals. Funding 365 doesn’t have a credit committee as such. Our directors are always on hand to give immediate decisions on the bigger enquiries that are above the remits of our underwriters. Much larger firms may need more structure than this to function properly, however, which is why credit committees exist. The onus here is on intermediaries to advise their clients on which lenders can move quickly and which can’t. However, lenders must help by being transparent about their systems and processes, as clearly not all lenders work in the same way. Finally, leaving issues identified early in the process until final credit approval stage. I think that we can all agree that there’s no excuse for this from any party. I concur with the law firm’s final comment in the article: “It’s incumbent on all the stakeholders, including lenders, lawyers, valuers and intermediaries, to look inwards. Are their processes as efficient and streamlined as they believe them to be?” No one should rest on their laurels. At Funding 365 we continually assess our processes. The lenders that do things a bit differently and a bit better will drive the changes that will define the shape of the future short-term finance market. In the jungle it isn’t the large that eat the small – it’s the fast that eat the slow.
OPINION & COMMENTARY
OPINION & COMMENTARY
Examining the impact of a slowing sales cycle Zuhair Mirza Principal Avamore
Earlier this year, Avamore produced its first ever industry report in which a slowdown of the sales cycle for H2 2018 was observed and predicted to continue.
I
t is no surprise to see that the market as a whole has experienced a softening due to a number of factors, including changes in stamp duty, affordability being stretched for owner occupiers, a change in government policy targeting buy-to-let landlords and changes to taxation for overseas private investment (namely Annual Tax on Enveloped Dwellings and Inheritance Tax). These developments – combined with a degree of uncertainty around Brexit – mean that, on the whole, appetite for buying in the UK market has taken a dip. For those that work alongside developers, it is important to consider what wider impact these changes are likely to have. The slowing sales cycle will inevitably result in a higher cost of finance due to the longer term of loans. This increase in interest costs, at a constant gross loan to value ratio, also results in a lower net advance being provided for projects. The combination of these two factors is a lower return on equity for developments, before taking in to account any movements in market prices. With buyer appetite subdued, developers who would have expected to sell projects within a relatively short time frame may turn to buy-to-let mortgages for their exit strategy if bids do not reach the desired price. In this scenario, development finance lenders are repaid in full and the developer retains ownership of the scheme under a more cost-efficient capital structure. A knock-on effect of this type of exit is that the pace at which developers can move on to their next project is likely to drop due to their initial equity and profit being tied up in previous developments. Conversely, lenders are being repaid via a refinance and investor appetite for credit exposure in UK real estate markets remains very strong. We expect this imbalance
between the recycling of equity and debt capital in the coming months may result in lenders finding it increasingly difficult to redeploy capital. This may well be unfamiliar territory for a large part of the sector and it will be interesting to observe how the lending industry responds to the changing environment. We have already begun to see lenders seeking to expand their product range and geographic coverage, although we acknowledge that there may be other reasons for this. How could the equity market evolve going forward? If we look at the economy as a whole, we have yet to see the fundamental economic impact of Brexit. If a form of soft Brexit takes shape over the coming months, then sentiment may be the key factor that impacts the sales cycle and we may have seen the worst of it. If Brexit results in an exit from the single market, then significant economic changes will likely follow with the establishment of standalone trade agreements. This will have wide-reaching effects on the economy, investor appetite and the affordability of housing. Historically, however, in the medium to long term, UK residential property has performed well and hopefully that underlying trend will continue and release pressure points in real estate capital markets.
OPINION & COMMENTARY
OPINION & COMMENTARY
Examining the impact of a slowing sales cycle Zuhair Mirza Principal Avamore
Earlier this year, Avamore produced its first ever industry report in which a slowdown of the sales cycle for H2 2018 was observed and predicted to continue.
