Commercial Broker (NACFB Magazine) July/August 2022

Issue 102 JULY/AUGUST 2022

Broker COMMERCIAL

The award-winning magazine for the National Association of Commercial Finance Brokers

16 A REAL FORCE FOR GOOD

18 A BLUEPRINT FOR THE FUTURE

Analysing impact lending and the trajectory of CDFIs

Birthday celebrations NACFB heralds 30th year with Summer Party

Understanding the role of ESG in financial services

44 KEEPING SKIN IN THE GAME Brokers won’t be replaced by algorithms anytime soon

52 NACFB EXPO SNAPSHOTS A community back in Birmingham and back in business

Contents

In this July & August issue NACFB News

Special Features

4 6 8

22-23

10 12-14

Note from Norman Chambers Updates from the Association Note from headline sponsor, Allica Bank Industry news round-up Membership news

24-36

Shawbrook Bank: Supporting professionals NACFB: Celebrating a 30-year milestone

Industry Insight 40 42-43

Clyde & Co LLP: Double take Triodos Bank UK: Zeroing in

Opinion & Commentary 44-45 46 48-49 50 52 54

16

Swoop Funding: Skin in the game?

Mercantile Trust: Seconds, anyone?

Unity Trust Bank: The common good Hope Capital: Under the lights NACFB Expo: A snapshot of #CFE2022 Five minutes with: Tatyana Stefanova, Business Development Manager – Scotland, LendInvest

JENNY BARRETT Communications Consultant

MAGAZINE ADVERTISING T 02071 010359

NACFB: Blueprint for a better future

Diana Chrouch OBE: Empowering minority-led business owners

33 Eastcheap | London | EC3M 1DT Kieran.Jones@nacfb.org.uk

33 Eastcheap | London | EC3M 1DT Laura.Mills@nacfb.org.uk

Magazine@nacfb.org.uk

Ask the Expert 20

KIERAN JONES Editor & Feature Writer

LAURA MILLS Graphic Designer

SWIG Finance: A force for good

Compliance Update 18-19

Further Information

33 Eastcheap | London | EC3M 1DT Jenny.Barrett@nacfb.org.uk

Patron Profile 16-17

46

42

MACKMAN Design & Production T 01787 388038

mackman.co.uk

NACFB | 3

Welcome

Norman’s Note

T

he sweltering heat that swept across the UK this summer serves as a timely reminder of what life could be like if global temperatures keep rising. Rather than the odd hot week here and there, sustained periods of temperatures over 35°C could well become the norm.

Whilst some may think that is a good thing, it comes with a heavy price.

I’m not sure any of us would want to deal with the accompanying water shortages, crop failures and wildfires. Long term and irreversible changes to the UK’s climate will also impact the way many brokers and lenders service their clients. EPC isn’t just about insulating homes; it considers a manner of efficiencies. And I fear we may yet need to completely rethink how we construct the houses we build to cope with more extreme weather disparities.

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CMY

Norman Chambers Managing Director | NACFB

The sun however did shine on two of the NACFB’s biggest flagship events. Our annual NACFB Expo was held on a gloriously sunny day back in June, and we quickly followed it up with our inaugural Summer Party, celebrating the Association’s 30th birthday on an even warmer day. You can read more about both events in this issue.

One area where we have been able to control unexpected national rises, is that of the Professional Indemnity insurance market. The team and I have worked tirelessly to launch our very own insurance mutual, exclusively for NACFB Members, further details can be found in this issue and over the coming weeks.

I hope the NACFB community have at least found time to enjoy the sunshine and I look forward to engaging with many of you at one of our upcoming award ceremonies, where hopefully the temperatures are a little cooler.

4 | NACFB

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NACFB News

Association updates for July & August 2022

NACFB launches insurance mutual

T

he NACFB is proud to announce that it has launched an insurance mutual designed to address rising Professional Indemnity Insurance (PII) premiums and provide tailored cover for its Members.

matters into our own hands. For the last few months, the Association has been quietly rolling out a viable solution, one that not only provides Members with tailored cover at a lower premium but also provides tangible Mutual benefits to the policyholders.”

Nearly 100 NACFB Members have already taken out a policy through the NACFB Mutual, delivering average savings of up to 30% when compared to previous PII premiums.

Paul added: “The NACFB Mutual seeks to put an end to market inequality whilst establishing greater stability and continuity for our Members. By removing a key concern for Members, they can focus on doing what they do best, helping to fund UK businesses.”

The NACFB Mutual, managed by specialist provider Tower Insurance, is available exclusively to NACFB Members. It seeks to provide more expansive PII cover tailored specifically to the needs of commercial finance brokers. The Association’s mutual also delivers additional benefits such as lower premiums and the ability to participate in the mutual’s success. The NACFB Mutual has been developed in direct response to a PII market plagued by increases in premiums and excesses, alongside continual reductions in policy coverage.

Owned by its policyholders, the NACFB Mutual is governed by an elected board of directors and will only insure the professional indemnity exposure of NACFB Members. Owing to the minimum standards reviews undertaken by the Association, NACFB Members carry a lower risk profile than many non-Members and the mutual’s pricing will seek to reflect such benchmarks of professionalism.

NACFB chair, Paul Goodman commented: “Last year, 21% of NACFB Members said the biggest threat to their brokerage was the rising cost of PII. Rather than wait for premium prices to fall, we have taken 6 | NACFB

Phil Gray, managing director of Watts Commercial Finance shared: “We were among the very first to take out a policy through the NACFB Mutual and benefited from savings of 30% over our previous policy.

“The underwriting team for the NACFB Mutual understood the nature of our business and explained how the policy coverage was greater than we had had before,” Phil added.

NACFB managing director, Norman Chambers said: “The broader professional indemnity market has been a poorly performing sector for insurers, and it was evident to the NACFB Board that our Members were being unfairly categorised, when in reality, they carry a much lower PII risk. In addition, the ongoing delivery of data from our Members will enable us to maintain a fairer insurance cover.”

Members with renewals on the horizon can obtain a quote for the NACFB Mutual by visiting nacfb.org/mutual

It’s our

Sweet spot

Note from our Sponsor

All for one Brokers sit at the vanguard of the green revolution

Gareth Anderson Product Owner, Lending Allica Bank

businesses were looking to fund with commercial finance. Our research revealed the following: • 48% of brokers said businesses were looking to raise capital to fund upgrades to their machinery.

W

ith the drive for businesses to go green continuing to grow, Allica Bank’s latest broker survey makes for some encouraging reading. 64% of the 143 commercial mortgage brokers we polled told us they’d noticed more of their clients looking for finance to improve their company’s sustainability credentials, with a quarter saying they’d seen a big increase.

It’s a positive trend. Alongside the environmental case for SMEs investing in green initiatives, it’s clear the business case – be it cutting running costs, encouraging investment or attracting new customers – has cut through, too.

But businesses need to have more than just ambition to go green.

They need the finance too. And considering how expensive these projects can often be, finding it won’t necessarily be easy.

This is why I think the role of the broker community is going to be so important to the UK’s drive towards net zero. The knowledge and expertise of a broker will be vital for ensuring SMEs can find the finance they need and are going green in a financially sustainable way.

• 35% wanted to upgrade their premises to improve its green credentials.

• 26% said their clients were looking to fund the purchase of electric vehicles.

• A quarter told us they had enquiries from SMEs wanting to transform their products or services to become more eco-friendly.

• 20% said clients were after a mortgage to move to a greener premises.

With the information above, we wanted to help brokers understand where they can focus their attention and provide the best support to their clients.

A joint effort

How are businesses going green?

