NACFB Magazine - February 2018

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Issue 55 February 2018

The magazine for the National Association of Commercial Finance Brokers

The heart of the matter The NACFB Magazine catches up with CEO Graham Toy

In this issue

A D

Introducing our sector-specific events

Our upcoming bespoke functions, free for all Member brokers

W Working Capital Day

D Development Finance Day A Asset Finance Day W

Banking on digital

Broker opportunities in a transforming industry

Cryptocurrencies

Could bitcoin affect the commercial finance industry?

n better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge novation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on e built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service owledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better etter knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on lt on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience rvice built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on e built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people perience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better etter experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on lt on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation ople built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better n better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge 018 is well under way and I novation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better am delighted to report that we on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on e built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service have hit the ground running. owledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better The NACFB team is pleased by etter knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on the response from Members who lt on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience rvice built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better have accessed NACFB Compliance on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on and MyNACFB – both of which e built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people are now available at no additional perience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better etter experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on to your membership. cost lt on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation ople built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better n better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on building a head of steam is Also built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge our NACFB events programme. I novation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on encourage all our Members to take e built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service note of the upcoming workshops, owledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better Members’ and Patrons’ days, regional St on John’s Wood,built London etter knowledge built better innovation on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on Fitzrovia, London Cheetham Hill, Manchester lt on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience roundtable events and our national • knowledge Refinance,built restaurant and bar • built Acquisition, hotel • Equity release,built ground rentsinnovation and rvice built on better on better innovation built on better people on better252-room experience builtin oncentral better service built on better knowledge on better built on better people built on better Commercial Finance Expo in June.

• £2.7m loan, 12 monthbuilt term Manchester office on better service built on better knowledge on better innovation built on better people built on better experience built on better service built onunit better knowledge built on better innovation built on better people built on • 65% LTV • £14.5m loan, 6 month term • service £2.1m built loan,on 12better monthknowledge term e built on better service built on better knowledge built on better innovation built on better people built on better experience built on better built on better innovation built on better people perience built on better service built on better knowledge built on better innovation better service built on better knowledge built on better innovation built on better • 65%built LTVon better people built on better experience built on • 65% LTV In this issue you will see and hear etter experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on from me quite a bit, and I make no lt on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation ople built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better apology for that. The interview I n better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on gave to the NACFB Magazine forms built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge novation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better part of our drive to be as open and on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on transparent as I can before our e built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service owledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better membership. In the interview, I etter knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on was keen to relay how and why the lt on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience changes to your membership have rvice built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on about, while taking a broader come e built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people look at the challenges facing our perience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better etter experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on industry in 2018. lt on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation ople built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better Brexit n better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on betterEast experience built on better service built on better knowledge built on will remain the top of the Farnborough, Surrey Borough, London Brighton, Sussex built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge political and economic agenda this novation built on better people built onand better experience built on better service on better knowledge on better innovation built on people built on better experience built on better service built on better • Site acquisition development • built Acquisition funding of abuilt residential • better East Sussex year, on better innovation built better built onspace better experience built on better service built on better knowledge built on better of people built on better experience built on better service built on but I believe that this is only part of 9on flats andpeople commercial high street portfolio, renovation ofbuilt on better innovation • Redevelopment Grade II listed e built on better innovation people service built on better knowledge built on better innovation builtdevelopment on better people of the picture. Commercial finance • £5.3mbuilt loan,on21better month termbuilt on better experience built on 25 better residential units building and of built on better experience built on better service owledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better • 69% LTGDV • £4.0m loan, 16 month term 70 residential units, gym and brokers have an important role to play etter knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on • better 65% LTGDV 6 commercial units innovation built on better people built on better experience lt on better knowledge built on better innovation built on better people built on experience built on better service built on better knowledge built on better in ensuring UK businesses are offered • £25.4m loan, built 30 month term rvice built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge on better innovation built on better people built on better a range and diversity of products so • built 68%on LTGDV on better service built on better knowledge built on better innovation built on better people built on better experience built on better service better knowledge built on better innovation built on better people built on that SMEs, vital to our economy, have e built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people perience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better access to much-needed funding even etter experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on in the most turbulent of times. lt on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation ople built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better n better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on I encourage all Members to make built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge the very most of their NACFB novation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on membership in 2018 by registering e built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service with owledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better NACFB Compliance, MyNACFB etter knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built onattending as many relevant and lt on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience events as possible. By extracting the rvice built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on value from the Association’s best e built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people membership offering, through the perience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better fullonarray of available benefits, we etter experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built South London Shepherds Bush, West built Hampstead, London lt on better experience built Norwood, on better service built on better knowledge built on better innovation built onLondon better people built on better experience on better service built on better knowledge built on better innovation can help your business to prosper. ople built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better • Bridge to let loan, office conversion to • Refurbishment loan, extension of • Development light loan, extension and n better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on 43built residential units terraced Victorian house conversion ofbetter Victorian terraced house built on better people on better experience built on better service built on better knowledge built on better innovation built on better people built on experience built on better service built on better knowledge I look forward to working alongside • £7.6m loan, 24 on month term £1.0m month term of multiple (HMO) novation built on better people built better experience built on better service• built on loan, better12 knowledge built on better innovation built on better peopleoccupancy built on better experience built on better service built on better you this year. on better innovation better people built on better experience built on better service built loan, on better peopleterm built on better experience built on better service built on • built 68%on LTV • 65% LTV built on better knowledge built on better innovation • £2.5m 14 month e built on better innovation built on better people built on better experience built on better service built on better knowledge built on better•innovation 57% LTV built on better people built on better experience built on better service owledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better Warm regards, etter knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on lt on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience rvice built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better Graham Toy, CEO, NACFB on better serviceOctopus built on Property better knowledge built on better innovation built onNo better peopleFern builtTrading on better built on better service on better Octopus knowledge built onLending better innovation built on better people built on is the trading name of Bridgeco Ltd (Reg 6629989), Ltdexperience (Reg No 6447318), Nino Ltd (Regbuilt No 9015082), Property Ltd e built on better(Reg service on better knowledge built onLimited better innovation built on better people built 33 on Holborn, better experience built on better service on better knowledge built on better innovation built on better people Nobuilt 7531926) and Octopus Co-Lend (Reg No 8913299), Registered Office: London EC1N 2HT, registered inbuilt England and Wales and Dragonfly perience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better Finance S.ar.l. (Reg No B189290) Registered Office: Parc d’Activité Syrdall, 6 rue Gabriel Lippmann, L-5365 Munsbach, Luxembourg registered in Luxembourg. Octopus etter experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on Property Lending Ltd and Octopus Co-Lend Limited are authorised and regulated by the Financial Conduct Authority. For intermediary use only. lt on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation ople built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better n better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge novation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better

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Welcome | NACFB

2

Graham Toy CEO NACFB

In this February issue NACFB News 4 6 7 8-10

In the news NACFB events NACFB Bridging Finance Day 2018 Interview with CEO Graham Toy

Compliance Update 12-13 Data encryption: a step towards GDPR

Commercial Finance 14-15 Essential news bites

Top Story 16

Stephen Johnson to leave Shawbrook

Introducing 18

Aldermore announces Broker Training Academy events

Ask the Expert 32

Keith Morgan

Special Features 34-35 Brokers stand firm 36-37 The challenges of advising on business loan investments 38-39 Waking sleeping dogs: cryptocurrencies

Industry Guides 40 42

Keeping order with debentures Turnaround to new finance

Opinion & Commentary 44 46

A happy client will return Answering the call of 2018

Case Studies 20

Peer-to-peer loan supports growing estate 22-23 Keeping things simple for £1m portfolio expansion 24 Funding cushion secures revolving business

Digest 26-28 Banking on digital

Patron Profile 30-31 United Trust Bank

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

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

NACFB Magazine | 3

n better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge novation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on e built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service owledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better etter knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on lt on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience rvice built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on e built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people perience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better etter experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on lt on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation ople built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better n better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge 018 is well under way and I novation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better am delighted to report that we on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on e built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service have hit the ground running. owledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better The NACFB team is pleased by etter knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on the response from Members who lt on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience rvice built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better have accessed NACFB Compliance on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on and MyNACFB – both of which e built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people are now available at no additional perience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better etter experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on to your membership. cost lt on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation ople built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better n better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on building a head of steam is Also built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge our NACFB events programme. I novation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on encourage all our Members to take e built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service note of the upcoming workshops, owledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better Members’ and Patrons’ days, regional St on John’s Wood,built London etter knowledge built better innovation on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on Fitzrovia, London Cheetham Hill, Manchester lt on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience roundtable events and our national • knowledge Refinance,built restaurant and bar • built Acquisition, hotel • Equity release,built ground rentsinnovation and rvice built on better on better innovation built on better people on better252-room experience builtin oncentral better service built on better knowledge on better built on better people built on better Commercial Finance Expo in June.

• £2.7m loan, 12 monthbuilt term Manchester office on better service built on better knowledge on better innovation built on better people built on better experience built on better service built onunit better knowledge built on better innovation built on better people built on • 65% LTV • £14.5m loan, 6 month term • service £2.1m built loan,on 12better monthknowledge term e built on better service built on better knowledge built on better innovation built on better people built on better experience built on better built on better innovation built on better people perience built on better service built on better knowledge built on better innovation better service built on better knowledge built on better innovation built on better • 65%built LTVon better people built on better experience built on • 65% LTV In this issue you will see and hear etter experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on from me quite a bit, and I make no lt on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation ople built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better apology for that. The interview I n better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on gave to the NACFB Magazine forms built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge novation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better part of our drive to be as open and on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on transparent as I can before our e built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service owledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better membership. In the interview, I etter knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on was keen to relay how and why the lt on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience changes to your membership have rvice built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on about, while taking a broader come e built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people look at the challenges facing our perience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better etter experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on industry in 2018. lt on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation ople built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better Brexit n better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on betterEast experience built on better service built on better knowledge built on will remain the top of the Farnborough, Surrey Borough, London Brighton, Sussex built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge political and economic agenda this novation built on better people built onand better experience built on better service on better knowledge on better innovation built on people built on better experience built on better service built on better • Site acquisition development • built Acquisition funding of abuilt residential • better East Sussex year, on better innovation built better built onspace better experience built on better service built on better knowledge built on better of people built on better experience built on better service built on but I believe that this is only part of 9on flats andpeople commercial high street portfolio, renovation ofbuilt on better innovation • Redevelopment Grade II listed e built on better innovation people service built on better knowledge built on better innovation builtdevelopment on better people of the picture. Commercial finance • £5.3mbuilt loan,on21better month termbuilt on better experience built on 25 better residential units building and of built on better experience built on better service owledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better • 69% LTGDV • £4.0m loan, 16 month term 70 residential units, gym and brokers have an important role to play etter knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on • better 65% LTGDV 6 commercial units innovation built on better people built on better experience lt on better knowledge built on better innovation built on better people built on experience built on better service built on better knowledge built on better in ensuring UK businesses are offered • £25.4m loan, built 30 month term rvice built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge on better innovation built on better people built on better a range and diversity of products so • built 68%on LTGDV on better service built on better knowledge built on better innovation built on better people built on better experience built on better service better knowledge built on better innovation built on better people built on that SMEs, vital to our economy, have e built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people perience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better access to much-needed funding even etter experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on in the most turbulent of times. lt on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation ople built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better n better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on I encourage all Members to make built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge the very most of their NACFB novation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on membership in 2018 by registering e built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service with owledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better NACFB Compliance, MyNACFB etter knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built onattending as many relevant and lt on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience events as possible. By extracting the rvice built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on value from the Association’s best e built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people membership offering, through the perience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better fullonarray of available benefits, we etter experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built South London Shepherds Bush, West built Hampstead, London lt on better experience built Norwood, on better service built on better knowledge built on better innovation built onLondon better people built on better experience on better service built on better knowledge built on better innovation can help your business to prosper. ople built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better • Bridge to let loan, office conversion to • Refurbishment loan, extension of • Development light loan, extension and n better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on 43built residential units terraced Victorian house conversion ofbetter Victorian terraced house built on better people on better experience built on better service built on better knowledge built on better innovation built on better people built on experience built on better service built on better knowledge I look forward to working alongside • £7.6m loan, 24 on month term £1.0m month term of multiple (HMO) novation built on better people built better experience built on better service• built on loan, better12 knowledge built on better innovation built on better peopleoccupancy built on better experience built on better service built on better you this year. on better innovation better people built on better experience built on better service built loan, on better peopleterm built on better experience built on better service built on • built 68%on LTV • 65% LTV built on better knowledge built on better innovation • £2.5m 14 month e built on better innovation built on better people built on better experience built on better service built on better knowledge built on better•innovation 57% LTV built on better people built on better experience built on better service owledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better Warm regards, etter knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on lt on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience rvice built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better Graham Toy, CEO, NACFB on better serviceOctopus built on Property better knowledge built on better innovation built onNo better peopleFern builtTrading on better built on better service on better Octopus knowledge built onLending better innovation built on better people built on is the trading name of Bridgeco Ltd (Reg 6629989), Ltdexperience (Reg No 6447318), Nino Ltd (Regbuilt No 9015082), Property Ltd e built on better(Reg service on better knowledge built onLimited better innovation built on better people built 33 on Holborn, better experience built on better service on better knowledge built on better innovation built on better people Nobuilt 7531926) and Octopus Co-Lend (Reg No 8913299), Registered Office: London EC1N 2HT, registered inbuilt England and Wales and Dragonfly perience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better Finance S.ar.l. (Reg No B189290) Registered Office: Parc d’Activité Syrdall, 6 rue Gabriel Lippmann, L-5365 Munsbach, Luxembourg registered in Luxembourg. Octopus etter experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation built on Property Lending Ltd and Octopus Co-Lend Limited are authorised and regulated by the Financial Conduct Authority. For intermediary use only. lt on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better innovation ople built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on better n better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge built on built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better knowledge novation built on better people built on better experience built on better service built on better knowledge built on better innovation built on better people built on better experience built on better service built on better

Octopus Property is a leading lender in the commercial, development and residential property markets.

We understand property and have an established track record that is built on better service, knowledge and innovation. Our performance speaks for itself and our commitment to providing flexible loans enables us to cover the market and support our clients, no matter how complex the requirement

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www.octopusproperty.com • sales@octopusproperty.com • 0800 2946850

Welcome | NACFB

2

Graham Toy CEO NACFB

In this February issue NACFB News 4 6 7 8-10

In the news NACFB events NACFB Bridging Finance Day 2018 Interview with CEO Graham Toy

Compliance Update 12-13 Data encryption: a step towards GDPR

Commercial Finance 14-15 Essential news bites

Top Story 16

Stephen Johnson to leave Shawbrook

Introducing 18

Aldermore announces Broker Training Academy events

Ask the Expert 32

Keith Morgan

Special Features 34-35 Brokers stand firm 36-37 The challenges of advising on business loan investments 38-39 Waking sleeping dogs: cryptocurrencies

Industry Guides 40 42

Keeping order with debentures Turnaround to new finance

Opinion & Commentary 44 46

A happy client will return Answering the call of 2018

Case Studies 20

Peer-to-peer loan supports growing estate 22-23 Keeping things simple for £1m portfolio expansion 24 Funding cushion secures revolving business

Digest 26-28 Banking on digital

Patron Profile 30-31 United Trust Bank

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

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

NACFB Magazine | 3

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

Our three-in-one model The NACFB has streamlined its membership model. The three types of subscription that we offer, namely your NACFB membership, NACFB Compliance and MyNACFB, have been amalgamated under one single payment.

Since 1st January 2018, existing and new Members have been taking advantage of the enhanced benefits package.

The Association believes that the added security and support that comes with both NACFB Compliance and MyNACFB will help you and your clients. We are here as your trusted trade body to keep you up-to-date with regulatory issues and provide technical backing whenever it may be required.

Love at first site.

When you know, you know. Let us provide the finance for that plot you’ve fallen for this Valentine’s Day.