I
t is no surprise to see that the market as a whole has experienced a softening due to a number of factors, including changes in stamp duty, affordability being stretched for owner occupiers, a change in government policy targeting buy-to-let landlords and changes to taxation for overseas private investment (namely Annual Tax on Enveloped Dwellings and Inheritance Tax). These developments – combined with a degree of uncertainty around Brexit – mean that, on the whole, appetite for buying in the UK market has taken a dip. For those that work alongside developers, it is important to consider what wider impact these changes are likely to have. The slowing sales cycle will inevitably result in a higher cost of finance due to the longer term of loans. This increase in interest costs, at a constant gross loan to value ratio, also results in a lower net advance being provided for projects. The combination of these two factors is a lower return on equity for developments, before taking in to account any movements in market prices. With buyer appetite subdued, developers who would have expected to sell projects within a relatively short time frame may turn to buy-to-let mortgages for their exit strategy if bids do not reach the desired price. In this scenario, development finance lenders are repaid in full and the developer retains ownership of the scheme under a more cost-efficient capital structure. A knock-on effect of this type of exit is that the pace at which developers can move on to their next project is likely to drop due to their initial equity and profit being tied up in previous developments. Conversely, lenders are being repaid via a refinance and investor appetite for credit exposure in UK real estate markets remains very strong. We expect this imbalance
between the recycling of equity and debt capital in the coming months may result in lenders finding it increasingly difficult to redeploy capital. This may well be unfamiliar territory for a large part of the sector and it will be interesting to observe how the lending industry responds to the changing environment. We have already begun to see lenders seeking to expand their product range and geographic coverage, although we acknowledge that there may be other reasons for this. How could the equity market evolve going forward? If we look at the economy as a whole, we have yet to see the fundamental economic impact of Brexit. If a form of soft Brexit takes shape over the coming months, then sentiment may be the key factor that impacts the sales cycle and we may have seen the worst of it. If Brexit results in an exit from the single market, then significant economic changes will likely follow with the establishment of standalone trade agreements. This will have wide-reaching effects on the economy, investor appetite and the affordability of housing. Historically, however, in the medium to long term, UK residential property has performed well and hopefully that underlying trend will continue and release pressure points in real estate capital markets.
OPINION & COMMENTARY
SPECIALIST LENDING SOLUTIONS BRIDGING FINANCE
Connecting to the digital customer Michael Williams Head of operations Amicus
Many commercial mortgage lenders have a view that they interact with two kinds of customer: the end borrower and the broker who introduces the borrower’s application. The broker is the key relationship for the lender, effectively acting as the agent, explaining the lender’s proposition to the end customer. They manage the relationship between the end borrower and the lender through to completion. Once the loan has been funded, the relationship between the borrower and the lender becomes more direct. The challenge for lenders is that in the lender/broker world of SME commercial mortgages, it is not entirely clear how digital can be implemented successfully and deliver real benefits to both the lender and the broker. In a market with an increasing number of lenders, a compelling case must be made to brokers to encourage them to adopt any new
58 | NACFB Magazine
Further consideration has to be given to the nature of the product and the fact that some lenders have large broker panels, who often have their own platforms for managing applications. A commercial mortgage is not a basic unsecured loan, and the complexity of some applications – whether it is a limited company set up to manage a large commercial mortgage portfolio or a trading business – makes it very challenging to develop an app on a mobile phone that could cater for all variations. At the moment, many lenders favour a web-based portal which broadly contracts out key data collection and the input of information into the lender’s application platform. The right strategy for lenders in this space for the next few years is to forego the full digital roadmap, and to go down the automation route, using digital type technologies where appropriate to lower the cost of delivery and improve the management of data. The best approach at present is to invite key brokers to be involved in the design of the webbased application portal, to automate repetitive tasks when it is economic to do so and to design processes that ensure that all data is accurate and is held on the lender’s platform.
The challenge for lenders is that it is not entirely clear how digital can be implemented successfully to deliver real benefits to both the lender and the broker
Our lowest Bridging Finance range from only 0.49%pm Available for standard and light refurbishment Automated valuations and Joint Legal Representation for faster completions Dedicated underwriter from DIP to completion Available through all distribution channels
Contact your local BDM 0800 116 4385 precisemortgages.co.uk
FOR INTERMEDIARY USE ONLY.
Precise Mortgages is a trading name of Charter Court Financial Services Limited which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority (Financial Services Register Firm Reference Number 494549). Registered in England and Wales (company number 06749498). Registered office: 2 Charter Court, Broadlands, Wolverhampton WV10 6TD.