While brokers sit front and centre, the whole commercial finance industry has a role to play – including Allica. For example, we recently introduced a rate reduction incentive for businesses borrowing against a property with an EPC rating in the A-C bracket. We are also exploring other initiatives to encourage borrowing for climate friendly projects.

We thought it would be useful for brokers to gauge the areas they could add most value. As such, we also surveyed what green projects

As an industry, we can make a huge difference to tackling the climate crisis. But it’s going to need everybody to do their bit.

8 | NACFB

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Industry News

Industry News 1. FCA increases adviser fees by 5.6% The FCA is increasing its annual funding requirement (AFR) for advisers by 5.6% from July. The regulator said minimum fees for advice firms will increase to £1,500 for 2022/23, from £1,151 in 2021/22, and increase further to £1,750 in 2023/24. In response to a consultation, the FCA said it received a significant amount of feedback that it should not increase fees, especially minimum fees for small firms. The watchdog said it froze the minimum and flat-rate fees for two years during the pandemic.

3. Bank of England warns of an economic storm The Bank of England has said the economic outlook has “deteriorated materially”. The Bank’s latest Financial Stability Report urged banks to ramp up capital buffers but noted that lenders are well-placed to weather even a severe economic downturn and resilient to debt vulnerabilities. While banks’ capital ratios are still strong, they are expected to decline slightly. The Financial Policy Committee warned commercial banks against making “excessive” cuts in lending to households and businesses because this would risk exacerbating an economic downturn.

4. Bailey opposes Treasury plan to overrule regulators

2 2. Struggling small firms dismayed over call to cut prices A campaign by David Buttress, the Government’s cost of living tsar, asking businesses to cut prices to help with living costs has been branded a “slap in the face” for small firms. Martin McTague, national chair of the Federation of Small Businesses said asking struggling companies to “soak up additional costs just isn’t realistic” and that most small firms were “well beyond the point of being able to absorb extra costs without passing them on, which is often a last resort”.

10 | NACFB

Bank of England governor Andrew Bailey has expressed concern over Treasury plans to allow ministers to overrule financial watchdogs on key areas of City regulation.

According to Sky News he said that any such clause in the Financial Services and Markets Bill would undermine perceptions of the Bank’s independence. Sky News says the power to overrule the Prudential Regulation Authority would be held in reserve, citing a source who says it would rarely, if ever, be used and could need parliamentary approval.

5. Fast growing firms set to create thousands of jobs Britain’s fastest-growing small businesses are poised to create thousands of new jobs over the next year, despite concerns over the impact soaring inflation and rising interest rates will have on the economy. The Sunday Times 100, a ranking of Britain’s fastest-growing private companies with revenues of less than £250 million, reveals that more than 6,000

jobs will be generated over the next 12 months as businesses look to expand, attracting investment and helping to get the economy back on track.

6. Scepticism that a global recession can be avoided World Bank chief economist Carmen Reinhart is sceptical that global economies can avoid a recession amid a climate of surging inflation and higher interest rates. She told Reuters: “What worries everybody is that all the risks are stacked on the downside.” The World Bank recently cut its global growth forecast by nearly a third to 2.9% for 2022. It added that global growth could fall to 2.1% in 2022 and 1.5% in 2023 if downside risks materialised.

7 7. City watchdog bolsters its leadership team To keep up with its expanding remit, the FCA has hired 500 people in the last six months and appointed six directors. Roma Pearson will direct consumer finance; Camille Blackburn takes on the newly created role of director of wholesale buy-side; Matthew Long tackles payments and digital assets; Anthony Monaghan has been promoted to director of retail and regulatory investigations; Karen Baxter joins enforcement as director of strategy, policy, international and intelligence; and Simon Walls, will be director of wholesale sell-side.

Membership News

Membership News Allica Bank lends £1 billion to UK small businesses

New invoice finance company appoints managing director

At the end of June 2022, Allica Bank reached its largest milestone yet with over £1 billion in loans to Britain’s SMEs. In 2021, the NACFB Patron and headline sponsor set itself the target of £500 million committed lending offers, which it exceeded by achieving £560 million.

East Yorkshire-based One Stop Business Finance (OSBF) is continuing its expansion plans after the launch of a new invoice financing company and a doubling in the size of its team. Since the NACFB Member was founded seven years ago, it has enjoyed sustained profitable growth UK-wide which has provided the platform for OSBF to fund the next stage of its expansion.

The Bank now forecasts to complete £3 billion of lending to established SMEs in the next three years. Allica has also shared that it continues to make strides in its asset finance business, having now completed over £100 million of asset finance funding since launching in 2021. This figure is expected to double by the end of 2022 and follows the welcoming of some 2,000 SME customers when it acquired AIB’s GB SME lending portfolio late last year.

Richard Davies, chief executive officer, Allica Bank, commented: “Our ambitious, yet achievable, target of lending £3 billion to SMEs over the next three years will enable us to support even more SMEs.” Alongside its lending to SMEs, the Bank has built financial momentum.

Annual net operating income increased to £7.8 million in 2021, and April year to date net operating income has already exceeded this at £10.1 million, driving the Bank towards monthly profitability in 2022.

12 | NACFB

Now the new company in the group, One Stop Invoice Finance Limited, will be headed by Lynn-Marie Jameson as managing director.

Lynn-Marie has worked in the invoice finance sector for almost two decades and brings with her an in-depth knowledge of the invoice finance market, including a wealth of experience in leadership.

Along with working in the independent invoice finance market providing funding solutions for SME businesses, Lynn-Marie also brings extensive experience of working in high street banks, supporting mid to large corporate businesses.

Andrew Mackenzie, the group managing director of One Stop Business Finance, said: “Our invoice finance plans have been accelerated by a couple of years because we have found an exceptional candidate in Lynn-Marie at an opportune moment.”

One Stop Business Finance provides secured loans and invoice finance to SMEs nationwide from its own funding and other providers.

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Membership News

Membership News Islamic investment company takes a majority stake in OFFA

One in five businesses struggling to remain competitive

Sharia-compliant short-term bridge finance provider OFFA is setting its sights on major expansion after securing a multi-million pound investment from the UAE’s Gulf Islamic Investments (GII), which has taken a 51% stake in the start-up. The funding will enable OFFA to deepen and broaden its presence in the UK’s Islamic property bridge finance market, which is estimated to be worth £500 million annually.

In the wake of UK inflation reaching a 40-year high of 9.1%, data from Time Finance has revealed that 91% of SMEs have been forced to hike their own prices in order to keep up with soaring operational costs.

Formed in 2019, the NACFB Patron aims to meet the unfulfilled demand from British Muslims, who require finance for their property purchases in accordance with their faith. The Birmingham-based start-up quickly demonstrated its proof of concept, completing dozens of deals and garnering financing opportunities totalling £178 million. GII lists UK interests among the $3 billion assets it manages, including property on Bayswater Road, London, and the Lewis Building in Birmingham.

The GII investment will be used to develop OFFA’s IT infrastructure and staff recruitment, as the firm gears up for the launch of Sharia-compliant retail and commercial bridge and long-term finance products in 2023. Commenting on the importance of the GII investment deal, OFFA chair Sultan Choudhury said: “It’s fantastic to find a partner that supports our thriving business and shares our values.”

14 | NACFB

The NACFB Patron found that one in five businesses fear they are struggling to remain competitive in the wake of rising costs. Some 63% of firms were found to have increased their prices by 10% and one in five by up to a significant 30%. Of the businesses surveyed, soaring energy and utility costs and the rising cost of materials and stock ranked the two greatest threats to businesses.