The NACFB becomes fully cyber-certified The NACFB has received a certificate of compliance confirming that the Association now fully complies with the requirements of the national Cyber Essentials scheme.

The government-backed scheme was launched four years ago, with the goal of helping organisations take the first steps in protecting themselves against common cyberattacks.

The certification ensures the NACFB meets the standards set to protect our Members’ data from the most common cyberattacks. This is important because vulnerability to simple attacks can mark many organisations out as target for more in-depth, unwanted attention from cyber criminals and others.

The Cyber Essentials scheme provides a detailed set of requirements for IT systems, and the NACFB’s internal systems and software met these exact standards. As the ever-present cyber security threat continues to grow, we remain one step ahead in protecting all data the Association processes.

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

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

4 | NACFB Magazine

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

Our three-in-one model The NACFB has streamlined its membership model. The three types of subscription that we offer, namely your NACFB membership, NACFB Compliance and MyNACFB, have been amalgamated under one single payment.

Since 1st January 2018, existing and new Members have been taking advantage of the enhanced benefits package.

The Association believes that the added security and support that comes with both NACFB Compliance and MyNACFB will help you and your clients. We are here as your trusted trade body to keep you up-to-date with regulatory issues and provide technical backing whenever it may be required.

Love at first site.

When you know, you know. Let us provide the finance for that plot you’ve fallen for this Valentine’s Day.

The NACFB becomes fully cyber-certified The NACFB has received a certificate of compliance confirming that the Association now fully complies with the requirements of the national Cyber Essentials scheme.

The government-backed scheme was launched four years ago, with the goal of helping organisations take the first steps in protecting themselves against common cyberattacks.

The certification ensures the NACFB meets the standards set to protect our Members’ data from the most common cyberattacks. This is important because vulnerability to simple attacks can mark many organisations out as target for more in-depth, unwanted attention from cyber criminals and others.

The Cyber Essentials scheme provides a detailed set of requirements for IT systems, and the NACFB’s internal systems and software met these exact standards. As the ever-present cyber security threat continues to grow, we remain one step ahead in protecting all data the Association processes.

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

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

4 | NACFB Magazine

NACFB NEWS

NACFB NEWS

NACFB Bridging Finance Day 2018

Introducing our sector-specific events

Kieran Jones Communications manager NACFB

Our upcoming bespoke functions, free for all Member brokers 2018 will see the NACFB running more events than ever before and in a wider selection of locations across the UK. Following the success of the inaugural Bridging Finance Day in January, there are three further bespoke days catering to individual aspects of commercial finance lending – and they are free for any NACFB Member to attend.

These days will focus on working capital solutions, asset finance and Event

development finance, and up to six lenders will be supporting each day alongside the NACFB team. Our aim is to develop an environment that establishes a centre of excellence across all commercial finance divisions.

As with November’s Asset Finance Day in Bolton, the focus of each event will be roundtable ‘speed dating’ sessions with lenders, providing NACFB Members the chance to engage in face-to-face

sessions with each Patron. The bespoke events will conclude with a networking session which will allow Members to socialise with other NACFB brokers and the lenders in a more informal setting.

Such focused events enable the NACFB to cater more acutely to each aspect of commercial finance, and will proceed future events across other sectors.

Location

Date

NACFB Working Capital Solutions Day

Royal Berkshire Conference Centre, Madejski Stadium, Reading, RG2 0FL

07/03/2018

NACFB Development Finance Day

Radisson Blu Birmingham, 12 Suffolk Street Queensway, Birmingham, B1 1BT

07/03/2018

NACFB Asset Finance Day

Park Inn by Radisson, 296 Mansfield Road, Nottingham, NG5 2BT

13/03/2018

If you would like to register for any of the upcoming events, please visit: www.nacfb.org/events or email andrina.dhillon@nacfb.org.uk

A D

W Working Capital Day

D Development Finance Day A Asset Finance Day W

T

he NACFB’s inaugural Bridging Finance Day was hailed a triumph by brokers and lenders, following the event held in London on 25th January 2018.

The day marked the first in a series of bespoke, sector-specific events catering to individual aspects of commercial finance lending, hosted by the NACFB. Kicking off with Bridging Finance Day, the Association’s aim is to develop an environment that establishes centres of excellence while maintaining the highest professional standards across all commercial finance divisions.

NACFB managing director Norman Chambers and Kevin Jones, CEO of Omega Group, outlined the NACFB’s objectives and the Association’s ongoing efforts to support the bridging finance sector. They spoke of efforts to raise the bar and further educate NACFB Members in all aspects of bridging finance while promoting the highest professional standards. Such events and future efforts will help establish and develop Members’ relationships with new and existing lenders, while providing forums to keep Members informed of upcoming changes – especially on compliance and regulatory matters.

The packed-out day at London’s Vanderbilt Hotel saw six Patrons engage in roundtable discussions with NACFB brokers operating in the bridging space. Among items discussed were the various types and uses of bridging finance products available to introducers, views of realistic bridging finance interest rates as well as lending criteria, potential exit options and analysis of working case studies.

Representatives from Patrons Amicus, LendInvest, London

6 | NACFB Magazine

Credit, Masthaven, Together and Roma Finance were able to directly address questions from all attending brokers and draw frameworks for a number of future opportunities.

Ian Boden, sales director at LendInvest, praised NACFB Members for using the ‘speed dating’ format and valued the opportunity to network in a bridging-focused setting. Scott Marshall, managing director at Roma Finance, relayed how the day enabled him to make half a dozen ‘proper deals’ which would not have come about, had they not had the occasion to sit down and talk through processes directly with attending brokers.

The first part of the day focussed on training and education, and began with expert legal insight from Jonathan Newman, senior partner at Brightstone Law. Jonathan shared his experiences of bridging deals with both brokers and lenders in the form of a case study. The outcomes from his real-life example of a disputed bridging loan called for improved transparency in methods, better business practices, stronger working relationships and an adherence to greater sector professionalism.

Attendees on the day also benefited from a complimentary compliance workshop from Roger Deane, managing director of NACFB Compliance. Roger outlined the regulatory hurdles and potential compliance pitfalls bridging finance brokers may encounter

during the lifecycle of a deal and concluded with a look ahead to the upcoming GDPR directive.

With the UK bridging sector thriving, the industry in 2018 is worth an estimated £4bn with around 40 specialist bridging lenders operating in the arena. The NACFB Bridging Finance Day formed part of continued efforts by the Association to further facilitate dialogue between bridging lenders and brokers to help fund UK businesses.

Following the success of the London Bridging Finance Day, the NACFB is rolling out free sector specific events across the country – including another regional bridging event. You can book online for the below events: Working Capital Solutions Day Reading, 20th February 2018 Development Finance Day Birmingham, 7th March 2018 Asset Finance Day Nottingham, 13th March 2018 Factoring & Invoice Discounting Day Location TBC Commercial Mortgage Day Location TBC Buy-to-let Finance Day Location TBC Bridging Finance Day (non-London) – Location TBC Register to attend via nacfb.org today.

NACFB Magazine | 7

NACFB NEWS

NACFB NEWS

NACFB Bridging Finance Day 2018

Introducing our sector-specific events

Kieran Jones Communications manager NACFB

Our upcoming bespoke functions, free for all Member brokers 2018 will see the NACFB running more events than ever before and in a wider selection of locations across the UK. Following the success of the inaugural Bridging Finance Day in January, there are three further bespoke days catering to individual aspects of commercial finance lending – and they are free for any NACFB Member to attend.

These days will focus on working capital solutions, asset finance and Event

development finance, and up to six lenders will be supporting each day alongside the NACFB team. Our aim is to develop an environment that establishes a centre of excellence across all commercial finance divisions.

As with November’s Asset Finance Day in Bolton, the focus of each event will be roundtable ‘speed dating’ sessions with lenders, providing NACFB Members the chance to engage in face-to-face

sessions with each Patron. The bespoke events will conclude with a networking session which will allow Members to socialise with other NACFB brokers and the lenders in a more informal setting.

Such focused events enable the NACFB to cater more acutely to each aspect of commercial finance, and will proceed future events across other sectors.

Location

Date

NACFB Working Capital Solutions Day

Royal Berkshire Conference Centre, Madejski Stadium, Reading, RG2 0FL

07/03/2018

NACFB Development Finance Day

Radisson Blu Birmingham, 12 Suffolk Street Queensway, Birmingham, B1 1BT

07/03/2018

NACFB Asset Finance Day

Park Inn by Radisson, 296 Mansfield Road, Nottingham, NG5 2BT

13/03/2018

If you would like to register for any of the upcoming events, please visit: www.nacfb.org/events or email andrina.dhillon@nacfb.org.uk

A D

W Working Capital Day

D Development Finance Day A Asset Finance Day W

T

he NACFB’s inaugural Bridging Finance Day was hailed a triumph by brokers and lenders, following the event held in London on 25th January 2018.

The day marked the first in a series of bespoke, sector-specific events catering to individual aspects of commercial finance lending, hosted by the NACFB. Kicking off with Bridging Finance Day, the Association’s aim is to develop an environment that establishes centres of excellence while maintaining the highest professional standards across all commercial finance divisions.

NACFB managing director Norman Chambers and Kevin Jones, CEO of Omega Group, outlined the NACFB’s objectives and the Association’s ongoing efforts to support the bridging finance sector. They spoke of efforts to raise the bar and further educate NACFB Members in all aspects of bridging finance while promoting the highest professional standards. Such events and future efforts will help establish and develop Members’ relationships with new and existing lenders, while providing forums to keep Members informed of upcoming changes – especially on compliance and regulatory matters.

The packed-out day at London’s Vanderbilt Hotel saw six Patrons engage in roundtable discussions with NACFB brokers operating in the bridging space. Among items discussed were the various types and uses of bridging finance products available to introducers, views of realistic bridging finance interest rates as well as lending criteria, potential exit options and analysis of working case studies.

Representatives from Patrons Amicus, LendInvest, London

6 | NACFB Magazine

Credit, Masthaven, Together and Roma Finance were able to directly address questions from all attending brokers and draw frameworks for a number of future opportunities.

Ian Boden, sales director at LendInvest, praised NACFB Members for using the ‘speed dating’ format and valued the opportunity to network in a bridging-focused setting. Scott Marshall, managing director at Roma Finance, relayed how the day enabled him to make half a dozen ‘proper deals’ which would not have come about, had they not had the occasion to sit down and talk through processes directly with attending brokers.

The first part of the day focussed on training and education, and began with expert legal insight from Jonathan Newman, senior partner at Brightstone Law. Jonathan shared his experiences of bridging deals with both brokers and lenders in the form of a case study. The outcomes from his real-life example of a disputed bridging loan called for improved transparency in methods, better business practices, stronger working relationships and an adherence to greater sector professionalism.

Attendees on the day also benefited from a complimentary compliance workshop from Roger Deane, managing director of NACFB Compliance. Roger outlined the regulatory hurdles and potential compliance pitfalls bridging finance brokers may encounter

during the lifecycle of a deal and concluded with a look ahead to the upcoming GDPR directive.

With the UK bridging sector thriving, the industry in 2018 is worth an estimated £4bn with around 40 specialist bridging lenders operating in the arena. The NACFB Bridging Finance Day formed part of continued efforts by the Association to further facilitate dialogue between bridging lenders and brokers to help fund UK businesses.

Following the success of the London Bridging Finance Day, the NACFB is rolling out free sector specific events across the country – including another regional bridging event. You can book online for the below events: Working Capital Solutions Day Reading, 20th February 2018 Development Finance Day Birmingham, 7th March 2018 Asset Finance Day Nottingham, 13th March 2018 Factoring & Invoice Discounting Day Location TBC Commercial Mortgage Day Location TBC Buy-to-let Finance Day Location TBC Bridging Finance Day (non-London) – Location TBC Register to attend via nacfb.org today.

NACFB Magazine | 7

NACFB | cover story The heart of the matter Now in its 27th year, the NACFB is the association of choice for commercial finance brokers. The NACFB Magazine caught up with incumbent CEO Graham Toy, who has been at the helm since July 2017. Here, he reflects on the journey so far and looks ahead at 2018.

You’re six months into your tenure at the NACFB. What have you learned so far?

I arrived at the NACFB as CEO in July 2017, and I will admit I arrived with a set of preconceptions about the Association and its role within the commercial finance community. I had been a Patron of the NACFB for 15 years and was aware of its power as a trade body and the reassurance that it offered me as a lender, but what I wasn’t aware of was just how passionate the NACFB board and head office team were about driving the organisation forward.

Reflecting on my time so far, we are working to instil a greater level of communication across all levels of what it is the NACFB does. The team works tirelessly to serve our Members’ best interests and to communicate clearly how their efforts will lead to a more open, transparent and accountable organisation.

I have also been reminded of just how dynamic the commercial finance community is. I have spoken with countless Member brokers who I feel are real ambassadors to the sector and I am proud to have such talented, skilled and focused people who can call themselves NACFB Members.

8 | NACFB Magazine

What challenges have you seen the commercial finance sector face?

Apart from the perennial issues of economic uncertainty, embedding as business as usual, the new regulatory regime has been a challenge. In addition, getting to grips with the ever-increasing range of lenders and products now available to SMEs. While increased competition and choice is good news for our Members’ clients, understanding their processes and appetite to lend has kept introducers on their toes.

What advice can you offer commercial finance brokers for 2018?

My advice for brokers is to remain adaptable and dynamic, as I know many already are. Working more closely with SMEs and offering them a full range of options is the best way to help them secure finance. It goes without saying that the more options an SME is presented with, the more likely it is to find the funding required.

It will also result in a better informed final decision.

I am also passionate about Members leveraging the benefit of their membership of the NACFB. The broker should always reassure their client that they are Members of the Association. Adopting the code of

practice and minimum standards will also help ensure good customer outcomes. This must build confidence between introducer and client.

What are your predictions for the financial sector for the year ahead?

Clearly, Brexit remains the top political and economic issue, but in reality, it is only part of the picture. Many of the fundamental building blocks of our economy – namely the UK’s skills, innovation and infrastructure – remain firmly within our control.

Commercial finance brokers have an important role to play in ensuring UK businesses are offered a range of diverse products so that SMEs, vital to our economy, have access to funding even in the most turbulent of times.

What changes have been implemented for NACFB Members since you arrived?

2017 was a year of sizeable change and to recognise such change the NACFB team underwent strategy sessions to discuss in-depth structural matters that provide the very foundation of the organisation. Many of those matters fed into the heart of the resolutions that were proposed at the 2017 AGM. From these sessions we developed a clear and focused vision and mission statements that will underpin everything that we, as an association, aim to deliver in the future.

The key change at the NACFB is that we wanted all NACFB Members to benefit from full support from

My advice for brokers is to remain adaptable and dynamic

NACFB Compliance and access to our training portal, MyNACFB, in addition to NACFB membership.

To this end, we amalgamated the three types of subscription that we offer. Instead of subscribing to NACFB Compliance Services, paying for MyNACFB and paying the membership fee, all Members will now receive all these benefits under a single membership fee.

What remains the same?

While the structure of our membership has changed, the fundamentals of what we are here to do remain. We will continue to partner with our Members to foster professional expertise, embracing the highest industry and regulatory

NACFB Magazine | 9

NACFB | cover story The heart of the matter Now in its 27th year, the NACFB is the association of choice for commercial finance brokers. The NACFB Magazine caught up with incumbent CEO Graham Toy, who has been at the helm since July 2017. Here, he reflects on the journey so far and looks ahead at 2018.

You’re six months into your tenure at the NACFB. What have you learned so far?

I arrived at the NACFB as CEO in July 2017, and I will admit I arrived with a set of preconceptions about the Association and its role within the commercial finance community. I had been a Patron of the NACFB for 15 years and was aware of its power as a trade body and the reassurance that it offered me as a lender, but what I wasn’t aware of was just how passionate the NACFB board and head office team were about driving the organisation forward.

Reflecting on my time so far, we are working to instil a greater level of communication across all levels of what it is the NACFB does. The team works tirelessly to serve our Members’ best interests and to communicate clearly how their efforts will lead to a more open, transparent and accountable organisation.