01848 (3)
People can often be confused about what digital means, and to different people it can be different things. The best definition I have seen is that digital is the convergence of social media, mobile, the web and the cloud, which are used to connect to the new kind of digital customer. Digital is not just automation – it is the wider application of these newer technologies to create new business concepts.
way of working, which in most cases will target how they submit an application and how they manage or monitor it throughout the application process.
Get in touch
T
here has been a great deal of talk about digital across all areas of the economy over the last 10 years or more, including the banking and commercial mortgage sectors. For many businesses it is seen as a more effective way of connecting with customers, facilitating growth and managing data.
OPINION & COMMENTARY
SPECIALIST LENDING SOLUTIONS BRIDGING FINANCE
Connecting to the digital customer Michael Williams Head of operations Amicus
Many commercial mortgage lenders have a view that they interact with two kinds of customer: the end borrower and the broker who introduces the borrower’s application. The broker is the key relationship for the lender, effectively acting as the agent, explaining the lender’s proposition to the end customer. They manage the relationship between the end borrower and the lender through to completion. Once the loan has been funded, the relationship between the borrower and the lender becomes more direct. The challenge for lenders is that in the lender/broker world of SME commercial mortgages, it is not entirely clear how digital can be implemented successfully and deliver real benefits to both the lender and the broker. In a market with an increasing number of lenders, a compelling case must be made to brokers to encourage them to adopt any new
58 | NACFB Magazine
Further consideration has to be given to the nature of the product and the fact that some lenders have large broker panels, who often have their own platforms for managing applications. A commercial mortgage is not a basic unsecured loan, and the complexity of some applications – whether it is a limited company set up to manage a large commercial mortgage portfolio or a trading business – makes it very challenging to develop an app on a mobile phone that could cater for all variations. At the moment, many lenders favour a web-based portal which broadly contracts out key data collection and the input of information into the lender’s application platform. The right strategy for lenders in this space for the next few years is to forego the full digital roadmap, and to go down the automation route, using digital type technologies where appropriate to lower the cost of delivery and improve the management of data. The best approach at present is to invite key brokers to be involved in the design of the webbased application portal, to automate repetitive tasks when it is economic to do so and to design processes that ensure that all data is accurate and is held on the lender’s platform.
The challenge for lenders is that it is not entirely clear how digital can be implemented successfully to deliver real benefits to both the lender and the broker
Our lowest Bridging Finance range from only 0.49%pm Available for standard and light refurbishment Automated valuations and Joint Legal Representation for faster completions Dedicated underwriter from DIP to completion Available through all distribution channels
Contact your local BDM 0800 116 4385 precisemortgages.co.uk
FOR INTERMEDIARY USE ONLY.
Precise Mortgages is a trading name of Charter Court Financial Services Limited which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority (Financial Services Register Firm Reference Number 494549). Registered in England and Wales (company number 06749498). Registered office: 2 Charter Court, Broadlands, Wolverhampton WV10 6TD.
01848 (3)
People can often be confused about what digital means, and to different people it can be different things. The best definition I have seen is that digital is the convergence of social media, mobile, the web and the cloud, which are used to connect to the new kind of digital customer. Digital is not just automation – it is the wider application of these newer technologies to create new business concepts.
way of working, which in most cases will target how they submit an application and how they manage or monitor it throughout the application process.
Get in touch
T
here has been a great deal of talk about digital across all areas of the economy over the last 10 years or more, including the banking and commercial mortgage sectors. For many businesses it is seen as a more effective way of connecting with customers, facilitating growth and managing data.
our book stays open
AN ADAPTABLE, APPROACHABLE AND DEPENDABLE BRIDGING FINANCE PARTNER WITH LOANS THAT RANGE FROM THE EVERYDAY TO THE EXTRAORDINARY.
E TH BRIDGING OUTSID
E BOX
LE V ER AG ING P RO PE RT Y ASSE TS
THE RISE OF THE REFURB
THE CHAINBREAK
WHEN OPPORTUNITY KNOCKS
FAST FUND S URGE NT ACQU ISITIONS
RAISING THE CAPITAL