Ed Rimmer, Time Finance chief executive officer, said: “Something’s got to give in the coming weeks and months for businesses to remain viable, as reactive changes to their service offering and increasing costs will only go so far in overcoming the challenges they face.”

The research also found that nearly 50% of the business owners were considering switching to cheaper supply chains. While this kind of impact can usually be predicted during times of financial hardship, changes to a company’s supply chain can worsen their circumstances by impacting the quality of products or services delivered.

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Patron Profile

A force for good Impact lending and the trajectory of CDFIs John Peters Managing Director SWIG Finance

looking at the bigger picture, and our locally based business managers employ a relationship-focused approach which makes us well-placed to understand our SME customers’ finance and wider business needs.

Impact-led and purpose-driven

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stablished over 30 years ago, SWIG Finance is one of the UK’s longest-standing CDFIs, and covers the South West region with offices in Truro, Exeter and Bristol.

As a Community Development Finance Institution (CDFI), we play an important role in the region’s eco-system of lenders that support micro, small and medium businesses which struggle to find the support they need from mainstream lenders.

What it means to be a CDFI CDFIs operate a fundamentally different business model from traditional shareholder-driven financial institutions, whereby we reinvest profits to support our mission which is to empower underserved businesses in the South West to realise their full potential.

We don’t compete with the banks, but rather help to increase the overall share of SMEs accessing finance, by focusing our efforts on segments which fall outside of the ambit of mainstream lenders due to finance criteria or automated credit scoring methods.

As our decisions are made by people, not computers, we can lend by 16 | NACFB

CDFIs access their own capital for on-lending from ethical sources and lend within an ethical framework to generate positive social and economic impacts. By doing this, we help local businesses, families, and communities to be more resilient.

Our recently published 2021/22 Social Impact Report showcases the diverse range of businesses we support and how these businesses, through our lending, have each generated a positive impact.

The report also highlights how we are working to address key demographic imbalances.

Recently, we have adopted the UN’s Sustainable Development Goals into our reporting methods which is helping us to take a more holistic view of our impact as well as helping us with setting meaningful benchmarks and goals for future lending.

Future customers We raise capital through social investors and undertake lending in our own right, as well as manage funds on behalf of third parties. We support incorporated SMEs in most sectors seeking to grow or invest in productivity. Loan sizes range from £25,000 to £250,000 with an average loan size of £90,000.

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We reinvest profits to support our mission which is to empower underserved businesses in the South West to realise their full potential

Alongside this, we have established ourselves as the South West’s leading provider of the British Business Bank’s Start Up Loans scheme, through which we can provide loans of £500 to £25,000 per business owner for any business trading up to three years.

Through this programme we work with budding entrepreneurs who are opting to branch out and run their own businesses. This is an exciting programme to deliver, and we are currently providing access to start-up funding for two new entrepreneurs each working day.

We follow these new businesses and stand ready to support them when further growth opportunities emerge.

SWIG Finance’s future Since 2019, SWIG Finance has grown rapidly, largely through growing our own lending portfolio in response to demand, with leads sourced both directly and through our expanding intermediary network. We have also tripled our head count and created career development opportunities for staff.

Our busy lending team, led by Nicola Parker (ex- Blaise Commercial Finance, Co-op and Triodos Bank) continues to expand, and we’re currently recruiting new business lending managers across the South West.

Because we get to know our clients, challenge their business plans, and take a flexible approach to lending when the bank has said no, our business model is more resource-intensive, which is why our significant investment in a new,‘turnkey’ CRM and loan management system to provide optimum customer service is so important.

Our investment in technology also supports the efficiency of our relationship management activity, which is crucial in these challenging times. This allows us to provide meaningful ongoing support to our existing customers, whilst focusing new lending on businesses that can adapt and flourish in rapidly changing environments.

The net zero trajectory We are also addressing the climate challenge, and in particular, the question of how we can support the transition to net zero. Along with Social Impact, we see an emphasis on the ‘E’ in ESG (Environmental, Social and Governance) as our core mission, supporting businesses both on a net zero trajectory as well as those in early planning stages.

The transition will need investment in innovative solutions that will create new opportunities and generate reinvestment into local communities. In the UK however, access to finance is already a challenge for many, which is where the CDFI sector is set to play an increasingly important role.

NACFB | 17

Compliance

Blueprint for a better future Understanding the role of ESG in financial services Charlotte Mathieson Senior Compliance Officer NACFB

on environmental and social issues, resulting in increasingly different expectations around the products and services they access and the businesses they work for or with.

Is it just another policy?

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nvironmental, Social and Governance more commonly known as ESG, is the hot topic around the boardroom table with more and more firms adding ESG to their agenda. It is also part of the FCA Strategy for 2022-2025.

“Companies and consumers are increasingly considering environmental, social and governance issues when choosing products, services, and investments. And we are pushing for further diversity and inclusion across financial services and listed companies.”

– FCA 2022-25 strategy

ESG refers to the metrics related to intangible assets held within a business and has been described as a form of corporate social credit score. It can sometimes be used interchangeably with the abbreviation CSR (Corporate Social Responsibility), but CSR has a much broader scope than ESG. It is not a new concept but the importance of ESG has been amplified over recent years by factors like the increase and intensity of natural disasters, social inequalities around income, age, gender, ethnicity, sexuality and disabilities and the global COVID-19 pandemic.

People are more aware of their own responsibilities and their impact 18 | NACFB

ESG covers a diverse range of considerations for businesses, which can’t be neatly documented within a policy or procedure. Rather, firms should think about how they can weave the principles and practices of ESG throughout their business in how they work, how they develop products and services and how they engage with their workforce and the wider community.

It will be down to the governance of firms to effect positive change by developing an ESG strategy and culture that resonates with both

“

ESG refers to the metrics related to intangible assets held within a business and has been described as a form of corporate social credit score

“

employees and external stakeholders. The FCA believes firms that take ESG issues seriously, including having a more diverse and inclusive culture, can better meet the needs of consumers and markets, and support greater innovation and competition.

By stepping back and looking at your business model, you can start to map out how ESG effects your firm

Where to begin…

On Friday 1st January 2016, the United Nations Sustainable Development Goals came into force, after world leaders adopted them in September 2015 at an historic UN summit. They were hailed as ‘a blueprint to achieve a better and more sustainable future for all’, with an aim to promote prosperity while protecting the planet.

Firms may see ESG as an insurmountable task within their risk and governance framework, however, most firms are already making positive contributions to ESG by looking at the way in which they develop: • Products and services • Equality, diversity, and inclusion within workforces • Recruitment processes that remove unconscious bias and expand the methods used to reach a more diverse network of candidates • Flexibility and equal opportunities frameworks • Mechanisms to support professional development in the form of leadership and apprenticeship programmes, education, and training • Efficiencies in relation to waste, recycling, and energy usage • Systems and solutions to enable firms and their workforce to reduce their carbon footprint • Investing in sustainable technology • Partnerships with local communities or charities who champion ESG initiatives and goals.

Integrating ESG into your firm’s strategy The focus on ESG is only going to grow as our workforces become younger and more diverse and the effects of climate change take hold. Whether you are an individual, SME, or a large corporation, it is clear ESG will have a place at the table and a voice throughout your business. So, how can your business start to develop an ESG framework? By stepping back and looking at your business model, you can start to map out how ESG effects your firm and its relationships with internal and external stakeholders.

By identifying those areas, you can then begin to engage with people within your business to develop the key themes you intend to focus on and start to build those themes into a structured framework. The framework should outline: • • • • • • •

Areas of focus Core objectives Key stakeholders Timescales for completion Key milestones Reporting methods How you will revise or adapt your approach.