I have also been reminded of just how dynamic the commercial finance community is. I have spoken with countless Member brokers who I feel are real ambassadors to the sector and I am proud to have such talented, skilled and focused people who can call themselves NACFB Members.

8 | NACFB Magazine

What challenges have you seen the commercial finance sector face?

Apart from the perennial issues of economic uncertainty, embedding as business as usual, the new regulatory regime has been a challenge. In addition, getting to grips with the ever-increasing range of lenders and products now available to SMEs. While increased competition and choice is good news for our Members’ clients, understanding their processes and appetite to lend has kept introducers on their toes.

What advice can you offer commercial finance brokers for 2018?

My advice for brokers is to remain adaptable and dynamic, as I know many already are. Working more closely with SMEs and offering them a full range of options is the best way to help them secure finance. It goes without saying that the more options an SME is presented with, the more likely it is to find the funding required.

It will also result in a better informed final decision.

I am also passionate about Members leveraging the benefit of their membership of the NACFB. The broker should always reassure their client that they are Members of the Association. Adopting the code of

practice and minimum standards will also help ensure good customer outcomes. This must build confidence between introducer and client.

What are your predictions for the financial sector for the year ahead?

Clearly, Brexit remains the top political and economic issue, but in reality, it is only part of the picture. Many of the fundamental building blocks of our economy – namely the UK’s skills, innovation and infrastructure – remain firmly within our control.

Commercial finance brokers have an important role to play in ensuring UK businesses are offered a range of diverse products so that SMEs, vital to our economy, have access to funding even in the most turbulent of times.

What changes have been implemented for NACFB Members since you arrived?

2017 was a year of sizeable change and to recognise such change the NACFB team underwent strategy sessions to discuss in-depth structural matters that provide the very foundation of the organisation. Many of those matters fed into the heart of the resolutions that were proposed at the 2017 AGM. From these sessions we developed a clear and focused vision and mission statements that will underpin everything that we, as an association, aim to deliver in the future.

The key change at the NACFB is that we wanted all NACFB Members to benefit from full support from

My advice for brokers is to remain adaptable and dynamic

NACFB Compliance and access to our training portal, MyNACFB, in addition to NACFB membership.

To this end, we amalgamated the three types of subscription that we offer. Instead of subscribing to NACFB Compliance Services, paying for MyNACFB and paying the membership fee, all Members will now receive all these benefits under a single membership fee.

What remains the same?

While the structure of our membership has changed, the fundamentals of what we are here to do remain. We will continue to partner with our Members to foster professional expertise, embracing the highest industry and regulatory

NACFB Magazine | 9

NACFB NEWS

All these benefits are informed by our sector experience of over 25 years as a trade body.

These are the benefits to becoming a new Member of the Association, but we also feel that it doesn’t hurt to remind existing Members of what we offer, so that they can get the most out of their membership.

With other trade associations forming, how does the NACFB ensure its Members are best served?

All of the Member benefits I have spoken of, and the fact that we are communicating, enable us to keep focused and remain a Member-driven association. We take an entirely holistic and collaborative approach with all other trade bodies operating in the same space. In truth, all finance trade bodies share the same aims and goals as us: to best serve the interests of financial brokers operating in all spaces. standards, including engagement with our stakeholders, to help their businesses prosper.

We will also continue to offer the same high-level, bespoke compliance support to the commercial finance community – only this year, we are proud to have extended that support to include all NACFB Members.

Why is the NACFB now offering compliance support to all its Members?

We had to take a step back from the detail and took a broader perspective on the current trading and regulatory environment. We cannot delude ourselves into thinking that the direction of travel that regulation is taking is going any other way. Our regular discussions with regulators reveal that they appreciate what we are doing to exercise some level of oversight of the industry.

What are the benefits of becoming an NACFB Member?

One of the key tasks the NACFB team and I undertook was to make sure we all had a clear focus on how we add value. There is little point in having a carefully crafted vision and mission without having a clear handle on exactly what we do to deliver value to Members. From this we developed key USPs and we hope you will agree that these are at the very heart of what we do to enable our Members’ businesses to prosper.

We distilled the many benefits the NACFB offers down to what we felt were the key advantages to becoming a Member. These encompass our: aforementioned compliance and regulatory support

A great example of this is the series of meetings we recently chaired with the Association of Mortgage Intermediaries on how best to collaborate and deal with the challenges that the GDPR legislation imposes on the broker community. We will continue to work with all trade associations for the betterment of our Members.

Where would you like to see the Association in five years’ time?

I see the NACFB as being the professional association of choice for all commercial finance brokers and lenders servicing the needs of business borrowers and property investors. Indeed, that is our vision statement. We are putting measures in place to ensure we meet this target and build a legacy, so that not only is the NACFB stronger in five years’ time, but also enabling it to be celebrating its golden anniversary in 25 years’ time, too.

bespoke events calendar If we continue to treat the whole compliance issue with the respect it deserves, regulators can continue to direct their energies towards other areas. What we do – which sits in the self-regulating arena – is actually benefiting all our Members and nonMembers alike, and there are, quite clearly, damaging consequences to all brokers if broader compliance support is not taken seriously.

10 | NACFB Magazine

full code of practice informed industry voice broker and lender engagement levels block cover of professional indemnity insurance.

The ship is in good order, we are on a clearly defined course and, although it may not always be plain sailing, I know I can rely on the support of our Members to help us and help their businesses to prosper.

NACFB NEWS

All these benefits are informed by our sector experience of over 25 years as a trade body.

These are the benefits to becoming a new Member of the Association, but we also feel that it doesn’t hurt to remind existing Members of what we offer, so that they can get the most out of their membership.

With other trade associations forming, how does the NACFB ensure its Members are best served?

All of the Member benefits I have spoken of, and the fact that we are communicating, enable us to keep focused and remain a Member-driven association. We take an entirely holistic and collaborative approach with all other trade bodies operating in the same space. In truth, all finance trade bodies share the same aims and goals as us: to best serve the interests of financial brokers operating in all spaces. standards, including engagement with our stakeholders, to help their businesses prosper.

We will also continue to offer the same high-level, bespoke compliance support to the commercial finance community – only this year, we are proud to have extended that support to include all NACFB Members.

Why is the NACFB now offering compliance support to all its Members?

We had to take a step back from the detail and took a broader perspective on the current trading and regulatory environment. We cannot delude ourselves into thinking that the direction of travel that regulation is taking is going any other way. Our regular discussions with regulators reveal that they appreciate what we are doing to exercise some level of oversight of the industry.

What are the benefits of becoming an NACFB Member?

One of the key tasks the NACFB team and I undertook was to make sure we all had a clear focus on how we add value. There is little point in having a carefully crafted vision and mission without having a clear handle on exactly what we do to deliver value to Members. From this we developed key USPs and we hope you will agree that these are at the very heart of what we do to enable our Members’ businesses to prosper.

We distilled the many benefits the NACFB offers down to what we felt were the key advantages to becoming a Member. These encompass our: aforementioned compliance and regulatory support

A great example of this is the series of meetings we recently chaired with the Association of Mortgage Intermediaries on how best to collaborate and deal with the challenges that the GDPR legislation imposes on the broker community. We will continue to work with all trade associations for the betterment of our Members.

Where would you like to see the Association in five years’ time?

I see the NACFB as being the professional association of choice for all commercial finance brokers and lenders servicing the needs of business borrowers and property investors. Indeed, that is our vision statement. We are putting measures in place to ensure we meet this target and build a legacy, so that not only is the NACFB stronger in five years’ time, but also enabling it to be celebrating its golden anniversary in 25 years’ time, too.

bespoke events calendar If we continue to treat the whole compliance issue with the respect it deserves, regulators can continue to direct their energies towards other areas. What we do – which sits in the self-regulating arena – is actually benefiting all our Members and nonMembers alike, and there are, quite clearly, damaging consequences to all brokers if broader compliance support is not taken seriously.

10 | NACFB Magazine

full code of practice informed industry voice broker and lender engagement levels block cover of professional indemnity insurance.

The ship is in good order, we are on a clearly defined course and, although it may not always be plain sailing, I know I can rely on the support of our Members to help us and help their businesses to prosper.

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

Data encryption: a step towards GDPR

In today’s world, cybersecurity has become a key risk in business and the use of encryption – as a means to protect personal data – is an important tool in working towards General Data Protection Regulation (GDPR) compliance.

James Hinch Compliance consultant NACFB What is encryption?

Although there are various types, encryption is the process for encoding a message or data in such a way that only authorised individuals with the correct level of permission can access it. In order to grant this, a secure key is generated, whereby only users who have this key can gain access to the encrypted data.

For example, the door to your home requires a unique key to unlock it – only those with that key can access it. Encryption itself does not prevent attempted access, but adds a barrier of defence against anyone who may decide to unlawfully gain access to the data.

12 | NACFB Magazine

Encryption is a good way of meeting the data security requirements of the Information Commissioner’s Office (ICO). The ICO’s Principle 7 states that “appropriate technical and organisational measures shall be taken against unauthorised or unlawful processing of personal data and against accidental loss or destruction of, or damage to, personal data”.

The industry is seeing ever-increasing levels of data crime where personal data has been stolen, lost or subject to unauthorised access. Many of these cases come about by data being inadequately protected or the devices on which the data is shared being left in inappropriate and unsecure places – and in some cases, both. The ICO states that where such losses occur and where encryption software has not been used to protect the data, regulatory and possible legal action may be pursued along with financial penalties.

Despite the many options for encryption, in general terms, it is the process of converting information or data into code, specifically to prevent unauthorised access. Encryption is not just about protecting your emails; you should consider all data held and stored by your business and what steps can be taken to protect it.

Why use it?

To encrypt is to ensure both company-sensitive and individuals’ data is protected. By encrypting your data, your business has taken steps to satisfy ICO Principle 7 by adding a layer of defence to your business. You must also consider risks when using data transfer via online software, CD, DVD, USB etc. Encryption software should be used to mitigate threats to all your data risks.

What does this mean for you, the broker?

Brokers will need to ensure that any use of encryption is effective against the risks they are trying to mitigate.

The use of such encryption must remain proportionate, as it cannot be used in every processing operation, for practical reasons. The use of encryption should be documented.

In preparing for GDPR, you should review the risks posed to your business and consider what mitigation and benefit encryption will offer as a security measure.

A privacy impact assessment (available to NACFB Members as a download from nacfbcompliance.co.uk) will provide a template for documenting any decisions your business makes regarding encryption and the reasons for its use. This can also help check that your business is only using the minimum amount of personal data

necessary for the delivery of your service to clients.

Brokers need to ensure any use of encryption is effective against the risks they are trying to mitigate

If encryption is used, then it is likely that your business will have encryption keys which are used to decode the data. Consider the management of these keys. Where are they kept? Who has access to them?

How secret are they? If the keys can be easily accessed without any control, their effectiveness will be diminished.

Finally, ensure that your data encryption methods are reviewed annually at the very least as part of your compliance plan. In an ever-evolving technical world, it is important to continually review the potential future threats and take steps to manage data risks posed to your business.

NACFB Magazine | 13

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

Data encryption: a step towards GDPR

In today’s world, cybersecurity has become a key risk in business and the use of encryption – as a means to protect personal data – is an important tool in working towards General Data Protection Regulation (GDPR) compliance.

James Hinch Compliance consultant NACFB What is encryption?

Although there are various types, encryption is the process for encoding a message or data in such a way that only authorised individuals with the correct level of permission can access it. In order to grant this, a secure key is generated, whereby only users who have this key can gain access to the encrypted data.

For example, the door to your home requires a unique key to unlock it – only those with that key can access it. Encryption itself does not prevent attempted access, but adds a barrier of defence against anyone who may decide to unlawfully gain access to the data.

12 | NACFB Magazine

Encryption is a good way of meeting the data security requirements of the Information Commissioner’s Office (ICO). The ICO’s Principle 7 states that “appropriate technical and organisational measures shall be taken against unauthorised or unlawful processing of personal data and against accidental loss or destruction of, or damage to, personal data”.

The industry is seeing ever-increasing levels of data crime where personal data has been stolen, lost or subject to unauthorised access. Many of these cases come about by data being inadequately protected or the devices on which the data is shared being left in inappropriate and unsecure places – and in some cases, both. The ICO states that where such losses occur and where encryption software has not been used to protect the data, regulatory and possible legal action may be pursued along with financial penalties.

Despite the many options for encryption, in general terms, it is the process of converting information or data into code, specifically to prevent unauthorised access. Encryption is not just about protecting your emails; you should consider all data held and stored by your business and what steps can be taken to protect it.

Why use it?

To encrypt is to ensure both company-sensitive and individuals’ data is protected. By encrypting your data, your business has taken steps to satisfy ICO Principle 7 by adding a layer of defence to your business. You must also consider risks when using data transfer via online software, CD, DVD, USB etc. Encryption software should be used to mitigate threats to all your data risks.

What does this mean for you, the broker?

Brokers will need to ensure that any use of encryption is effective against the risks they are trying to mitigate.

The use of such encryption must remain proportionate, as it cannot be used in every processing operation, for practical reasons. The use of encryption should be documented.

In preparing for GDPR, you should review the risks posed to your business and consider what mitigation and benefit encryption will offer as a security measure.

A privacy impact assessment (available to NACFB Members as a download from nacfbcompliance.co.uk) will provide a template for documenting any decisions your business makes regarding encryption and the reasons for its use. This can also help check that your business is only using the minimum amount of personal data

necessary for the delivery of your service to clients.

Brokers need to ensure any use of encryption is effective against the risks they are trying to mitigate

If encryption is used, then it is likely that your business will have encryption keys which are used to decode the data. Consider the management of these keys. Where are they kept? Who has access to them?

How secret are they? If the keys can be easily accessed without any control, their effectiveness will be diminished.

Finally, ensure that your data encryption methods are reviewed annually at the very least as part of your compliance plan. In an ever-evolving technical world, it is important to continually review the potential future threats and take steps to manage data risks posed to your business.

NACFB Magazine | 13

Commercial Finance

Government launches anti-money laundering watchdog

LendingCrowd launches income account

14 | NACFB Magazine

Investec acquires Amicus Commercial Finance Amicus Commercial Finance has been rebranded as Investec Capital Solutions and will provide working capital financing to owner-managed UK SMEs. The rebrand follows the acquisition of Amicus Commercial Finance last month

by Investec Bank PLC. The lender has been fully integrated into Investec Corporate Lending.

John Wilde, founder of Amicus Commercial Finance, will stay on to lead Investec Capital Solutions.

Number of people in work hits record 32.2 million The number of people in work in the UK rose by 102,000 in the three months to November 2017, according to the Office for National Statistics.

The unemployment rate was 4.3%, down from 4.8% a year earlier and the joint lowest since 1975.

1.44 million people were counted as unemployed, some 160,000 fewer than for a year earlier.

Scottish economy grows 0.2% The Scottish economy increased by 0.2% in Q3 2017, according to figures from Scotland’s chief statistician.

The latest GDP release showed an increase of 0.2% in Q3 in real terms, compared with the previous quarter, and an increase of 0.6% compared with Q3 2016.

Output in the services sector grew by 0.2% while output in production increased by 1.2%.

The Office for Professional Body Anti-Money Laundering Supervision (OPBAS) has been launched to bolster the UK’s defences against money laundering and terrorist financing.

Based within the FCA, the organisation will work with all the UK’s Anti-Money Laundering supervisors.

OPBAS has powers to investigate and penalise those that don’t meet the standards set out in the Money Laundering Regulations 2017.

Aldermore appoints specialist vehicle valuations head Tim Bearder has joined Aldermore as its new head of specialist vehicle valuations.

With over 35 years of experience in the motor industry, Tim will take charge of vehicle valuations in the newly created specialist car team at the bank.

He will report directly to Paul Seddon, head of large value underwriting in the asset finance business.

Avamore scraps BDM model

P2P lender LendingCrowd has announced the launch of its income account, offering a target return of 5.6%.