How the NACFB can support Members to navigate ESG As a Member of the NACFB you can enhance your knowledge and demonstrate your understanding of ESG, and the wider factors mentioned by logging into your NACFB account online and accessing the learning portal, where you will find over 100 e-learning courses that focus not only on regulatory compliance but topics such as: • • • • •

ESG Environmental awareness Unconscious bias Equality and diversity Recruitment.

As well as the learning portal, our model office suite of policies is available to support you and your business to develop and demonstrate your commitment to governance, risk, and compliance.

If you would like to find out more, please contact the NACFB compliance team at compliance@nacfb.org.uk NACFB | 19

Ask the Expert

Empowering minority-led business owners

Q Diana Chrouch OBE Special Advisor to the All Party Parliamentary Group for Ethnic Minority Business Owners, and Chair of FSB National Policy for Ethnic Minority Business Owners

E

thnic minority business (EMBs) owners contribute an estimated £25 billion to the UK’s economy, and despite the size of the potential market, there is a lack of products and services tailored to their needs.

The result is that EMBs are not always able to access the funding and capital they need to scale-up. This is not only frustrating for EMBs owners, it is also bad news for the economy. We asked Diana to explain more.

Many SMEs struggle to find the right kind of finance. In what ways are EMB owners specifically impacted?

There are many disproportionate barriers which occur often as a result of cultural and language differences. There are also structural barriers such as overly strict qualification criteria from lenders, a lack of digital skills as well as the sheer volume of options and providers on the market which can lead to EMBs owners feeling totally overwhelmed. This can even lead 20 | NACFB

&

to some EMBs feeling so discouraged that they do not even attempt to apply.

What would good look like and what targets could we set?

Data on minority business owners remains limited, who should we be looking to for a clearer picture?

To provide a good service the industry needs to move away from ‘one size fits all’. Apart from obvious targets for funding businesses led by ethnic minorities, the industry needs to address the lack of diversity amongst its professionals. Targets for improving the number of diverse commercial brokers and leaders in the industry would be key to making services more inclusive. Diverse teams with lived experience, cultural and language perspectives are going to be better placed to build trust and engagement amongst ethnic minority business communities.

They could also provide the insights needed to enable the development of services tailored to needs of diverse founders and give the industry a competitive edge.

A

It is difficult to get a clear national picture since the financial services industry does not have a systematic standard for ethnicity data collection and so reports about barriers are done on a representative sample basis. This means it is difficult for brokers to develop a good understanding of the needs of EMBs. More specifically a lack of access to ethnicity data in the financial services sector has hampered the ability to analyse customer journey issues and identify the key areas where difficulties are encountered.

Should we be asking government to act, and if so, in what way?

There is plenty of space for government leadership on improving access to finance for EMBs. We need a collaborative approach between the government and the industry to ensure that there is a clear and specific strategy for addressing barriers and unlocking potential. A key objective would be to work with the government to provide a fuller range of tailored financial solutions even in sectors that are sometimes regarded as “red flag” such as hospitality and retail where EMBs are highly represented.

What can the NACFB community do to help reduce key barriers?

A key barrier the NACFB can address is the lack of trust between EMBs communities and the financial sector by proactively working to build relationships with diverse communities. This will ensure that grassroots EMBs are not only aware of the potential for financial solutions but can also build confidence in the expert business support that commercial brokers can give.

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Special Feature

Advertising Feature

Supporting professionals Funding options for professional service clients Kevin Flowerday Head of Professions, Soft Assets and Technology Finance Shawbrook

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anaging a business is a tough balancing act nowadays.

Professional firms, such as solicitors and medical professionals, are innovating to support their clients whilst juggling post-Brexit requirements as well as inflation and supply chain disruptions. With government loans such as the Recovery Loan Scheme reducing their scope, liquidity has become a priority and obtaining access to SME finance is the next critical step.

Equally critical is maintaining a customer-centric approach, which for legal firms requires considerable resources to support their customers and finding the time to keep abreast of developments in the regulatory landscape. Similarly, professionals in the healthcare sector will be focusing on delivering an optimum service for their patients and catching up on the backlog created by the pandemic.

Business essentials such as company taxes, insurances and even equipment upgrades will often then take a back seat. As VAT bills are due each quarter, and late payments result in substantial issues with the HMRC, obtaining solutions that provide certainty of funding throughout the year can be a key differentiator for a broker.

Working with a funder who understands the pressure of the sector and the submission processes for company taxes can eliminate this worry. In fact, a VAT funding facility ensures the full payment is made in advance of the HMRC due date without impacting on the firm’s cashflow.

Another business essential that is often overlooked is Professional Indemnity Insurance. Although a corporate requirement for any company, this safety net requires planning. One needs to assess changes in requirements, taking into consideration the effect of newer advisory areas and contracted services before determining 22 | NACFB

the right insurer and identifying the one-off cost which often creates an unexpected peak in expenditure. Financing this cost can streamline the workload for your clients and ease cashflow management with monthly payments agreed over a fixed term.

Another major outlay for any firm is technology and with the ongoing focus on improved efficiencies and working flexibly, legal groups looking to digitise and update their systems will feel the impact on their cashflow reserves. Whether enhancing hardware, upgrading to cloud-based platforms or introducing new CRM facilities, your clients can finance the technology and implementation fees upfront.

Similarly, for healthcare professionals, refurbishment and medical equipment upgrades can be financed, spreading the cost over up to seven years.

For brokers whose clients want peace of mind that the various business essentials will be processed swiftly and effortlessly, there is always the option of arranging an annual credit facility. In principle, this works in a similar style to setting up funding lines, where all the client’s working capital needs are considered and a single pot of funding is agreed with the flexibility to drawdown multiple loan schedules throughout the year. A win-win situation for the broker and the client.

To support professional firms considering acquisitive growth or other pivotal changes such as restructures, exits or EOTs, there is the possibility of incorporating this sizeable outlay into the pre-agreed credit facility. Having funding pre-agreed and the assistance from an expert team who has experience in the industry enables your client to move quickly and can be a gamechanger for those more complex opportunities.

So if your clients are registered professionals in the legal or healthcare industry and they are looking to ease their cashflow and their workload relating to company taxes and insurances, we think we can help. Our Professions Finance team understands the sectors and can provide a full range of financial solutions whilst demystifying the application and approval process on those business essentials for you and your client.

Professions Finance

Professionally speaking Whether your client is a legal or medical professional looking to spread the cost of their VAT bills, company and partner taxes or insurances or they require funding for refurbishments or business acquisitions, speak to our specialist Professions Finance team today.

Contact us today

01277 892 281 professions@shawbrook.co.uk shawbrook.co.uk/professionals

THIS ADVERTISEMENT IS INTENDED FOR INTERMEDIARY USE ONLY AND MUST NOT BE DISTRIBUTED TO POTENTIAL CLIENTS

Celebrating a 30-year milestone A summer scrapbook for an afternoon to remember

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he sun shone on July’s inaugural NACFB Summer Party as 600-guests toasted to thirty years of empowering UK business.

The prestigious and unrivalled surroundings of the Honourable Artillery Company played host to a convivial afternoon of lawn games and Great British summer favourites. An open bar and a well-stocked kitchen ensured all guests were suitably energised in what turned out to be a summer scorcher of an afternoon.

And it really was a venue befitting the occasion. Nestled just outside the City lies one of London’s most exclusive hidden gems. The juxtaposition of heritage and history against the shimmer of modern office blocks is a sight to behold.

Armoury House, the home of the Honourable Artillery Company (HAC) was built to replace a smaller seventeenth-century armoury. Today it functions as the home of the HAC Regiment, a place for members to hold meetings, relax and socialise, and as an exclusive venue for external events such as this one.

The lawn and gardens, normally reserved for cricket and rugby matches, instead saw the Association’s Members, Patrons, Partners, staff, and invited guests celebrate three decades of the trade body. Boules, hook a duck, giant Jenga, archery and even croquet ensured that guests could keep busy between networking and shade hunting.

NACFB managing director, Norman Chambers, said: “Friday was what it’s all about. Our other flagship events quite rightly focus on products, service, and recognition, but this Summer Party was a more informal opportunity to catch-up, talk a little bit of shop, and fundamentally have a good laugh. By that yardstick, it surpassed all expectations. Even the Great – yet unpredictable - British weather smiled upon us.”

The NACFB Board of Directors and head office team would like to thank all those that attended the Association’s 30th birthday celebrations and have collated some of the highlights of a birthday to remember.

Broker a great deal L

Our Business Development Team understand that every deal is unique. That’s why they work with you and take the time to understand your client’s needs, offering tailored financial solutions to drive business forward.

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Sed ut perspiciatis unde omnis iste natus error sit voluptatem accusantium doloremque laudantium, totam rem aperiam, eaque.

Talk to us today.

Barclays.co.uk/brokers Make money work for you

Barclays Business is a trading name of Barclays Bank UK PLC. Barclays Bank UK PLC is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority (Financial Services Register No. 759676). Registered in England. Registered No. 9740322. Registered Office: 1 Churchill Place, London E14 5HP. Barclays Bank UK PLC adheres to The Standards of Lending Practice which is monitored and enforced by The Lending Standards Board. Further details can be found at www.lendingstandardsboard.org.uk. 9917163 May 2021

Leading rates, high-LTV, simpler bridging Every month more brokers are experiencing low-cost, flexible bridging delivered by experts and powered by technology. Get your Heads of Terms in minutes by enquiring online.

Property finance made simple.

lendinvest.com/ intermediaries LendInvest plc is a public limited company registered in England and Wales (No. 8146929). Registered Office: 8 Mortimer Street, London, W1T 3JJ. Your client’s property may be repossessed if they do not keep up repayments on their mortgage.

For intermediaries only.

And the win

ner is...

#BrokingEx

cellence

200 entries submitted by over 90 brokerages across 15 categories, who will walk away with a trophy?

In-person awards ceremony returns to Birmingham’s Edgbaston Cricket Ground on Friday 23rd September

Discounted Member tickets available via commercialbrokerawards.co.uk

NACFB | 35

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Energy E ffic ie

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We’re committed to futureproofing landlords’ investments, providing long-term sustainable solutions to improve their energy efficiency.

That’s why we’ve launched our new Energy Efficiency Discount, rewarding investors with a reduced arrangement fee for properties with an Energy Performance Certificate (EPC) rating of ‘C’ or above.

Banking for the real world.

Get in touch

0330 123 4521 cm.broker@shawbrook.co.uk property.shawbrook.co.uk

THIS ADVERTISEMENT IS FOR PROFESSIONAL INTERMEDIARIES ONLY AND IS NOT INTENDED FOR PUBLIC OR CUSTOMER USE

Special Feature

Advertising Feature

Set fair Business outlook remains broadly positive Keith Softly Head of Commercial Banking Intermediaries Lloyds Bank

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t was great to see so many of you at the recent NACFB Commercial Finance Expo in Birmingham and to discuss opportunities to support you and your clients.

Challenging market From our conversations with brokers, it was evident that businesses in the UK remain broadly positive despite the challenges we’ve all faced over the past six months. The desire to invest continues and businesses are confronting head-on the well-documented challenges of labour market shortages, supply chain issues and the rising costs of materials and resources.

This sentiment is also reflected in the findings of the recent Lloyds Bank Business Barometer (June 2022), which found that, on average, underlying business confidence remains consistent with historic levels.

Supporting the broker network The unique strength of the broker network within UK financial services is the ability to provide clients with access to – and a view of – the whole market and to structure deals in a way that is tailored to every client’s individual needs.

38 | NACFB

We understand that as a broker, you must be able to place your trust in us to deliver for your clients. That’s why our experienced team is focused on working with you, to better understand what products and solutions your clients need, both now and in the future.

We know how important it is for you to receive the right help, so our teams are structured around the specialist sectors and products we support. This includes healthcare, real estate, trading and working capital, asset finance, and card acquiring. Importantly, all teams are part of a joined-up broker channel.

Our dedicated team of business development managers will deliver a professional and responsive service to all our brokers. We’ll keep you informed every step of the way via your preferred means of communication. We will deal with your referrals promptly and work with you to meet your clients’ timescales, while managing and paying commission quickly, conveniently, and directly into your bank account.

“

From agriculture to manufacturing, recruitment to charities and beyond, we support businesses of all shapes and sizes

All necessary training and assistance is provided to ensure you have an understanding of our business and know which sectors we can support.

Funding for growth In the first half of this year, we approved more than £500 million of transactions, covering a range of deals from term lending to asset finance. We have also worked with brokers and their clients to improve cash flow through invoice finance and card payments.

We recognise the vital part you play in helping your clients access the solutions they need to develop and grow.

Based throughout the UK, our network of more than 60 business development managers, have a wealth of experience combining both regional and local knowledge. From agriculture to manufacturing, recruitment to charities and beyond, we support businesses of all shapes and sizes across multiple industries.

“

In the first half of this year, we approved more than £500 million of transactions, covering a range of deals from term lending to asset finance

Supporting specialist requirements

• Real estate We have appetite for residential investment deals including HMOs and student accommodation. Commercial investment deals are available depending on the underlying sector with light industrial being attractive. Funding for residential property development is also available.

Our specialist business development teams can provide specific expertise across the following sectors:

If you have a deal or client you would like to talk to us about please email brokerdirect@lloydsbanking.com

• Healthcare We currently have an appetite in the dental, GP and pharmacy sectors, as well as children’s day nurseries and veterinary practices.

Visit lloydsbank.com/businessintermediaries

• Trading businesses Supporting businesses who have either outgrown their current premises or are looking for additional security by moving from rented to owner occupied.

Please note that any data sent by email is not secure and could be read by others.

All lending is subject to status. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under Registration Number 119278.

NACFB | 39

Industry Insight

Double take Dual representation for commercial finance Andrew Hardman Consultant Clyde & Co LLP

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or residential purchases and buy-to-let transactions, dual representation – where one solicitor acts for both lender and borrower – is common. However, the legal profession’s Code of Conduct has made it virtually inevitable that separate legal representation for both lender and borrower is in place when financing or refinancing commercial property.

Here is what brokers and borrowers can expect the process to look like.

Traditional due diligence For simple transactions, usually where a single property is being purchased, the lender’s solicitor will ask the borrower’s solicitor for an extensive list of property documents which, in all likelihood, will comprise those you would expect to be requested by the borrower’s legal representative. After analysing the documents and addressing any queries with the borrower’s legal team, the lender’s solicitor will report back to the lender. There is no reliance on the borrower’s solicitor’s report on title.

Certificates of Title When dealing with large multi-let properties or more complex transactions involving multiple properties the most common legal process is based upon the City of London Law Society Certificate of Title (CLLS Certificate of Title) which is a lengthy document 40 | NACFB

prepared by the borrower’s solicitor addressed to both the lender and the borrower.

This document sets out the details of the title, the usual property search results, the occupational leases as well as any ancillary documents and relevant management information. There can be several iterations of this document when discussed with the lender’s solicitor, depending upon the matters revealed.