From this account, LendingCrowd will transfer investors’ interest payments to their main self-select account, which users can then withdraw – with no fees – while capital repayments will be automatically reinvested.

The income account will also be available as an Isa.

Liverpool to develop 370 acres of commercial land Liverpool City Council is to publish a new 15-year plan, expected to create nearly 35,000 new homes and develop 370 acres of land for commercial purposes.

Liverpool’s Local Plan set out the key priorities for the city’s economy up to 2033, such as increasing the supply of affordable homes and promoting key development areas especially within the city centre.

Avamore Capital has announced a change in its origination process and hiring strategy.

The bridging and development lender plans to change its approach to origination whereby its relationship managers will originate, underwrite, execute and asset manage each transaction.

Avamore is also in advanced discussions with a number of senior bridging and development professionals to join at principal level.

Limited company BTL outstrips remortgages

RateSetter ceases unsecured business lending

RateSetter has announced it has stopped accepting new, unsecured business loan applications.

While the P2P lender confirmed that active unsecured business loans would continue to repay in line with their schedule, it said it will now focus solely on property-backed and asset-backed lending.

RateSetter also reassured investors that the changes carried no material impact on them.

Funding Knight becomes Sancus Funding Funding Knight Limited has announced it will be changing its name to Sancus Funding Limited with immediate effect.

The decision came following a strategic review of operations

by Funding Knight’s owners GLI Finance Limited.

The move is designed to simplify the group’s structure and bring together a select number of niche alternative finance businesses.

Manufacturing shows rapid growth

Praetura sees 50% asset finance growth in South and Midlands

Praetura Asset Finance has reported over 50% increase in asset finance funding year-on-year in the South and Midlands regions.

In 2017, the lender saw a 26% rise in hire purchase facilities compared with 2016, as well as a 23% increase in total lending.

It also saw triple-digit growth in the amount lent to businesses in the arts and entertainment industry.

72% of BTL mortgage transactions by landlords operating via limited companies in Q4 2017 were used for property acquisitions, according to recent research.

Mortgages for Business’s limited company buyto-let index shows this differs from individual landlords and the residential market, where refinancing property is the preferred reason for borrowing.

The predilection for corporate structures continued to grow throughout 2017.

Equity release lending highest since 2002 Annual equity release lending growth has reached its highest level since 2002 in Q4 2017, according to year-end figures from the Equity Release Council.

The housing wealth unlocked by over-55 homeowners reached £3.06bn in 2017 – the first time it exceeded £3bn in a single year.

Lending in Q4 2017 was over £838m, the highest level on record for any single quarter.

Manufacturing output and domestic and export orders showed accelerated growth in Q4 2017, according to CBI’s latest Industrial Trends Survey.

The survey of 369 manufacturers also revealed that investment intentions moved back above average after deteriorating in Q3.

Skill shortages were a key concern for Q1 2018, and the proportion of firms with spare operating capacity was the lowest in 29 years.

53% prefer traditional assets over new Over half of UK adults (53%) would rather invest in traditional asset classes in 2018 instead of new classes, such as cryptocurrencies, according to Market Financial Solutions.

The UK’s Property Investor Intentions 2018 report surveyed over 2,000 UK adults.

63% regarded property as a safe asset, and just 15% was actively looking to invest in alternative assets over the next 12 months.

NACFB Magazine | 15

Commercial Finance

Government launches anti-money laundering watchdog

LendingCrowd launches income account

14 | NACFB Magazine

Investec acquires Amicus Commercial Finance Amicus Commercial Finance has been rebranded as Investec Capital Solutions and will provide working capital financing to owner-managed UK SMEs. The rebrand follows the acquisition of Amicus Commercial Finance last month

by Investec Bank PLC. The lender has been fully integrated into Investec Corporate Lending.

John Wilde, founder of Amicus Commercial Finance, will stay on to lead Investec Capital Solutions.

Number of people in work hits record 32.2 million The number of people in work in the UK rose by 102,000 in the three months to November 2017, according to the Office for National Statistics.

The unemployment rate was 4.3%, down from 4.8% a year earlier and the joint lowest since 1975.

1.44 million people were counted as unemployed, some 160,000 fewer than for a year earlier.

Scottish economy grows 0.2% The Scottish economy increased by 0.2% in Q3 2017, according to figures from Scotland’s chief statistician.

The latest GDP release showed an increase of 0.2% in Q3 in real terms, compared with the previous quarter, and an increase of 0.6% compared with Q3 2016.

Output in the services sector grew by 0.2% while output in production increased by 1.2%.

The Office for Professional Body Anti-Money Laundering Supervision (OPBAS) has been launched to bolster the UK’s defences against money laundering and terrorist financing.

Based within the FCA, the organisation will work with all the UK’s Anti-Money Laundering supervisors.

OPBAS has powers to investigate and penalise those that don’t meet the standards set out in the Money Laundering Regulations 2017.

Aldermore appoints specialist vehicle valuations head Tim Bearder has joined Aldermore as its new head of specialist vehicle valuations.

With over 35 years of experience in the motor industry, Tim will take charge of vehicle valuations in the newly created specialist car team at the bank.

He will report directly to Paul Seddon, head of large value underwriting in the asset finance business.

Avamore scraps BDM model

P2P lender LendingCrowd has announced the launch of its income account, offering a target return of 5.6%.

From this account, LendingCrowd will transfer investors’ interest payments to their main self-select account, which users can then withdraw – with no fees – while capital repayments will be automatically reinvested.

The income account will also be available as an Isa.

Liverpool to develop 370 acres of commercial land Liverpool City Council is to publish a new 15-year plan, expected to create nearly 35,000 new homes and develop 370 acres of land for commercial purposes.

Liverpool’s Local Plan set out the key priorities for the city’s economy up to 2033, such as increasing the supply of affordable homes and promoting key development areas especially within the city centre.

Avamore Capital has announced a change in its origination process and hiring strategy.

The bridging and development lender plans to change its approach to origination whereby its relationship managers will originate, underwrite, execute and asset manage each transaction.

Avamore is also in advanced discussions with a number of senior bridging and development professionals to join at principal level.

Limited company BTL outstrips remortgages

RateSetter ceases unsecured business lending

RateSetter has announced it has stopped accepting new, unsecured business loan applications.

While the P2P lender confirmed that active unsecured business loans would continue to repay in line with their schedule, it said it will now focus solely on property-backed and asset-backed lending.

RateSetter also reassured investors that the changes carried no material impact on them.

Funding Knight becomes Sancus Funding Funding Knight Limited has announced it will be changing its name to Sancus Funding Limited with immediate effect.

The decision came following a strategic review of operations

by Funding Knight’s owners GLI Finance Limited.

The move is designed to simplify the group’s structure and bring together a select number of niche alternative finance businesses.

Manufacturing shows rapid growth

Praetura sees 50% asset finance growth in South and Midlands

Praetura Asset Finance has reported over 50% increase in asset finance funding year-on-year in the South and Midlands regions.

In 2017, the lender saw a 26% rise in hire purchase facilities compared with 2016, as well as a 23% increase in total lending.

It also saw triple-digit growth in the amount lent to businesses in the arts and entertainment industry.

72% of BTL mortgage transactions by landlords operating via limited companies in Q4 2017 were used for property acquisitions, according to recent research.

Mortgages for Business’s limited company buyto-let index shows this differs from individual landlords and the residential market, where refinancing property is the preferred reason for borrowing.

The predilection for corporate structures continued to grow throughout 2017.

Equity release lending highest since 2002 Annual equity release lending growth has reached its highest level since 2002 in Q4 2017, according to year-end figures from the Equity Release Council.

The housing wealth unlocked by over-55 homeowners reached £3.06bn in 2017 – the first time it exceeded £3bn in a single year.

Lending in Q4 2017 was over £838m, the highest level on record for any single quarter.

Manufacturing output and domestic and export orders showed accelerated growth in Q4 2017, according to CBI’s latest Industrial Trends Survey.

The survey of 369 manufacturers also revealed that investment intentions moved back above average after deteriorating in Q3.

Skill shortages were a key concern for Q1 2018, and the proportion of firms with spare operating capacity was the lowest in 29 years.

53% prefer traditional assets over new Over half of UK adults (53%) would rather invest in traditional asset classes in 2018 instead of new classes, such as cryptocurrencies, according to Market Financial Solutions.

The UK’s Property Investor Intentions 2018 report surveyed over 2,000 UK adults.

63% regarded property as a safe asset, and just 15% was actively looking to invest in alternative assets over the next 12 months.

NACFB Magazine | 15

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P RO P E RT Y F I N A N C E D I V I S I O N | CO M M E RC I A L | S P E C I A L I S T BT L | CO M M E RC I A L I N V E S T M E N T | S T L & R E F U R B | T R A D I N G B U S I N E S S

Our pick of the latest Patron news

Stephen Johnson to leave Shawbrook

REGULAR SHAWB ROOK B ANK LIMITED SHAWB ROOK GROUP PLC

Tom Belger Senior reporter Bridging and Commercial

Shawbrook has announced that Stephen Johnson will be stepping down from its board and relinquishing his roles as deputy CEO, executive director of the Shawbrook Group and managing director of property finance.

SPECIALISTS IN GOOD SENSE Our business is built on relationships, and we rely on the support of our Broker Partners to deliver transparent lending solutions to the professional investor, landlord and SME community.

A flexible approach to both client and security:

T

he specialist bank said Stephen would be leaving the company on 30th April 2018.

Shawbrook also announced that Karen Bennett and Jeremy Law would be joining the executive committee as managing director of commercial property finance and managing director of residential finance respectively.

Ian Cowie, managing director of business finance, will take responsibility for development finance.

“Stephen has been an integral part of Shawbrook since inception and has made a significant contribution during that time, helping to build a bank that now has assets of over £5bn; the recent change of ownership has created an opportunity for Stephen to take some time out with his family and we wish him all the very best for the future,” said Steve Pateman, CEO of Shawbrook.

“We are fortunate to have strong successors in place: Karen Bennett has been with Shawbrook since 2004 and has led our commercial property business for the last two years, while Jeremy Law has four years of experience in residential mortgages from his time at the Post Office.”

Iain Cornish, chairman of Shawbrook, added: “The board would like to thank Stephen for the important contribution he has made over the last 15 years and in particular during the IPO in April 2015.

We wish him and his family well.”

Stephen said that Shawbrook has played a huge part in his professional life, but felt the change of ownership presented an opportunity to pass the leadership of the property business to a new generation.

“I appreciate the support that I have had from the board in making this difficult decision and I am sure Karen, Jeremy and Ian will continue to provide the perceptive and thoughtful underwriting and great customer service that have been the hallmarks of the business over the last few years and I wish them all well.”

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Term lending from 2.99% above 3 month LIBOR*

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Ltd companies, LLPs & Individuals

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Broad range of security including HMOs & multi-lets

S TA C K E D ( S M A L L U S E ) SHAWB ROOK B ANK LIMITED SHAWB ROOK GROUP PLC

*Shawbrook Bank applies a minimum floor of 0.75% to the LIBOR rate

D I S C U S S YO U R C A S E S TO DAY

0330 123 4521 or email cm.broker@shawbrook.co.uk

www.shawbrook.co.uk THIS ADVERTISEMENT IS INTENDED FOR INTERMEDIARY USE ONLY AND MUST NOT BE DISTRIBUTED TO POTENTIAL CLIENTS

16 | NACFB Magazine

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LOGO

P RO P E RT Y F I N A N C E D I V I S I O N | CO M M E RC I A L | S P E C I A L I S T BT L | CO M M E RC I A L I N V E S T M E N T | S T L & R E F U R B | T R A D I N G B U S I N E S S

Our pick of the latest Patron news

Stephen Johnson to leave Shawbrook

REGULAR SHAWB ROOK B ANK LIMITED SHAWB ROOK GROUP PLC

Tom Belger Senior reporter Bridging and Commercial

Shawbrook has announced that Stephen Johnson will be stepping down from its board and relinquishing his roles as deputy CEO, executive director of the Shawbrook Group and managing director of property finance.

SPECIALISTS IN GOOD SENSE Our business is built on relationships, and we rely on the support of our Broker Partners to deliver transparent lending solutions to the professional investor, landlord and SME community.

A flexible approach to both client and security:

T

he specialist bank said Stephen would be leaving the company on 30th April 2018.

Shawbrook also announced that Karen Bennett and Jeremy Law would be joining the executive committee as managing director of commercial property finance and managing director of residential finance respectively.

Ian Cowie, managing director of business finance, will take responsibility for development finance.

“Stephen has been an integral part of Shawbrook since inception and has made a significant contribution during that time, helping to build a bank that now has assets of over £5bn; the recent change of ownership has created an opportunity for Stephen to take some time out with his family and we wish him all the very best for the future,” said Steve Pateman, CEO of Shawbrook.

“We are fortunate to have strong successors in place: Karen Bennett has been with Shawbrook since 2004 and has led our commercial property business for the last two years, while Jeremy Law has four years of experience in residential mortgages from his time at the Post Office.”

Iain Cornish, chairman of Shawbrook, added: “The board would like to thank Stephen for the important contribution he has made over the last 15 years and in particular during the IPO in April 2015.

We wish him and his family well.”

Stephen said that Shawbrook has played a huge part in his professional life, but felt the change of ownership presented an opportunity to pass the leadership of the property business to a new generation.

“I appreciate the support that I have had from the board in making this difficult decision and I am sure Karen, Jeremy and Ian will continue to provide the perceptive and thoughtful underwriting and great customer service that have been the hallmarks of the business over the last few years and I wish them all well.”

n

Short Term lending from 0.55%

n

Term lending from 2.99% above 3 month LIBOR*

n

Ltd companies, LLPs & Individuals

n

Broad range of security including HMOs & multi-lets

S TA C K E D ( S M A L L U S E ) SHAWB ROOK B ANK LIMITED SHAWB ROOK GROUP PLC

*Shawbrook Bank applies a minimum floor of 0.75% to the LIBOR rate

D I S C U S S YO U R C A S E S TO DAY

0330 123 4521 or email cm.broker@shawbrook.co.uk

www.shawbrook.co.uk THIS ADVERTISEMENT IS INTENDED FOR INTERMEDIARY USE ONLY AND MUST NOT BE DISTRIBUTED TO POTENTIAL CLIENTS

16 | NACFB Magazine

THE TEAM FOR BRIDGING LOANS

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

Aldermore announces Broker Training Academy events

WE

Specialist bank Aldermore has announced four upcoming dates for its Broker Training Academy in 2018.

T

Carl D’Ammassa, group managing director of business finance at Aldermore, said: “Aldermore is passionate about supporting the development of the next generation of asset finance brokers, as our success in helping UK businesses is very much linked to the success of the broker community. As such, we have developed a unique Broker Training Academy, which we launched four years ago, running courses for both new Aldermore employees and employees of our broker partners.”

Sales skills The sales skills module will help you understand how to build a list of prospects that fit your strike zone.

You’ll develop skills to make sure you’re talking to the right people, at the right time and about the right things, while enhancing your ability to gain access to those important key stakeholders. You’ll come away with practical steps to lead customers through the sales process to a

successful close and learn top tips on how to have a structured and proven approach to business development.

Principles of asset finance This module starts by giving you a deeper understanding about today’s external business environment and how SMEs can fund essential investment with asset finance. It focuses on the specific benefits of asset finance products plus the practical application of Aldermore’s underwriting process. You’ll leave the module with the practical information you need to develop successful credit applications.

Regulatory This is a topical workshop, developed

RETAIL

INDUSTRIAL

SHOPS

DO

ASTs

INVESTMENT

RESIDENTIAL

HOTELS

IT

OFFICES

INVESTORS

ALL!

C

M

he workshops, which aim to support the growth and development of the next generation of asset finance brokers, consist of three core modules, each enhancing knowledge and skills of asset finance.

COMMERCIAL

specifically to cover all key regulatory information for our asset finance brokers. You’ll get an introduction to Consumer Credit and the FCA, including the FCA handbook. The module covers sales processes and procedures in a regulatory environment and takes a look at the ongoing requirements throughout the life of the agreement. You’ll also get a deeper insight into complaints handling and FOS. The second day will focus on bringing the first day of learning to life using some real asset finance deals and customer scenarios. You’ll also get to experience a live panel talking about topical themes in the industry, such as the vulnerable customer.