Ultimately, the lender’s solicitor reports to the lender on the basis of a document provided by the borrower’s solicitor who warrants and takes responsibility for the contents. The lender’s solicitor will not review any of the property documents themselves. Instead, they rely entirely on the borrower’s solicitor’s representation of these in the Certificate of Title. Sometimes there are negotiations about the level of the borrower’s solicitor’s financial liability under the Certificate.

The case for separate legal representation is compelling. There is reduced potential for conflicts of interest or unwelcome surprises with two pairs of eyes looking at the property details and purchase process. This is particularly useful where there are complex or unusual title issues. Also, and particularly where indemnity insurance is in place, any future sale is likely to be smoother, quicker, and sometimes cheaper.

However, there are downsides including the potential that the transaction is driven by process rather than true analysis of the security.

Then there is the cost of indemnity insurance premiums as well as the cost of two sets of legal representation, with little or no scope for the borrower to negotiate with the lender’s solicitor. Lastly, separate legal representation increases the risk of delay even in relatively straightforward transactions. That said, it is probably better to endure delay and get it right rather than risk the transaction falling through.

Here to support the transition to zero emissions Climate is a key part of the UK’s business agenda, from infrastructure and software to renewable energy.

We’re helping to drive a green future by providing businesses with the funding they need to invest in renewable assets as we all make the transition to a low-carbon economy and build a leaner and greener future.

Visit lombard.co.uk/sustainable.

Request for NatWest Group Green Asset Finance must meet the NatWest Group Climate and Sustainable Finance inclusion criteria for your business size. Over 18s only. Security may be required. Fees (other than arrangement fees) may apply. Available to UK customers for business purposes only. Available for borrowing over £25,000 and less than £10m. Subject to status, eligibility and approval. Finance provided by Lombard.

Industry Insight

Zeroing in Demystifying finance-driven carbon reduction

Phillip Bate Business Lending Team Lead Triodos Bank UK

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s environmental responsibility becomes a higher priority for many companies and organisations, gaining a deeper understanding of how sustainability is measured is more important than ever. However, the scope of terminology used when talking about sustainability can be difficult to get to grips with – especially when applied to the concept of sustainable finance.

Take, for example, ‘net zero’. The COP26 climate summit in Glasgow brought the term into sharp focus and, in the months that followed, companies have been announcing their ‘net zero targets’ in a bid to tackle the challenge of limiting global warming. But with some inconsistency in how this term is defined, it can be hard to understand the true extent to which such targets are achieved and measured. And when it comes to seeking sustainable sources of finance, things can become particularly confusing.

The clearest definition Put simply, ‘net zero’ means that the total greenhouse gas (GHG) emissions of an organisation are equal to or less than the emissions it removes from the environment. On a corporate level, the Science Based Targets initiative (SBTi) has defined reaching net zero as: achieving 42 | NACFB

a state in which the activities within the value chain of an organisation result in no net impact on the climate from GHG emissions, and which is consistent with limiting global warming to 1.5°C. Greenhouse gas emissions are categorised into three groups or 'Scopes' by the most widely-used international accounting tool, the Greenhouse Gas Protocol. Scope 1 covers direct emissions from owned or controlled sources. Scope 2 covers indirect emissions from the generation of purchased electricity, steam, heating and cooling consumed by the reporting company. Scope 3 includes all other indirect emissions that occur in a company’s value chain.

When it comes to the emissions included within carbon reduction targets, it’s not just about those an organisation produces directly and those associated with the electricity or energy it buys (such as to heat or cool its buildings), but it’s also about emissions associated with companies up and down an organisation’s value or supply chain. Otherwise known as ‘Scope 3’ emissions, this is often the

“

The scope of terminology used when talking about sustainability can be difficult to get to grips with

“

The Partnership for Carbon Accounting Financials… aims to produce a globally recognised standard for measuring the carbon footprint of loans and investments

largest area and the hardest to measure as it includes emissions from goods or services bought and sold – including all loans and investments made.

The role of transparency In 2016 Triodos was involved in the development of the Partnership for Carbon Accounting Financials (PCAF), which aims to produce a globally recognised standard for measuring the carbon footprint of loans and investments. Looking for banks that measure themselves using PCAF, along with the principles of the SBTi as outlined overleaf, can be a useful guide on where they are on their road to ‘net zero’.

To limit global warming to 1.5°C above pre-industrial levels, all sectors of society need to decarbonise and collectively reach net zero emissions by 2050. The financial industry can facilitate the transition in line with the Paris Climate Agreement. As a first step in this direction, harmonised and transparent GHG accounting becomes an imperative. Measuring and disclosing the GHG emissions associated with the lending and investment activities of financial institutions is the foundation to create transparency and accountability, and to enable financial institutions to align their portfolio with the Paris Climate Agreement.

It’s this transparency that is key. Look at where a bank invests and how that relates back to their achievements and carbon

reduction targets. For financial institutions, it’s their loans and investments which drive the majority of their ‘Scope 3’ emissions, so understanding what is in an organisation’s portfolio, and the associated emissions, is the only way to know if it is truly green.

Balancing net zero with mission goals At Triodos, we don’t want net zero targets to adversely affect our mission and the positive impact we strive for, or the holistic nature of our impact. We’re looking for the transition to a net zero economy to be a just one – you could call it ‘Just Zero’ – through which we continue to deliver on our mission to finance positive impact while supporting social inclusion.

An example of this is financing we have helped to provide for the Scottish Highlands-based Morvern Community Development Company, a charitable organisation that supports sustainable development in the area. The funding goes towards the development of a high-end hydropower scheme on the Barr River, which gives the Morvern community a strategic stake in the energy supply on the peninsular.

If your customers are keen to explore sustainability and actively engage with opportunities to make environmentally and socially responsible choices – including their financial provider – then it is important that they truly understand what ‘net zero’ means for a bank or investor.

NACFB | 43

Broker Voice

Skin in the game?

Why we won’t be replaced by algorithms just yet Stuart Pawelczyk Head of Commercial Mortgages Swoop Funding

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here continues to be significant investment in technology in the financial services sector with many businesses striving to find efficiencies in the process of supporting SMEs and property professionals to access funding solutions. It’s one of the main reasons I joined Swoop Funding, a fintech that embraces technology to provide solutions for SMEs and improve access to the global finance market.

So, when the question as to which areas of the broking process are best left to humans and which to technology was posed, it really got the grey matter working hard even though it’s a question we deliberate daily.

Digitising the basics The fundamentals of sourcing commercial finance for a client are similar across the board, whether you are an independent sole trader working with a few regular clients or an employee of a nationwide commercial finance brokerage that writes £100 million annually. Find a client, discuss their requirements, and make sure they are realistic and achievable, send them a list of information that’s needed to underwrite the deal, then start talking to lenders and submitting applications.

44 | NACFB

In the business loan, unsecured loan, start-up business loan and asset finance (non-property backed) fields, new lenders are really shaking up the market and the application process. They don’t have legacy issues, they are nimble and fleet of foot, willing to rapidly develop new technology solutions and use APIs to support intermediaries and make their products more accessible.

With many applications to lenders in this space taking a very similar approach in terms of information/documentation collected and the underwriting process, efficiencies are easily found. The use of open banking and the ability to integrate accounting software are just two examples of fintech’s using modern technology to simplify and speed up the credit application and approval process here too. They provide a lender with greater insight and visibility

“

Numbers only tell part of the story, the narrative that’s required to explain those numbers is sometimes more important

“

In as little as two years’ time a significant percentage of business loans will be fully automated, with nominal human intervention

into a business at the touch of a button. In as little as two years’ time a significant percentage of business loans will be fully automated, with nominal human intervention. Applications are made instantly, approvals within minutes and drawdown in a matter of days.