Aldermore Broker Training Academy 2018 dates: Event

Date

Sales skills workshop

15-16th May

Principles of asset finance workshop

13-14th June

Sales skills workshop

8-9th October

Regulatory workshop

5-6th November

Workshops will take place in Birmingham over two days. Brokers can register online via Cvent – spaces are limited for each session, so early registration is recommended. Waitlists are available for full sessions.

Y

CM

MY

CY

CMY

K

FACTORIES

OWNER OCCUPIERS

Let’s Talk!

COM M ERCIAL

•

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

RESIDENT I AL

•

A PRINCIPAL LENDER 18 | NACFB Magazine

DEVELOP ME N T

THE TEAM FOR BRIDGING LOANS

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

Aldermore announces Broker Training Academy events

WE

Specialist bank Aldermore has announced four upcoming dates for its Broker Training Academy in 2018.

T

Carl D’Ammassa, group managing director of business finance at Aldermore, said: “Aldermore is passionate about supporting the development of the next generation of asset finance brokers, as our success in helping UK businesses is very much linked to the success of the broker community. As such, we have developed a unique Broker Training Academy, which we launched four years ago, running courses for both new Aldermore employees and employees of our broker partners.”

Sales skills The sales skills module will help you understand how to build a list of prospects that fit your strike zone.

You’ll develop skills to make sure you’re talking to the right people, at the right time and about the right things, while enhancing your ability to gain access to those important key stakeholders. You’ll come away with practical steps to lead customers through the sales process to a

successful close and learn top tips on how to have a structured and proven approach to business development.

Principles of asset finance This module starts by giving you a deeper understanding about today’s external business environment and how SMEs can fund essential investment with asset finance. It focuses on the specific benefits of asset finance products plus the practical application of Aldermore’s underwriting process. You’ll leave the module with the practical information you need to develop successful credit applications.

Regulatory This is a topical workshop, developed

RETAIL

INDUSTRIAL

SHOPS

DO

ASTs

INVESTMENT

RESIDENTIAL

HOTELS

IT

OFFICES

INVESTORS

ALL!

C

M

he workshops, which aim to support the growth and development of the next generation of asset finance brokers, consist of three core modules, each enhancing knowledge and skills of asset finance.

COMMERCIAL

specifically to cover all key regulatory information for our asset finance brokers. You’ll get an introduction to Consumer Credit and the FCA, including the FCA handbook. The module covers sales processes and procedures in a regulatory environment and takes a look at the ongoing requirements throughout the life of the agreement. You’ll also get a deeper insight into complaints handling and FOS. The second day will focus on bringing the first day of learning to life using some real asset finance deals and customer scenarios. You’ll also get to experience a live panel talking about topical themes in the industry, such as the vulnerable customer.

Aldermore Broker Training Academy 2018 dates: Event

Date

Sales skills workshop

15-16th May

Principles of asset finance workshop

13-14th June

Sales skills workshop

8-9th October

Regulatory workshop

5-6th November

Workshops will take place in Birmingham over two days. Brokers can register online via Cvent – spaces are limited for each session, so early registration is recommended. Waitlists are available for full sessions.

Y

CM

MY

CY

CMY

K

FACTORIES

OWNER OCCUPIERS

Let’s Talk!

COM M ERCIAL

•

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

RESIDENT I AL

•

A PRINCIPAL LENDER 18 | NACFB Magazine

DEVELOP ME N T

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

Peer-to-peer loan supports growing estate Martin Murphy Senior loan director Relendex

The estate under development

A

repaid loan on a property near Gloucester is a great example of the sort of funding situations and scenarios that Relendex can accommodate.

We were approached by one of our experienced and trusted broker contacts with a request to help established husband and wife property investors with their expansion plans.

The borrowers – who were from a construction background and both in their 70s – had owned a rural trading estate on several acres of land near Gloucester, which they had converted from farm and stables in the 1990s and had also extended through newbuild additions at several stages. At the time we refinanced the property, it comprised 18 small- and mediumsized commercial units, which the borrowers had successfully managed and let to multiple small, local enterprises. The existing, nearly fully let estate represented a very attractive investment in its own right.

Such was the success the borrowers had had with the existing estate that they had also secured planning permission to build a further 19 units, providing a further circa 24,000 sq ft of commercial space. Their intention was to build this out in two phases and part-sell and part-retain it for longterm investment purposes.

Relendex was approached to help the borrowers realise their plans and we were able to assist in the provision of a loan to both refinance the existing, let trading estate and also finance the development of the first phase of 10 new commercial units of circa 13,000 sq ft – together with infrastructure for

the larger site – at a total construction cost of approximately £650,000.

Although the initial and proposed gearing on the loan were both quite acceptable, the borrowers had been unable to proceed within any sort of realistic timeframe with a number of mainstream lenders who were put off by the borrowers’ ages, but also by the fact that the property was occupied by only local tenants and only on short-term leases. Relendex, however, was able to take the view that these highly experienced borrowers were not only fit and able to see through the proposed development and loan to a satisfactory exit, but that they had very successfully managed the existing trading estate at occupancy levels in excess of 90% for a good number of years. We took comfort in the exposure to multiple tenants and a proven and continuing demand in the local area.

The Relendex loan was secured on both the existing trading estate and also the new-build phase one units. This provided dual security for our lenders in that there was an existing income stream to assist with serviceability of the loan on completion of the works, but the loan was also being used to add significant additional value to the overall security package. From an underwriting point of view this required an analysis and assessment of the current occupation

and letting, of the continuing letting demand, and also of the development aspects, not only of costs but the construction process, programme, ground conditions and the borrowers’ ability to manage this and ultimately deliver the additional phase one units.

The loan exit was to come from a combination of unit sales and refinance, and so the due diligence process also required us to be satisfied with demand for the completed units and the potential availability of term funding to refinance residual debt.

The final challenge presented to us was one of time: our borrowers had already started the works from their resource and so we had to move with speed to ensure the construction programme could continue without hindrance. We always use trusted valuation and legal advisers who understand the time pressures applying to our funding, of course supported by our invaluable lenders to make sure that the Relendex side is always ready as soon as called upon by our borrowers.

The development process itself proceeded to our complete satisfaction and, as intended, the borrowers secured sufficient sales to repay the loan. They then carried out the development of the phase two units from further sales at phase one.

All in all, a resounding success.

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).

20 | NACFB Magazine

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

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

Peer-to-peer loan supports growing estate Martin Murphy Senior loan director Relendex

The estate under development

A

repaid loan on a property near Gloucester is a great example of the sort of funding situations and scenarios that Relendex can accommodate.

We were approached by one of our experienced and trusted broker contacts with a request to help established husband and wife property investors with their expansion plans.

The borrowers – who were from a construction background and both in their 70s – had owned a rural trading estate on several acres of land near Gloucester, which they had converted from farm and stables in the 1990s and had also extended through newbuild additions at several stages. At the time we refinanced the property, it comprised 18 small- and mediumsized commercial units, which the borrowers had successfully managed and let to multiple small, local enterprises. The existing, nearly fully let estate represented a very attractive investment in its own right.

Such was the success the borrowers had had with the existing estate that they had also secured planning permission to build a further 19 units, providing a further circa 24,000 sq ft of commercial space. Their intention was to build this out in two phases and part-sell and part-retain it for longterm investment purposes.

Relendex was approached to help the borrowers realise their plans and we were able to assist in the provision of a loan to both refinance the existing, let trading estate and also finance the development of the first phase of 10 new commercial units of circa 13,000 sq ft – together with infrastructure for

the larger site – at a total construction cost of approximately £650,000.

Although the initial and proposed gearing on the loan were both quite acceptable, the borrowers had been unable to proceed within any sort of realistic timeframe with a number of mainstream lenders who were put off by the borrowers’ ages, but also by the fact that the property was occupied by only local tenants and only on short-term leases. Relendex, however, was able to take the view that these highly experienced borrowers were not only fit and able to see through the proposed development and loan to a satisfactory exit, but that they had very successfully managed the existing trading estate at occupancy levels in excess of 90% for a good number of years. We took comfort in the exposure to multiple tenants and a proven and continuing demand in the local area.

The Relendex loan was secured on both the existing trading estate and also the new-build phase one units. This provided dual security for our lenders in that there was an existing income stream to assist with serviceability of the loan on completion of the works, but the loan was also being used to add significant additional value to the overall security package. From an underwriting point of view this required an analysis and assessment of the current occupation

and letting, of the continuing letting demand, and also of the development aspects, not only of costs but the construction process, programme, ground conditions and the borrowers’ ability to manage this and ultimately deliver the additional phase one units.

The loan exit was to come from a combination of unit sales and refinance, and so the due diligence process also required us to be satisfied with demand for the completed units and the potential availability of term funding to refinance residual debt.

The final challenge presented to us was one of time: our borrowers had already started the works from their resource and so we had to move with speed to ensure the construction programme could continue without hindrance. We always use trusted valuation and legal advisers who understand the time pressures applying to our funding, of course supported by our invaluable lenders to make sure that the Relendex side is always ready as soon as called upon by our borrowers.

The development process itself proceeded to our complete satisfaction and, as intended, the borrowers secured sufficient sales to repay the loan. They then carried out the development of the phase two units from further sales at phase one.

All in all, a resounding success.

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).

20 | NACFB Magazine

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

CASE STUDIES

CASE STUDIES

Keeping things simple for £1m portfolio expansion

Bob Young CEO Fleet Mortgages

The series of regulatory and taxation changes that have been introduced over the past 18-24 months has clearly had an impact on the buy-to-let sector, in particular how landlords pick properties to add to their portfolios.

22 | NACFB Magazine

T

he number of so-called ‘amateur landlords’ – those with one or two properties who have other jobs and use such investments as additions to their pension – may well fall back as we move towards a more professionalised sector with mostly landlords/investors for whom building portfolios is their day job.

This presents an interesting series of questions because it’s clear that such individuals or companies are looking more at the types of properties which can deliver the greater yield required in order to cover the additional costs.

how we deal with such enquiries and applications, and what we are able to offer in this area.

In that sense, it’s perhaps not been surprising to see an increase in interest in, for example, houses of multiple occupation (HMOs) and multi-unit blocks (MUBs), as these types of property can fulfil that greater need for yield. Advisers may well start to see more loan enquiries focused on this area and it’s important to know how lenders approach them, as what is accepted can differ for each case.

Clearly, advisers will be aware of the PRA underwriting changes introduced in 2017, specifically for those defined as ‘portfolio landlords’ with four or more mortgaged properties. This has added an extra layer or two of complexity for those lenders who had to be brought up to these new standards, however, as an experienced specialist lender that has been conducting such business since launch, we are immersed in this type of lending.

Our aim is to make the lending experience as simple as possible and not to overly complicate it.

For instance, Fleet Mortgages has a specific range of products purely focused on HMO/MUB properties, and a recent case should highlight

In this case, the borrower was looking to obtain £1m on a HMO/MUB of five self-contained flats in order to raise capital for another property purchase. The client was a portfolio landlord with a large number of properties in their portfolio, therefore we knew there was a strong level of experience present and that this individual would fit comfortably into the ‘professional landlord’ definition.

Our underwriters worked closely with the adviser to let them know what was needed and why, which gave them a clear idea of the overall requirements. With simplicity at the heart of our processes, in this case we ‘simply’ requested an assets and liability statement (taken in their format of choice) rather than a raft of unnecessary information which

Now, given that we are a focused and responsible lender, and that £1m is a lot of money to lend, we wanted to ensure we were completely happy with the case and that no issues could arise later that would mean we had to disappoint the client. The case was therefore referred to our credit committee – due to the loan value and the size of the client’s

parties have certainty – if we’re not going to lend we want to inform everyone straight away and if we are going to lend, similarly, we want to be able to provide that information in as short a space of time as possible.

It’s obvious from our own business levels that professional/portfolio landlords are increasingly looking

We worked closely with the adviser to let them know what was needed and why, giving them a clear idea of the overall requirements can only lead to delay in making the decision. Weeks of work was probably saved as we didn’t insist that all the information already available to us, such as the client’s other portfolio information, be submitted again.

With all the information gathered, we rang the valuer to let them know that the property was an MUB, ensuring that the valuation was completed properly the first time around – the valuer was booked in for three days later and thus we would have the valuation back in double-quick time.

background portfolio – and the underwriting team collated all the information and presented it to us.

Given the diligence of this work, and our strong relationship with the adviser, we were able to respond within 24 hours and approve the case, meaning it could be escalated and moved towards completion.

On paper, such cases might look worryingly complicated, however, if you pick the right lender with the right experience and quality, then it clearly doesn’t need to be like this at all. The important thing is that all

at HMOs and MUB properties in order to secure the greater yield they need. Given their previous activity in the market they will have larger portfolios which some lenders might struggle with – we are not one of those lenders and are here to make life as simple as possible for all concerned. Why not see what we can do and the results we can achieve?

You could be pleasantly surprised.

NACFB Magazine | 23

CASE STUDIES

CASE STUDIES

Keeping things simple for £1m portfolio expansion

Bob Young CEO Fleet Mortgages

The series of regulatory and taxation changes that have been introduced over the past 18-24 months has clearly had an impact on the buy-to-let sector, in particular how landlords pick properties to add to their portfolios.

22 | NACFB Magazine

T

he number of so-called ‘amateur landlords’ – those with one or two properties who have other jobs and use such investments as additions to their pension – may well fall back as we move towards a more professionalised sector with mostly landlords/investors for whom building portfolios is their day job.

This presents an interesting series of questions because it’s clear that such individuals or companies are looking more at the types of properties which can deliver the greater yield required in order to cover the additional costs.

how we deal with such enquiries and applications, and what we are able to offer in this area.

In that sense, it’s perhaps not been surprising to see an increase in interest in, for example, houses of multiple occupation (HMOs) and multi-unit blocks (MUBs), as these types of property can fulfil that greater need for yield. Advisers may well start to see more loan enquiries focused on this area and it’s important to know how lenders approach them, as what is accepted can differ for each case.

Clearly, advisers will be aware of the PRA underwriting changes introduced in 2017, specifically for those defined as ‘portfolio landlords’ with four or more mortgaged properties. This has added an extra layer or two of complexity for those lenders who had to be brought up to these new standards, however, as an experienced specialist lender that has been conducting such business since launch, we are immersed in this type of lending.

Our aim is to make the lending experience as simple as possible and not to overly complicate it.

For instance, Fleet Mortgages has a specific range of products purely focused on HMO/MUB properties, and a recent case should highlight

In this case, the borrower was looking to obtain £1m on a HMO/MUB of five self-contained flats in order to raise capital for another property purchase. The client was a portfolio landlord with a large number of properties in their portfolio, therefore we knew there was a strong level of experience present and that this individual would fit comfortably into the ‘professional landlord’ definition.

Our underwriters worked closely with the adviser to let them know what was needed and why, which gave them a clear idea of the overall requirements. With simplicity at the heart of our processes, in this case we ‘simply’ requested an assets and liability statement (taken in their format of choice) rather than a raft of unnecessary information which

Now, given that we are a focused and responsible lender, and that £1m is a lot of money to lend, we wanted to ensure we were completely happy with the case and that no issues could arise later that would mean we had to disappoint the client. The case was therefore referred to our credit committee – due to the loan value and the size of the client’s

parties have certainty – if we’re not going to lend we want to inform everyone straight away and if we are going to lend, similarly, we want to be able to provide that information in as short a space of time as possible.

It’s obvious from our own business levels that professional/portfolio landlords are increasingly looking

We worked closely with the adviser to let them know what was needed and why, giving them a clear idea of the overall requirements can only lead to delay in making the decision. Weeks of work was probably saved as we didn’t insist that all the information already available to us, such as the client’s other portfolio information, be submitted again.

With all the information gathered, we rang the valuer to let them know that the property was an MUB, ensuring that the valuation was completed properly the first time around – the valuer was booked in for three days later and thus we would have the valuation back in double-quick time.

background portfolio – and the underwriting team collated all the information and presented it to us.

Given the diligence of this work, and our strong relationship with the adviser, we were able to respond within 24 hours and approve the case, meaning it could be escalated and moved towards completion.

On paper, such cases might look worryingly complicated, however, if you pick the right lender with the right experience and quality, then it clearly doesn’t need to be like this at all. The important thing is that all

at HMOs and MUB properties in order to secure the greater yield they need. Given their previous activity in the market they will have larger portfolios which some lenders might struggle with – we are not one of those lenders and are here to make life as simple as possible for all concerned. Why not see what we can do and the results we can achieve?

You could be pleasantly surprised.

NACFB Magazine | 23

CASE STUDIES

Funding cushion secures revolving business Television Centre, Shepherds Bush term commitment, so it provides complete flexibility for the borrower.

Rene further explained: “A £25,000 facility was put in place, as we required £15,000 immediately and wanted the ability to access additional funds should we need them.

John Davies Director Just Cashflow PLC

T

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

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

Cream AV is a professional audiovisual services company that proudly claims it can seamlessly integrate technology at your fingertips or from your lips, both on land and at sea.

The company’s owners have a wealth of knowledge and experience working with the largest principal contractors in the construction industry. Delivering projects for some of the biggest institutions, including HSBC, Barclays, Bloomberg, Google and CITI, they have also completed many smaller floors or sections of buildings, multipleroom projects and single rooms, such as boardrooms, meeting rooms and video-conferencing projects. As well as the different room type requirements, they can also provide building-wide services, including IPTV, structured cabling and lighting control.

The new large, prestigious project was consultation and the

installation of audio and visual facilities for 11 apartments and two penthouses at the Television Centre, Shepherds Bush, London.

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

Rene Lacopini, director at Cream AV, said: “As a relatively new business it was essential to gain orders and have the ability to service them with speed and professionalism. Due to being in the start-up phase of business, while there were many funders in the marketplace, it was difficult finding the right lender to suit our needs.

We spoke to quite a few, but couldn’t find the flexibility we needed.

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

They also clearly valued the 20 years’ experience we had in this sector.”

The solution was Just Cashflow’s revolving credit facility that works exactly in the same way as a traditional bank overdraft and allows growing companies to smooth out inevitable peaks and troughs. Interest is charged on a daily basis and there is no long-

“A short while later we urgently required an additional £3,000. Having the cushion of funding already in place gave us the ability to focus on the project and not spend valuable time on further form-filling.”

The ability to access the additional funding also provided Cream AV with the confidence to actively source further orders in the knowledge that they had the funding partner to help them purchase material and equipment.

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

“I am extremely grateful for the way they responded to our business needs.

I was initially under a lot of pressure to get the funds into our account in a very short turnaround – just a few hours from signing important documents.

The effort from the Just Cashflow team and the guidance and understanding of our situation was greatly appreciated.”

Most growing companies like Cream AV suffer growing pains. These can come in the form of finding sufficient funds to pay for stock and work in progress, or the costs of marketing a new product or service and occasionally a debtor who is a slow or non-payer. This is why we have designed our revolving credit facility to provide them with the funding and flexibility they need.

Innovative loan solutions you can design to suit your clients Just Cashflow is giving professional brokers and intermediaries the ability to work with their clients to design the loan product that best suits their business needs and growth plans.

Just Cashflow has successfully been supporting SMEs with its Revolving Credit Facility (RCF) that acts exactly like a traditional bank overdraft. This is a great solution for shorter term funding needs. Now it is introducing a new loan product with flexible features that allows you to design funding to suit your clients needs.

Busineess Builder provides a 2 to 5 year loan facility for businesses that need funds over a longer period and gives them certainty on their monthly or weekly repayments. Other features that can be worked into the design include payment holidays, early repayment without penalties and loan extensions.

“We appreciate that businesses have different finance needs that reflect their growth plans, seasonality of income

and a range of other factors,” says John Davies, Director, Just Cashflow.

“This has driven the creation of our new product along with recognition that professional brokers and intermediaries are ideally placed to work with their business customers to design the most suitable loan facility.

“We have taken on board feedback from existing customers and the brokers we regularly deal with. A strong theme has been that our Revolving Credit Facility works really well when businesses have to prepare for inevitable bumps in the road that will impact their all important cash flow. However, this isn’t always the ideal solution when capital expenditure needs to be made,” John explains.

“It might be a new vehicle, printing press or lease on another shop where the business wants to have certainty about the term of the loan and what the monthly repayments are going to be.

“Seasonality of income was another strong theme and a lot of businesses

know how this is going to impact them and would welcome the flexibility and relief that payment holidays can provide.

“Businesses rely on the expertise of professional brokers and intermediaries and our flexible financial solutions will allow them to work with their clients to provide a tailored product. We are committed to providing fast and flexible funding so our application process is straightforward.

“The most successful businesses are ones that can quickly adapt to new challenges and opportunities and our thinking is that our finance facilities should reflect and encourage this. For example if things change and a business has the ability to repay their loan early why should they be penalised for it ?”

For more information on how Just Cashflow’s solutions are ideally placed to help build businesses, call our Broker Support Team on 0121 418 5037 or visit justcashflow.com/partner

The final piece in the puzzle

- a loan you can design yourself.

As a professional broker or intermediary you’ll be used to seeking fast and flexible funding for your clients.

Just Cashflow knows that every business is different and our new loan products enable us to offer you tailored financial solutions to meet the requirements of your clients.

Now you can design a loan with your Client that can give them access to funds from £10,000 to £500,000 in a way that exactly fits with their business needs.

Blend a short term and long term loan, pay it off without penalties, add in a payment holiday - a Just Cashflow loan can do it all.

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

Just call us now

0121 418 5037

FS668057

Alternatively, find out more

justcashflow.com/partner

BCMS668054

Just Cash Flow PLC is registered at 1 Charterhouse Mews, Farringdon, London EC1M 6BB under Company number 08508165 © Just Cash Flow PLC 20 17

24 | NACFB Magazine

CASE STUDIES

Funding cushion secures revolving business Television Centre, Shepherds Bush term commitment, so it provides complete flexibility for the borrower.

Rene further explained: “A £25,000 facility was put in place, as we required £15,000 immediately and wanted the ability to access additional funds should we need them.

John Davies Director Just Cashflow PLC

T

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

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

Cream AV is a professional audiovisual services company that proudly claims it can seamlessly integrate technology at your fingertips or from your lips, both on land and at sea.

The company’s owners have a wealth of knowledge and experience working with the largest principal contractors in the construction industry. Delivering projects for some of the biggest institutions, including HSBC, Barclays, Bloomberg, Google and CITI, they have also completed many smaller floors or sections of buildings, multipleroom projects and single rooms, such as boardrooms, meeting rooms and video-conferencing projects. As well as the different room type requirements, they can also provide building-wide services, including IPTV, structured cabling and lighting control.

The new large, prestigious project was consultation and the

installation of audio and visual facilities for 11 apartments and two penthouses at the Television Centre, Shepherds Bush, London.

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

Rene Lacopini, director at Cream AV, said: “As a relatively new business it was essential to gain orders and have the ability to service them with speed and professionalism. Due to being in the start-up phase of business, while there were many funders in the marketplace, it was difficult finding the right lender to suit our needs.

We spoke to quite a few, but couldn’t find the flexibility we needed.

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

They also clearly valued the 20 years’ experience we had in this sector.”

The solution was Just Cashflow’s revolving credit facility that works exactly in the same way as a traditional bank overdraft and allows growing companies to smooth out inevitable peaks and troughs. Interest is charged on a daily basis and there is no long-

“A short while later we urgently required an additional £3,000. Having the cushion of funding already in place gave us the ability to focus on the project and not spend valuable time on further form-filling.”

The ability to access the additional funding also provided Cream AV with the confidence to actively source further orders in the knowledge that they had the funding partner to help them purchase material and equipment.

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

“I am extremely grateful for the way they responded to our business needs.

I was initially under a lot of pressure to get the funds into our account in a very short turnaround – just a few hours from signing important documents.

The effort from the Just Cashflow team and the guidance and understanding of our situation was greatly appreciated.”

Most growing companies like Cream AV suffer growing pains. These can come in the form of finding sufficient funds to pay for stock and work in progress, or the costs of marketing a new product or service and occasionally a debtor who is a slow or non-payer. This is why we have designed our revolving credit facility to provide them with the funding and flexibility they need.

Innovative loan solutions you can design to suit your clients Just Cashflow is giving professional brokers and intermediaries the ability to work with their clients to design the loan product that best suits their business needs and growth plans.

Just Cashflow has successfully been supporting SMEs with its Revolving Credit Facility (RCF) that acts exactly like a traditional bank overdraft. This is a great solution for shorter term funding needs. Now it is introducing a new loan product with flexible features that allows you to design funding to suit your clients needs.

Busineess Builder provides a 2 to 5 year loan facility for businesses that need funds over a longer period and gives them certainty on their monthly or weekly repayments. Other features that can be worked into the design include payment holidays, early repayment without penalties and loan extensions.

“We appreciate that businesses have different finance needs that reflect their growth plans, seasonality of income

and a range of other factors,” says John Davies, Director, Just Cashflow.

“This has driven the creation of our new product along with recognition that professional brokers and intermediaries are ideally placed to work with their business customers to design the most suitable loan facility.

“We have taken on board feedback from existing customers and the brokers we regularly deal with. A strong theme has been that our Revolving Credit Facility works really well when businesses have to prepare for inevitable bumps in the road that will impact their all important cash flow. However, this isn’t always the ideal solution when capital expenditure needs to be made,” John explains.

“It might be a new vehicle, printing press or lease on another shop where the business wants to have certainty about the term of the loan and what the monthly repayments are going to be.

“Seasonality of income was another strong theme and a lot of businesses

know how this is going to impact them and would welcome the flexibility and relief that payment holidays can provide.

“Businesses rely on the expertise of professional brokers and intermediaries and our flexible financial solutions will allow them to work with their clients to provide a tailored product. We are committed to providing fast and flexible funding so our application process is straightforward.

“The most successful businesses are ones that can quickly adapt to new challenges and opportunities and our thinking is that our finance facilities should reflect and encourage this. For example if things change and a business has the ability to repay their loan early why should they be penalised for it ?”

For more information on how Just Cashflow’s solutions are ideally placed to help build businesses, call our Broker Support Team on 0121 418 5037 or visit justcashflow.com/partner

The final piece in the puzzle

- a loan you can design yourself.

As a professional broker or intermediary you’ll be used to seeking fast and flexible funding for your clients.

Just Cashflow knows that every business is different and our new loan products enable us to offer you tailored financial solutions to meet the requirements of your clients.

Now you can design a loan with your Client that can give them access to funds from £10,000 to £500,000 in a way that exactly fits with their business needs.

Blend a short term and long term loan, pay it off without penalties, add in a payment holiday - a Just Cashflow loan can do it all.

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

Just call us now

0121 418 5037

FS668057

Alternatively, find out more

justcashflow.com/partner

BCMS668054

Just Cash Flow PLC is registered at 1 Charterhouse Mews, Farringdon, London EC1M 6BB under Company number 08508165 © Just Cash Flow PLC 20 17

24 | NACFB Magazine

Digest The talk of the industry

Banking on digital In December 2017, RBS announced it would be closing a total of 259 branches across the country – a quarter of its network – as an increasing number of its customers were moving to online banking. RBS claimed the number of customers using branches across the UK had fallen by 40%, while mobile transactions increased by 73% over the same period. The closures were expected to result in approximately 680 redundancies.

Vera Sugar Editor NACFB Magazine

T

his is just one of the many signs that the changes the banking sector is undergoing are more significant than the industry first thought – and that they’re happening at a speed never seen before. While open, online banking has positive aspects for those ready for a change, there are many implications that are not immediately obvious, such as job losses, branch closures or increased funding requirements for research and development.

In the last 10 years, it became clear that all banks would have to increase their involvement with the digital world, with growing customer demand for ease of access and tightening competition. But the lag in traditional banks catching up with the younger generation is striking.

In a report released in December 2017 by P.A.ID Strategies, the market intelligence provider used banks’ digitalisation of their current and savings accounts as indicators of each institution’s progress towards a full digital transformation, observing metrics

26 | NACFB Magazine

such as application duration, number of steps in the application and time before the account could be used. Of the nine banks observed, the white paper ranked Starling Bank, Monzo and RBS (to a lesser extent) as leaders of digitalisation in the UK banking sector, claiming these banks provided an on-boarding process which “the rest of the market may do well to emulate”.

However, the study clearly showed that challengers are leading the way over their traditional competitors in all metrics observed, and that most UK banks have yet to embrace the mobile channel in its full form: “With consumers demanding fully digital (and fully mobile) services, and with more and more people switching bank accounts than ever before, banks face a choice: fully embrace digital, and more specifically mobile, to become a bank attractive to the digital consumer, or remain analogue and alienate the very customers they have spent millions of marketing pounds to attract.”

There’s no place like home One of the main reasons why so many SMEs still turn to their banks first and foremost for funding is the trust or relationship they have built up over the years. However, when that trusted partner

rejects a funding application – despite the SME being a loyal customer for a decade or more – this trust comes into question.

Commercial finance brokers – now more than ever – have a responsibility to reach beyond the banks and look for opportunities that these SMEs are missing out on. On the other hand, the transforming banking landscape is offering a real opportunity to these professionals.

If other, traditional banks follow the path that RBS has decided to take, and digital banks continue to play a growing part in the transformation, branches will inevitably become more difficult to access – distance and time being two key factors. Consequently, face-to-face contact between SMEs and their banks would be reduced; access to relationship or account managers may become limited, which could also mean the loosening of close relationships between banks and their customers. This is a danger to both sides.

The solution, however, could be simple – commercial finance brokers are experts in building relationships, and their time may just be now, according to Piotr Twaits, sales director at Synergy Commercial Finance: “Over recent years we have seen a change in the funding landscape

NACFB Magazine | 27

Digest The talk of the industry

Banking on digital In December 2017, RBS announced it would be closing a total of 259 branches across the country – a quarter of its network – as an increasing number of its customers were moving to online banking. RBS claimed the number of customers using branches across the UK had fallen by 40%, while mobile transactions increased by 73% over the same period. The closures were expected to result in approximately 680 redundancies.

Vera Sugar Editor NACFB Magazine

T

his is just one of the many signs that the changes the banking sector is undergoing are more significant than the industry first thought – and that they’re happening at a speed never seen before. While open, online banking has positive aspects for those ready for a change, there are many implications that are not immediately obvious, such as job losses, branch closures or increased funding requirements for research and development.

In the last 10 years, it became clear that all banks would have to increase their involvement with the digital world, with growing customer demand for ease of access and tightening competition. But the lag in traditional banks catching up with the younger generation is striking.

In a report released in December 2017 by P.A.ID Strategies, the market intelligence provider used banks’ digitalisation of their current and savings accounts as indicators of each institution’s progress towards a full digital transformation, observing metrics

26 | NACFB Magazine

such as application duration, number of steps in the application and time before the account could be used. Of the nine banks observed, the white paper ranked Starling Bank, Monzo and RBS (to a lesser extent) as leaders of digitalisation in the UK banking sector, claiming these banks provided an on-boarding process which “the rest of the market may do well to emulate”.

However, the study clearly showed that challengers are leading the way over their traditional competitors in all metrics observed, and that most UK banks have yet to embrace the mobile channel in its full form: “With consumers demanding fully digital (and fully mobile) services, and with more and more people switching bank accounts than ever before, banks face a choice: fully embrace digital, and more specifically mobile, to become a bank attractive to the digital consumer, or remain analogue and alienate the very customers they have spent millions of marketing pounds to attract.”

There’s no place like home One of the main reasons why so many SMEs still turn to their banks first and foremost for funding is the trust or relationship they have built up over the years. However, when that trusted partner

rejects a funding application – despite the SME being a loyal customer for a decade or more – this trust comes into question.