All well and good then?

Embracing technology to aid the application process enables them to write higher volumes, particularly for ‘vanilla’ transactions.

It also sees the broker able to service more clients, as well as allowing borrowers to access finance faster than ever. This is hugely positive, until something doesn’t fit in the right box. At this point the knowledge, expertise and skill of a broker comes to the fore to help shape the deal or rework the proposition.

Where there is a ‘kink’ or challenge in a deal, this is where human intervention is a real benefit and adds significant value to the process. Numbers only tell part of the story, the narrative that’s required to explain those numbers is sometimes more important on more complex transactions.

In comparison, traditional banks and most lenders that focus on property-backed transactions are too preoccupied with managing sizeable loan books through the post-pandemic period to look at reinventing or remodelling the finance application process.

It must be said that there is the odd exception operating in the lending space but as a broker, it can at times feel as though every lender has a different process and does things at different stages in the deal cycle. For instance, some lenders require a valuation before fully underwriting an application and instructing solicitors, whereas other lenders are happy to issue an offer that is conditional upon a satisfactory valuation. It isn’t just lender

to lender either. Regional variations can be found on occasion within the same lender.

These subtle differences in application processes do make it challenging to find efficiencies, however, the data points and underwriting questions are usually the same. Technology should be embraced to help standardise the process thus making it easier for SMEs and property professionals to access the finance they need, quicker.

The future-proof broker?

So, to answer the question, technology will play a pivotal role in speeding up application processes in areas such as data collection and underwriting. However, when things get a little challenging, that’s when a human touch is needed to remodel a proposal or to do the ‘grunt work’ to get things done.

A large amount of the data contained within a commercial mortgage application – particularly if it is an owner-occupied commercial mortgage – is subjective. Artificial intelligence isn’t yet at the level of a human when it comes to calculating non-recurring expenditure in a set of financials account to help establish a business’ ability to service debt. Nor can it tell a story. The facts may paint one picture which doesn’t look great, but a broker explaining the scenario as to why that fact came about helps create something far more appealing and palatable to lenders.

So, humans do remain indispensable to the commercial finance application process, but we should be pulling together as an industry to embrace technology to support more businesses and find efficiencies in the process.

NACFB | 45

Opinion

Seconds, anyone?

Understanding second charge bridging and buy-to-let finance Maeve Ward Director of Commercial Operations Mercantile Trust

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ny broker worth their salt will know about Energy Performance Certificate (EPC) changes that are due to come into force in 2025, but does everyone have a strategy about how to ensure their landlord clients’ properties will have an EPC rating of C or better by then?

It’s vital that brokers and their clients don’t ignore the fact that an awful lot of work will need to be done before then if a landlord wants to be able to legally let out a property with a new tenancy agreement in place in three years’ time.

Many brokers will have secured low fixed rates for their buy-to-let investor clients which could make remortgaging disadvantageous to them. An option is a second charge bridging loan to finance energy efficiency improvements, with a remortgage further down the line when the timing is more appropriate, potentially using the improved value of the property to secure a low rate, in turn a better customer outcome.

At Mercantile Trust, we have found that there is less understanding from brokers about second charge bridging loans, and therefore, less advice given about them. Perhaps it’s the fact that there aren’t a huge number of lenders who provide this type of finance. Simply, it’s a loan secured on a property which already has a (first) charge on it over a term no greater than 24 months – in this case, a buy-to-let mortgage.

A second charge bridging loan can provide access to finance much more quickly than a remortgage. They are also a very useful way of unlocking finance while avoiding early repayment charges or losing 46 | NACFB

a preferential rate. For these reasons, it’s why I think they should be seriously considered for financing EPC-related works. Indeed, we offer second charge bridging loans at Mercantile Trust and have already helped brokers secure finance for their landlord clients to get their properties up to the required standard.

There are also second charge buy-to-let mortgages, which can also be arranged quickly to benefit the borrower. At Mercantile Trust, loans up to £100,000 are eligible for our in-house legal process at no cost to the client as well as a potential AVM meaning that they can be turned around in days.

The reason a borrower might choose a second charge bridge over a second charge buy-to-let would be the ability to roll up the interest – so no monthly payment – whereas on the second charge buy-to-let there is a monthly payment.

It’s imperative that brokers help their landlord clients to find funding for the work needed for EPC standards. 2025 will be with us before we know it and there are funding options available which should meet the needs of your clients. You just need to know where to look and consider all the options, including second charge finance.

“

The reason a borrower might choose a second charge bridge over a second charge buy-to-let would be the ability to roll up the interest

Large, flexible bridging loans delivered at speed.

With nearly 50 years’ lending experience and partnerships with trusted solicitors, you can rely on a fast, straightforward decision for your bridging cases – no matter the loan size or how complex your clients’ circumstances.

Together can deliver funds quickly for: Large-scale refurbishments and redevelopments Multiple property purchases and substantial transactions Building projects and development exits Visit togthermoney.com/bridging-finance For professional intermediary use only.

Opinion

The common good Making an impact through ethical banking Mark Clayton Chief Operating Officer Unity Trust Bank

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when making decisions. It would bring about more transparent reporting and directors would need to evidence a company’s performance on areas including sustainability and social equality.

Of course, many businesses have proactively taken the decision to prioritise their positive impact and are already reaping the benefits.

he recent impact of COVID-19 on society, coupled with the climate crisis and rising social inequality have brought wider questions of ethics within business to the fore, not least with Mary Portas’ recent address to MPs on the proposed Better Business Act.

An independent study into the financial and operational performance of B Corporations in the UK, published in November 2020, revealed that organisations that operate at the highest standards in their social and environmental duties perform better in a range of different areas including annual turnover, staff retention and innovation.

The Better Business Act campaign is calling on the government to amend section 127 of the Companies Act to ensure businesses are legally responsible for benefiting workers, customers, communities, and the environment, while delivering profit.

Spanning 83 countries and over 5,000 companies, the B Corp movement has a mission to make business a force for good, transforming the global economy to benefit all people, communities, and the planet. For those that are looking to improve their positive impact on society, or are considering their next steps, choosing to partner with an ethical bank is just one way

Co-chaired by Mary Portas and spearheaded by a coalition of over 1,000 UK businesses, including Iceland, The Body Shop, Innocent Drinks and Anglian Water, the campaign argues that a failure to align the interests of shareholders with those of wider society and the environment has contributed to a set of challenges that threaten people’s health, wealth, and the natural world. Their research highlights that three quarters of the UK public want businesses to be legally responsible for their impact.

The Better Business Act would bring significant changes to companies and if it does succeed, it would be integral for directors to have a succinct understanding of how to adjust. The amendments to section 127 CA 2006 would require directors to consider the interests of a broader range of stakeholders, rather than just shareholders, 48 | NACFB

“

Three quarters of the UK public want businesses to be legally responsible for their impact

that businesses and organisations of all sizes can make a tangible, positive impact to society.

Ethical finance has been a topic of debate for many centuries, but it would take until the 1970s before the first specialist ethical banks emerged. Three decades later, the global financial crisis of 2008 crucially focused attention on the importance of banking and ethics, which has continued to this day with the growth in sustainable banking practices.

Unity Trust Bank was born out of a vision by trade unions to create a bank that would embrace the philosophy of serving the common good. Having just celebrated our 38th birthday, these founding principles are still at the heart of everything we do. Our mission is to create a better society, not simply

maximise profits. We provide banking services for businesses that share our principles of acting with integrity, and only lend to organisations that share our values. We align every loan proposal against one or more of the United Nations’ Sustainable Development Goals to ensure that all of our funds are used to deliver quantifiable impact. We also provide specialist sector knowledge and support that enables our customers to focus on their business and make a difference in their local communities.