Commercial finance brokers – now more than ever – have a responsibility to reach beyond the banks and look for opportunities that these SMEs are missing out on. On the other hand, the transforming banking landscape is offering a real opportunity to these professionals.

If other, traditional banks follow the path that RBS has decided to take, and digital banks continue to play a growing part in the transformation, branches will inevitably become more difficult to access – distance and time being two key factors. Consequently, face-to-face contact between SMEs and their banks would be reduced; access to relationship or account managers may become limited, which could also mean the loosening of close relationships between banks and their customers. This is a danger to both sides.

The solution, however, could be simple – commercial finance brokers are experts in building relationships, and their time may just be now, according to Piotr Twaits, sales director at Synergy Commercial Finance: “Over recent years we have seen a change in the funding landscape

NACFB Magazine | 27

DIGEST

Creative solutions you won’t find on the high street - SME business term loans - Commercial mortgages - Development finance - Bridging finance - Buy-to-let for landlords - Renewable energy loans - Property investor hunting licence - Residential refurbishment

RBS closures - will other large banks follow suit? and we see this further developing over the coming years. Our thoughts are that banking will further streamline its SME offering with many more businesses being looked after by telephone-based relationship managers and digital platforms.

“When businesses are making critical decisions about their future, our experience shows they value a trusted partner to help them on their journey. Often they are left frustrated with their current banking relationship, and on many occasions they do not know who their relationship manager is. We believe that a commercial broker can become the new ‘local’ bank manager, supporting SMEs in achieving their goals.”

Lenders’ turn While some of the traditional banks are still playing catch-up, specialist and challenger banks have improved their solutions in leaps and bounds. In 2017, Raphaels Bank invested in a range of back-office tools combining automated credit assessment with human insight.

“Our goal with these new back-office tools is to give our underwriters the ability to automate elements of the process without losing our ‘eyes on every case’ principle that ensures that all customers are judged entirely fairly,” said Darren Greenyer, deputy head of lending at Raphael Finance.

Starling Bank was granted a green light to offer its full product range via its app in December 2017, and Hampshire Trust Bank has recently launched a new web

portal and app, to create more accessible digital solutions for brokers. Jon Maycock, managing director of asset finance, said: “By providing brokers with digital solutions we can help streamline the loan application process, cut down on printing, save time and money and help to ensure decisions are made in a more timely manner – it’s a win-win situation.”

These are just some examples of lenders’ efforts, but we are bound to see more of these emerging as the UK banking landscape further develops and changes in 2018. However, it is clear that both lenders and brokers have an opportunity to expand their remit – while change isn’t always for the better, in this case, perhaps it is worth our time.

Banks face a choice: fully embrace digital to become attractive to the digital consumer, or remain analogue and alienate the very customers they have spent millions of marketing pounds to attract

28 | NACFB Magazine

A fast and flexible approach to lending

Find out more at assetzcapital.co.uk or call 0800 470 0432 Assetz SME Capital Limited 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 is registered with the Office of the Information Commissioner (Reg No: Z3338899) for data protection purposes.

DIGEST

Creative solutions you won’t find on the high street - SME business term loans - Commercial mortgages - Development finance - Bridging finance - Buy-to-let for landlords - Renewable energy loans - Property investor hunting licence - Residential refurbishment

RBS closures - will other large banks follow suit? and we see this further developing over the coming years. Our thoughts are that banking will further streamline its SME offering with many more businesses being looked after by telephone-based relationship managers and digital platforms.

“When businesses are making critical decisions about their future, our experience shows they value a trusted partner to help them on their journey. Often they are left frustrated with their current banking relationship, and on many occasions they do not know who their relationship manager is. We believe that a commercial broker can become the new ‘local’ bank manager, supporting SMEs in achieving their goals.”

Lenders’ turn While some of the traditional banks are still playing catch-up, specialist and challenger banks have improved their solutions in leaps and bounds. In 2017, Raphaels Bank invested in a range of back-office tools combining automated credit assessment with human insight.

“Our goal with these new back-office tools is to give our underwriters the ability to automate elements of the process without losing our ‘eyes on every case’ principle that ensures that all customers are judged entirely fairly,” said Darren Greenyer, deputy head of lending at Raphael Finance.

Starling Bank was granted a green light to offer its full product range via its app in December 2017, and Hampshire Trust Bank has recently launched a new web

portal and app, to create more accessible digital solutions for brokers. Jon Maycock, managing director of asset finance, said: “By providing brokers with digital solutions we can help streamline the loan application process, cut down on printing, save time and money and help to ensure decisions are made in a more timely manner – it’s a win-win situation.”

These are just some examples of lenders’ efforts, but we are bound to see more of these emerging as the UK banking landscape further develops and changes in 2018. However, it is clear that both lenders and brokers have an opportunity to expand their remit – while change isn’t always for the better, in this case, perhaps it is worth our time.

Banks face a choice: fully embrace digital to become attractive to the digital consumer, or remain analogue and alienate the very customers they have spent millions of marketing pounds to attract

28 | NACFB Magazine

A fast and flexible approach to lending

Find out more at assetzcapital.co.uk or call 0800 470 0432 Assetz SME Capital Limited 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 is registered with the Office of the Information Commissioner (Reg No: Z3338899) for data protection purposes.

Patron | profile

United Trust Bank

The high-flying specialists United Trust Bank (UTB) first adopted the Eurasian eagleowl as its brand mascot in 2015 and it has become an instantly recognisable feature of UTB’s marketing, whether looking across the London skyline or perched in a builder’s yard, surveying a row of excavators.

30 | NACFB Magazine

O

perating in several very different sectors and with a diverse product range encompassing a variety of B2B and B2C lending solutions and savings accounts, the eagle-owl represents attributes which extend across UTB’s business activities.

UTB was incorporated in London in 1955 but its modern era really began in 2003 when Graham Davin, chief executive officer, and Harley Kagan, group managing director, led a successful management buy-out. At the time there were nine staff and the bank had a balance sheet of around £20m. Several office moves, 14 years and a financial crisis later, there are more than 180 full time staff, five lending divisions and total assets of over £1bn. In 2016 UTB was placed 25th in the Sunday Times BDO Profit Track 100 league table of the fastest growing private UK companies.

The bank has grown consistently because of its willingness to

back British businesses, to work collaboratively with broker partners and to treat every borrower as an individual. UTB works closely with brokers representing house builders, developers, SMEs and individuals, providing their clients with bespoke financial solutions which enable them to complete an almost inexhaustible list of plans, projects and investments. These include, for example, funding the construction of thousands of new homes, helping SMEs to invest in new vehicles, plant and machinery, bridging downsizes for older borrowers, funding refurbishment projects, spreading the cost of large company tax bills, enabling the purchase of rare classic and performance cars and releasing equity from a borrower’s home with a second charge mortgage.

The asset finance division, headed by Martin Nixon, is 100% focused on the broker channel and provides SMEs with a range of options for funding the purchase of a variety of new and

used vehicles and machinery, as well as refinancing existing assets for capital raising. The team encourages direct contact between brokers and the bank’s credit managers to discuss proposals. Such is the speed of the service that same and next-day pay-outs are frequent.

The bank has established a reputation for being a knowledgeable and reliable development finance lender, funding more unusual projects as well as traditional housing schemes. The development finance division, led by executive director Noel Meredith, lends across the entire spectrum of new home construction, financing everything from state of the art modular build developments to the renovation and conversion of historic stately homes and the creation of new apartments from redundant office blocks. In October 2017, the bank announced that it had secured a £150m Enable guarantee from the British Business Bank. The facility, the first of its

From left to right: Jonathan Ayres – CFO, Graham Davin – CEO, Elvis, Harley Kagan – Group MD, Noel Meredith – Executive Director kind to be designed specifically to help fund housebuilders, will allow UTB to significantly increase its lending to SME housebuilders.

The structured finance and mortgages & bridging divisions complete UTB’s property finance portfolio. The structured finance division was established in 2016 by Gerard Morgan Jackson and was set up specifically to provide bespoke financial solutions for sophisticated investors and developers whose requirements aren’t catered for by conventional loan facilities.

Robert Owen is managing director of the merged mortgages & bridging division. UTB’s second charge loan offering has won four ‘Best provider’ awards since the bank entered the mortgage market in 2016 and UTB has invested in expanding the

division’s BDM team, which now covers more of the country and deals with more brokers than ever before.

The creation of bridging’s internal sales team and the restructure of the mortgage underwriting team to improve scalability and broker service provides some futureproofing for increasing demand, and the potential for further new product development.

In uncertain times brokers want to be confident that lenders are going to deliver the service and the funds they’ve promised. UTB has always been a dependable and approachable lender, providing support to its broker partners when they need it and enabling developers, businesses and individuals to seize opportunities for investment and growth.

NACFB Magazine | 31

Patron | profile

United Trust Bank

The high-flying specialists United Trust Bank (UTB) first adopted the Eurasian eagleowl as its brand mascot in 2015 and it has become an instantly recognisable feature of UTB’s marketing, whether looking across the London skyline or perched in a builder’s yard, surveying a row of excavators.

30 | NACFB Magazine

O

perating in several very different sectors and with a diverse product range encompassing a variety of B2B and B2C lending solutions and savings accounts, the eagle-owl represents attributes which extend across UTB’s business activities.

UTB was incorporated in London in 1955 but its modern era really began in 2003 when Graham Davin, chief executive officer, and Harley Kagan, group managing director, led a successful management buy-out. At the time there were nine staff and the bank had a balance sheet of around £20m. Several office moves, 14 years and a financial crisis later, there are more than 180 full time staff, five lending divisions and total assets of over £1bn. In 2016 UTB was placed 25th in the Sunday Times BDO Profit Track 100 league table of the fastest growing private UK companies.

The bank has grown consistently because of its willingness to

back British businesses, to work collaboratively with broker partners and to treat every borrower as an individual. UTB works closely with brokers representing house builders, developers, SMEs and individuals, providing their clients with bespoke financial solutions which enable them to complete an almost inexhaustible list of plans, projects and investments. These include, for example, funding the construction of thousands of new homes, helping SMEs to invest in new vehicles, plant and machinery, bridging downsizes for older borrowers, funding refurbishment projects, spreading the cost of large company tax bills, enabling the purchase of rare classic and performance cars and releasing equity from a borrower’s home with a second charge mortgage.

The asset finance division, headed by Martin Nixon, is 100% focused on the broker channel and provides SMEs with a range of options for funding the purchase of a variety of new and

used vehicles and machinery, as well as refinancing existing assets for capital raising. The team encourages direct contact between brokers and the bank’s credit managers to discuss proposals. Such is the speed of the service that same and next-day pay-outs are frequent.

The bank has established a reputation for being a knowledgeable and reliable development finance lender, funding more unusual projects as well as traditional housing schemes. The development finance division, led by executive director Noel Meredith, lends across the entire spectrum of new home construction, financing everything from state of the art modular build developments to the renovation and conversion of historic stately homes and the creation of new apartments from redundant office blocks. In October 2017, the bank announced that it had secured a £150m Enable guarantee from the British Business Bank. The facility, the first of its

From left to right: Jonathan Ayres – CFO, Graham Davin – CEO, Elvis, Harley Kagan – Group MD, Noel Meredith – Executive Director kind to be designed specifically to help fund housebuilders, will allow UTB to significantly increase its lending to SME housebuilders.

The structured finance and mortgages & bridging divisions complete UTB’s property finance portfolio. The structured finance division was established in 2016 by Gerard Morgan Jackson and was set up specifically to provide bespoke financial solutions for sophisticated investors and developers whose requirements aren’t catered for by conventional loan facilities.

Robert Owen is managing director of the merged mortgages & bridging division. UTB’s second charge loan offering has won four ‘Best provider’ awards since the bank entered the mortgage market in 2016 and UTB has invested in expanding the

division’s BDM team, which now covers more of the country and deals with more brokers than ever before.

The creation of bridging’s internal sales team and the restructure of the mortgage underwriting team to improve scalability and broker service provides some futureproofing for increasing demand, and the potential for further new product development.

In uncertain times brokers want to be confident that lenders are going to deliver the service and the funds they’ve promised. UTB has always been a dependable and approachable lender, providing support to its broker partners when they need it and enabling developers, businesses and individuals to seize opportunities for investment and growth.

NACFB Magazine | 31

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

Levelling the game Keith Morgan, chief executive of the British Business Bank, on fighting regional imbalances in SME funding

Q A

What is the biggest problem the industrial strategy is seeking to fix?

The government’s recent industrial strategy aims to “boost the productivity and earning power of people throughout the UK”. Crucially for the British Business Bank, two of the five ‘foundations’ of the strategy are ‘business environment: the best place to start and grow a business’ and ‘places: prosperous communities across the UK’.

A key part of the challenge the industrial strategy is responding to is that regional imbalances in access to finance for smaller businesses block widespread growth for our economy. Smaller businesses which could be growing and creating jobs and prosperity aren’t aware of or can’t access the right finance to help them scale up.

Our Small Business Finance Markets report shows a clear regional imbalance in the availability and accessibility of finance options for small businesses looking to grow. Too many alternative finance options – most markedly equity finance, vital for scaling up smaller businesses – are concentrated in London and the South East.

A healthy and productive small business sector requires a diverse range of funding options and funding providers. Ensuring that finance reaches smaller businesses across all regions of the UK – not just London and the South East – is vital to delivering widespread growth.

Q

How is the industrial strategy addressing this? And how is the British Business Bank involved?

A

The bank was created to make finance markets for small businesses work more effectively and allow them to prosper, grow and help boost the economy, no matter where they are in the country. The bank is already responsible for £650m in funds for the Northern Powerhouse and Midlands Engine areas, and this year we will be launching a similar fund for Cornwall and Isles of Scilly.

One announcement in the industrial strategy that builds on this work is the network of British Business Bank regional managers, which will be rolled out by autumn 2018 to ensure businesses across the UK know how to access sources of investment.

The industrial strategy has equipped us with greater resources and an increased role to deliver more for smaller businesses looking for finance. By putting in place a new network of regional managers, we will further address regional disparities in awareness of – and access to – funding choices for businesses across all regions of the UK. This regional network will help to ensure that businesses across the UK will have the know-how to access sources of investment.

Q

What else is the bank doing to help businesses access finance regionally?

A

Alongside these managers, a commercial investment programme, run by the bank, will also be launched to support developing clusters of business angels outside London.

The British Business Bank is already the UK’s largest British-based venture capital investor, with over £1bn committed across a range of existing programmes.

The industrial strategy reaffirmed the Autumn Budget’s commitment to create a new £2.5bn investment fund, run by the bank, which will unlock a total of £7.5bn investment to help ensure businesses can get access to the capital they need to scale up.

This new investment fund will run alongside the bank’s established and expanded programmes – including a series of private sector funds to be established and delivered through the bank. This will include a first wave of investment of up to £500m; an extension of our successful Enterprise Finance Guarantee to March 2022, supporting up to £500m of loans a year to help businesses’ access to debt finance; and a 10-year extension of our Enterprise Capital Funds programme, representing £1bn of commitments.

Alongside these interventions, we will be launching an enhanced information strategy that will use innovative digital tools to ensure smaller businesses aiming to scale up can access information about the finance options available to them, wherever they are in the UK.

The loan for one project that provides funds for the next Our new refurbishment bridging product is ideal for investors who want to purchase a property, carry out light refurbishments* and then release their investment quickly to move onto the next project.

• Loans from £26,000 to £5,000,000 • LTV up to 75% • Flexible terms For more information call 0161 933 7103 or visit togethermoney.com/intermedaries

This advertisement is intended for professional intermediary use only and must not be distributed to potential clients. * Light refurbishment includes the replacement or refurbishment of kitchens and include anything that requires planning permission or structural changes.

32 | NACFB Magazine

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

Levelling the game Keith Morgan, chief executive of the British Business Bank, on fighting regional imbalances in SME funding

Q A

What is the biggest problem the industrial strategy is seeking to fix?

The government’s recent industrial strategy aims to “boost the productivity and earning power of people throughout the UK”. Crucially for the British Business Bank, two of the five ‘foundations’ of the strategy are ‘business environment: the best place to start and grow a business’ and ‘places: prosperous communities across the UK’.