The growing movement towards doing ‘better business’ can only be a positive way forward for society as we all strive to ensure that we are building a sustainable future for generations to come. Banks that recognise the importance of these changes can be valuable partners to help businesses develop their own practices, and support them in making a greater impact across the UK.

NACFB | 43

Opinion

Under the lights Why bridging remains an unstoppable force in the Northwest Gary Bailey Managing Director Hope Capital

B

eing a business located in the Northwest ourselves, we can safely say that the enterprises operating within the cities, towns and rural areas in the Northwest are showing no signs of slowing down.

This is one of our core regions for providing bridging finance, especially for commercial deals. With cities including Manchester and Liverpool continuing to be the Northern powerhouses, they are establishing themselves as some of the most exciting locations for investment opportunities.

Notably, and as many of our broker panel will attest, the demand for bridging loans which accommodate business expansion or relocation projects has been a key growth area for us in the last few years. This is certainly the case for SMEs, that are set to increase in size. We all know that expanding an existing commercial space or moving to new business premises can be a costly process. Where a business needs to move or expand to improve its output, a business owner may find themselves in need of some additional short-term capital to get the wheels turning on the project. Brokers are now fully accustomed to turning to bridging loans to service bespoke client needs.

This is where bridging finance helps – it can cover all the company’s immediate costs while the relocation or expansion project takes place. Following this, the funds can then be repaid a few months down the line at a competitive rate of interest.

Turning to towns and rural areas in the Northwest, we have recently noticed a significant demand for bridging loans for holiday lets, bed and breakfasts and pubs. This will be because these types 50 | NACFB

of properties can at times be unmortgageable, meaning bridging finance is the most feasible option.

For example, an investor may have spotted an auction property, which could potentially be secured at a price below market value and then transformed into a pub. The investor will need to move quickly to ensure they have the funding in place to meet the 28-day deadline. In addition, as the majority of auction properties are often in a state of disrepair, it can be challenging to obtain a mortgage. As a result, bridging finance is a solution that can meet this need and fund property auction purchases at speed.

These are just some of the situations in which we will lend, but they are not the only ones. It has been reported that bridging loans for business and unregulated refinance purposes equate to almost one fifth of activity in the UK bridging finance market, which demonstrates the confidence brokers and borrowers are placing in this industry to maximise commercial opportunities.

Ultimately, the Northwest is proving to be an exciting place for businesses and is therefore definitely a region investors and developers looking for commercial opportunities should keep an eye firmly on.

“

Bridging loans for business and unregulated refinance purposes equate to almost one fifth of activity in the UK bridging finance market

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With fast access to funds, we can help businesses ease restricting cashflow due to rising costs and respond quickly to market changes.

Our straightforward finance options and quick decisions on lending, enable customers to react with confidence in their own marketplaces.

Speak to us today, we’re here to help. closebusinessfinance.co.uk

Close Brothers Business Finance is a trading style of Close Brothers Limited. Close Brothers Limited is registered in England and Wales (Company Number 00195626) and its registered office is 10 Crown Place, London, EC2A 4FT.

NACFB | 51

#CFE2022

A snapshot of #CFE2022 Back in Birmingham, back in business

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he NACFB Commercial Finance Expo returned to Hall 8 of the NEC in Birmingham on Wednesday 15th June. The largest annual gathering of commercial finance professionals in the UK, the day was deemed a roaring success with a record number of exhibitors, and visitor numbers up 9% on last year.

In the conference theatre, it was standing room only as BBC presenter Naga Munchetty hosted a series of thought-provoking presentations, interviews and panel debates which addressed industry hot topics designed to challenge and extend delegates’ knowledge of both the commercial finance market and the wider economy.

Exhibitor stands were buzzing as connections were made, games were played, and business was done with a smile.

All were exhibiting for the same purpose – to engage with the UK’s premier business funding pathfinders.

New for 2022, the exclusive NACFB Members’ Lounge boasted a private, comfy area away from the melee for Members to take the weight off their feet, grab a coffee, catch-up on emails and chat to other delegates.

A packed hall sees 130 exhibitors from across the commercial lending landscape

e r to mak rly eage a e g in s arriv day Delegate e most of their th

52 | NACFB

Commenting on the day, NACFB Board Director, Kim McGinley said: “The energy in the hall was amazing, the excitement was tangible. It’s a great way to do business as well as meet with colleagues and peers face-to-face.”

Feedback from the day has been overwhelmingly positive, and we thank you all sincerely – sponsors, speakers, exhibitors, and delegates – for coming. We’re looking forward to doing it all again next year, so save the date – Wednesday 14th June 2023.

And if you’re interested in exhibiting, please contact expo@nacfb.org.uk

ercial chief comm Nick Baker, k an B a lic Al A word from n ACFB Patro N at r ce ffi o

NACFB C h proceed air, Paul Goodm ings in th an e confere , opens nce thea tre

s for st debate rns to ho Naga retu nd year running the seco

Standing room only in the conference theatre

Taking fi ve in the new Membe rs’ loung e

ing deep Williams div ns Prof. Trevor ing conditio into UK lend

Roger Potgieter of Shoosmiths explains how to keep ahead of the regulatory curve

Visitor n umbers up 9% on 2 021 at 1 ,656

Expert p anellists disc we're in pre-rece uss whether ssion len ding

Diana Chrouch OBE tackles access to finance for minority-led businesses

rs the regulato ate whether eb d s st lli h et Pane ing their te are sharpen

Experts fro m across the indust if we are si ry discuss tting on a n EPC tim ebomb

Many in teresting and cha question s from th llenging e floor

Recognising 30 years of the NACFB. Who’s for birthday cake?

The NACFB head office team celebrate another triumphant NA CFB Expo

ednesday l again on W Let’s do it al am's NEC gh in irm 23 at B 14th June 20

NACFB | 53

Five Minutes With

​ ive F Minutes with: Tatyana Stefanova Tatyana Stefanova Business Development Manager – Scotland LendInvest Describe your role in ten words or less?

Driving business growth by building strong relationships with intermediaries across Scotland.

What is your favourite SME success story?

How do you make a difference?

Headspace, founded by Andy Puddicombe – story of a complete lifestyle change and how you can share your passion with the world via tech.

I never overpromise, if we can’t support a deal, I won’t waste your time.

What advice do you have for the modern commercial finance broker?

In your view, what are the key elements to a successful deal?

Transparency, strong packaging and, of course, suitable valuation coming back.

It's time to think digital! A lot of lenders are still using paper processes and there is real value in tech for brokers willing to embrace it, and the more that do the better and more efficient the whole industry will become.

What’s the most common reason for turning away a deal?

What is your favourite piece of management/leadership advice?

Property type or undisclosed credit issues.

Opportunity and risk come in pairs.

If you were to start your own small business, what would it sell?

Which person has inspired you the most?

Whisky and coffee.

The late Hilary Devey. She had a difficult

54 | NACFB

childhood; her parent's home was repossessed, she was a single mom but managed to build a very strong business despite the challenges of childcare and being a woman in a male-dominated industry.

What was the last great book you read?

Lean In: Women, Work, and the Will to Lead by Nell Scovell and Sheryl Sandberg.

What law would you pass if you were Prime Minister for the day?

Tougher penalties for people who don’t know how to indicate correctly at a roundabout.

If there was an Olympics for everyday activities, what activity would you have a good chance at winning a medal in?

Morning power walking to the coffee machine.

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