A key part of the challenge the industrial strategy is responding to is that regional imbalances in access to finance for smaller businesses block widespread growth for our economy. Smaller businesses which could be growing and creating jobs and prosperity aren’t aware of or can’t access the right finance to help them scale up.

Our Small Business Finance Markets report shows a clear regional imbalance in the availability and accessibility of finance options for small businesses looking to grow. Too many alternative finance options – most markedly equity finance, vital for scaling up smaller businesses – are concentrated in London and the South East.

A healthy and productive small business sector requires a diverse range of funding options and funding providers. Ensuring that finance reaches smaller businesses across all regions of the UK – not just London and the South East – is vital to delivering widespread growth.

Q

How is the industrial strategy addressing this? And how is the British Business Bank involved?

A

The bank was created to make finance markets for small businesses work more effectively and allow them to prosper, grow and help boost the economy, no matter where they are in the country. The bank is already responsible for £650m in funds for the Northern Powerhouse and Midlands Engine areas, and this year we will be launching a similar fund for Cornwall and Isles of Scilly.

One announcement in the industrial strategy that builds on this work is the network of British Business Bank regional managers, which will be rolled out by autumn 2018 to ensure businesses across the UK know how to access sources of investment.

The industrial strategy has equipped us with greater resources and an increased role to deliver more for smaller businesses looking for finance. By putting in place a new network of regional managers, we will further address regional disparities in awareness of – and access to – funding choices for businesses across all regions of the UK. This regional network will help to ensure that businesses across the UK will have the know-how to access sources of investment.

Q

What else is the bank doing to help businesses access finance regionally?

A

Alongside these managers, a commercial investment programme, run by the bank, will also be launched to support developing clusters of business angels outside London.

The British Business Bank is already the UK’s largest British-based venture capital investor, with over £1bn committed across a range of existing programmes.

The industrial strategy reaffirmed the Autumn Budget’s commitment to create a new £2.5bn investment fund, run by the bank, which will unlock a total of £7.5bn investment to help ensure businesses can get access to the capital they need to scale up.

This new investment fund will run alongside the bank’s established and expanded programmes – including a series of private sector funds to be established and delivered through the bank. This will include a first wave of investment of up to £500m; an extension of our successful Enterprise Finance Guarantee to March 2022, supporting up to £500m of loans a year to help businesses’ access to debt finance; and a 10-year extension of our Enterprise Capital Funds programme, representing £1bn of commitments.

Alongside these interventions, we will be launching an enhanced information strategy that will use innovative digital tools to ensure smaller businesses aiming to scale up can access information about the finance options available to them, wherever they are in the UK.

The loan for one project that provides funds for the next Our new refurbishment bridging product is ideal for investors who want to purchase a property, carry out light refurbishments* and then release their investment quickly to move onto the next project.

• Loans from £26,000 to £5,000,000 • LTV up to 75% • Flexible terms For more information call 0161 933 7103 or visit togethermoney.com/intermedaries

This advertisement is intended for professional intermediary use only and must not be distributed to potential clients. * Light refurbishment includes the replacement or refurbishment of kitchens and include anything that requires planning permission or structural changes.

32 | NACFB Magazine

LANDLORD DEMAND 8%

Special | features

9% of mortgage advisers described landlord demand as ‘strong’ or ‘very strong’ in Q3 2017, up from 6% in the previous quarter but still 1% considerably lower than highs of 35-45% between 2013-2016.

3%The number of advisers describing landlord demand as ‘weak’ or ‘very weak’ remained at 53% for the second successive quarter, still the highest ever figure following a steep 16%same. decline in strength since September 2015, when just 10% said the

An up-to-date insight into the industry

Brokers stand firm

37%

Current level of buy-to-let landlord demand

Current level of landlord demand 36%

Paragon’s intermediary survey shows confidence remains high

8%

Very strong

Stable

Very weak

Strong

Weak

Not Sure

1% 3%

Confidence among mortgage intermediaries reached its highest level since 2015 last year as mortgage activity increased in Q3, according to our latest Financial Advisers Confidence Tracking (FACT) Index report, based on interviews with 199 mortgage intermediaries.

GENERAL MORTGAGE MARKET MARKET OVERVIEW

reaching the highest level for some time.

Despite a rather uncertain environment, intermediaries are seeing higher levels of remortgage activity and at least stable demand from buy-to-let landlords.

John Heron Managing director – mortgages Paragon

the mortgage market, with the average number of mortgages introduced per advisers’ office in Q3 2017 at 24, up 9% on the previous quarter and 8% on the previous year. This is the third highest recorded figure since the 2008 financial crash and maintains the long-term recovery from a record low of 14 in 2009.

The average number of mortgages introduced per advisers’ office in Q3 2017 was 24, up 9% on Q2 2017 and % on the previous year. This is the A wide variety of recent data on housing The FACT Index, calculated as a percentage has pointed to a market that has been of a baseline figure, and adjusted to third highest recorded figure since the 200 financial crash and finely balanced. Low transaction numbers account for the volume of business which have been bolsteredthe by higher numbers advisers expect tofrom complete a over the On average, mortgage advisers expected maintains long-term recovery record low of 14 in 2009. of first-time buyers, house prices outside London have been creeping up and landlord activity has stabilised. These trends are confirmed by our Q3 2017 intermediary survey with confidence

following quarter, scored 105.9 in Q3 2017, the highest score since Q4 2015, and the second successive quarterly increase.

to do 2.4% more mortgage business in Q4 2017, with the expected number of cases stable at four, maintaining the reversal of a two-year downward trend between 2014-2016.

Average number of mortgages introduced per office This is in part due to increased activity in 25

Average number of mortgages introduced per office

37% 16%

Very strong

Stable

In buy-to-let, half (50%) of brokers Weak said that,Strong compared with the previous 12 months, they expected business to stay the same in the next 12 months. On average, mortgage advisers expect to do 3% less buy-to-let mortgage business in that period. This is the same as Q2 2017 but remains comfortably higher than the historic low of 6% seen in Q1 2016.

Remortgaging remained the most popular reason for obtaining a buy-to-let mortgage in Q3 2017, accounting for a slightly reduced majority of 50% of all buy-to-let business.

The steep upward trend in remortgaging since Q4 2013 has been matched by a long-term decline of first-time landlords, which grew slightly from a near-record low proportion of 13% in Q2 2017 to 14% in Q3.

Brokers reported a record number of landlords remortgaging to achieve a better interest rate in Q3 2017, accounting for 56% of all cases, while a historic low of 33% of landlords remortgaged for the purpose of capital raising in the same period. This is the culmination of a longterm trend and fewer landlords raising capital can be linked to the small decrease in overall remortgage cases in Q3 2017.

20

15

10

P

aragon’s FACT Index report for Q3 2017 also revealed that longer-term fixed rate mortgages continue to grow in popularity, with homeowners opting for five-year products to benefit from better rates.

5

0 2009

34 | NACFB Magazine

2010

2011

2012

2013

2014

2015

2016

2017

Very weak Not Sure

Despite an uncertain environment, intermediaries are seeing higher levels of remortgage activity and at least stable demand from buy-to-let landlords

accounts for almost 90% of all products, which has increased from 87% in the same quarter last year. Two-year fixed products remain stable, making up 47% of all mortgages in Q3 and are still the most popular product on the market despite the continuing popularity of longer terms.

In Q3 2017, longer-term fixes also continued on an upward trend, with five-year FACT products making up 39% of allINDEX mortgage products – an all-time high. Although Q3 2017 two-year products remain the most popular, making up 47% of all cases, the rate of growth in these has eased, and people seem to be gradually prioritising low rates over the length of term.

Interestingly, despite remortgages still being the most popular, figures have decreased from 39% in Q2 to 36% in Q3 with first-time buyers and buy-to-let mortgages now taking a higher percentage of the market. Buy-to-let mortgages now make up 17% of all mortgage cases.

It is positive for the buy-to-let market to see application numbers increase after weaker numbers in the previous three quarters. Hopefully this will be a sign of things to come for this market after a period of uncertainty following regulatory changes, reduced tax relief and the uncertainty around Brexit.

The popularity of fixed-rate mortgages has been rising steadily since 2011, and now

NACFB Magazine | 35

LANDLORD DEMAND 8%

Special | features

9% of mortgage advisers described landlord demand as ‘strong’ or ‘very strong’ in Q3 2017, up from 6% in the previous quarter but still 1% considerably lower than highs of 35-45% between 2013-2016.

3%The number of advisers describing landlord demand as ‘weak’ or ‘very weak’ remained at 53% for the second successive quarter, still the highest ever figure following a steep 16%same. decline in strength since September 2015, when just 10% said the

An up-to-date insight into the industry

Brokers stand firm

37%

Current level of buy-to-let landlord demand

Current level of landlord demand 36%

Paragon’s intermediary survey shows confidence remains high

8%

Very strong

Stable

Very weak

Strong

Weak

Not Sure

1% 3%

Confidence among mortgage intermediaries reached its highest level since 2015 last year as mortgage activity increased in Q3, according to our latest Financial Advisers Confidence Tracking (FACT) Index report, based on interviews with 199 mortgage intermediaries.

GENERAL MORTGAGE MARKET MARKET OVERVIEW

reaching the highest level for some time.

Despite a rather uncertain environment, intermediaries are seeing higher levels of remortgage activity and at least stable demand from buy-to-let landlords.

John Heron Managing director – mortgages Paragon

the mortgage market, with the average number of mortgages introduced per advisers’ office in Q3 2017 at 24, up 9% on the previous quarter and 8% on the previous year. This is the third highest recorded figure since the 2008 financial crash and maintains the long-term recovery from a record low of 14 in 2009.

The average number of mortgages introduced per advisers’ office in Q3 2017 was 24, up 9% on Q2 2017 and % on the previous year. This is the A wide variety of recent data on housing The FACT Index, calculated as a percentage has pointed to a market that has been of a baseline figure, and adjusted to third highest recorded figure since the 200 financial crash and finely balanced. Low transaction numbers account for the volume of business which have been bolsteredthe by higher numbers advisers expect tofrom complete a over the On average, mortgage advisers expected maintains long-term recovery record low of 14 in 2009. of first-time buyers, house prices outside London have been creeping up and landlord activity has stabilised. These trends are confirmed by our Q3 2017 intermediary survey with confidence

following quarter, scored 105.9 in Q3 2017, the highest score since Q4 2015, and the second successive quarterly increase.

to do 2.4% more mortgage business in Q4 2017, with the expected number of cases stable at four, maintaining the reversal of a two-year downward trend between 2014-2016.

Average number of mortgages introduced per office This is in part due to increased activity in 25

Average number of mortgages introduced per office

37% 16%

Very strong

Stable

In buy-to-let, half (50%) of brokers Weak said that,Strong compared with the previous 12 months, they expected business to stay the same in the next 12 months. On average, mortgage advisers expect to do 3% less buy-to-let mortgage business in that period. This is the same as Q2 2017 but remains comfortably higher than the historic low of 6% seen in Q1 2016.

Remortgaging remained the most popular reason for obtaining a buy-to-let mortgage in Q3 2017, accounting for a slightly reduced majority of 50% of all buy-to-let business.

The steep upward trend in remortgaging since Q4 2013 has been matched by a long-term decline of first-time landlords, which grew slightly from a near-record low proportion of 13% in Q2 2017 to 14% in Q3.

Brokers reported a record number of landlords remortgaging to achieve a better interest rate in Q3 2017, accounting for 56% of all cases, while a historic low of 33% of landlords remortgaged for the purpose of capital raising in the same period. This is the culmination of a longterm trend and fewer landlords raising capital can be linked to the small decrease in overall remortgage cases in Q3 2017.

20

15

10

P

aragon’s FACT Index report for Q3 2017 also revealed that longer-term fixed rate mortgages continue to grow in popularity, with homeowners opting for five-year products to benefit from better rates.

5

0 2009

34 | NACFB Magazine

2010

2011

2012

2013

2014

2015

2016

2017

Very weak Not Sure

Despite an uncertain environment, intermediaries are seeing higher levels of remortgage activity and at least stable demand from buy-to-let landlords

accounts for almost 90% of all products, which has increased from 87% in the same quarter last year. Two-year fixed products remain stable, making up 47% of all mortgages in Q3 and are still the most popular product on the market despite the continuing popularity of longer terms.

In Q3 2017, longer-term fixes also continued on an upward trend, with five-year FACT products making up 39% of allINDEX mortgage products – an all-time high. Although Q3 2017 two-year products remain the most popular, making up 47% of all cases, the rate of growth in these has eased, and people seem to be gradually prioritising low rates over the length of term.

Interestingly, despite remortgages still being the most popular, figures have decreased from 39% in Q2 to 36% in Q3 with first-time buyers and buy-to-let mortgages now taking a higher percentage of the market. Buy-to-let mortgages now make up 17% of all mortgage cases.

It is positive for the buy-to-let market to see application numbers increase after weaker numbers in the previous three quarters. Hopefully this will be a sign of things to come for this market after a period of uncertainty following regulatory changes, reduced tax relief and the uncertainty around Brexit.

The popularity of fixed-rate mortgages has been rising steadily since 2011, and now

NACFB Magazine | 35

SPECIAL FEATURES

Damon Walford CDO ThinCats

According to the Cambridge Centre for Alternative Finance’s (CCAF) latest report, platform-led due diligence is critical to retail investors in business loans, but it seems that external, independent advice is not easily available.

36 | NACFB Magazine

SPECIAL FEATURES

The challenges of advising on business loan investments I t is not entirely clear from the CCAF report whether investors actually don’t want financial advice, or whether they can’t readily source it. There are some instances where financial advice is likely to be key – not necessarily just about which lender/ platform to use, but how to incorporate alternative lending in an overall portfolio.

For instance, it is clear from the average lender demographics in the same report that a very sizeable proportion of lenders are taking retirement income, or coming to it soon.

Financial planning for retirement can be extremely complicated; how to make the money work in the most effective way for each individual, how to use different tax wrappers and allowances to maximise post-tax income, and also how to plan for inheritance issues. Dividend allowances, savings allowances, different income tax bands, spouse allowances, SIPPs, SASSs and Isas are all potentially important aspects of a retirement-oriented portfolio.

Individual circumstances and investment objectives can vary enormously, so it can be difficult to make generalisations.

Unsurprisingly, it is likely to be a difficult area to research by yourself.

An asset class which generates relatively predictable and stable cashflow (particularly with amortising loans) is very interesting when designing retirement portfolios – and it is not surprising to see the popularity of alternative assets for institutional investors tackling the same challenges as private investors. However, retail investors are far more limited than institutional investors in their ability to access these types of assets - alternative lending offers one of the few opportunities for retail lenders to avoid market volatility and to offer a relatively attractive and stable yield. It is clearly unfortunate, therefore, if financial advice is not readily accessible to give a balanced explanation of the different options available.

T

here are a number of reasons as to why this might be the case, most of which stem from the fact that alternative lending is not traded on a public exchange (as opposed to dedicated secondary markets) or available in dedicated open-ended retail funds.

First, the bulk of advised assets tends to flow to the large investment platforms which can only handle funds or assets traded on a public exchange.

This complicates the adviser’s life as alternative lending then needs to be held separately. This all materially increases the adviser’s administrative overheads – for example, putting together a single snapshot of a client’s assets is more difficult if not all held together.

third party analysis is often fundamental to an adviser’s own due diligence and so its limited availability is also an issue.

A very common way to match different potential investments to individual client risk appetite is to assess the historical volatility of an investment. Again,

Additionally, while the main trade body – the Peer-to-Peer Finance Association – now requires its members to produce stress testing of their loan portfolios from 2018, concerns may linger that the industry is still relatively young and needs to stand the test of time. Advisers all remember different investments which became very popular

The total value of investment in business loans from retail investors is smaller than several individual retail funds, and so simply cannot show up on advisers’ radars A large proportion of advisers are not independent and are restricted to using centralised investment propositions which can amount to billions in size.

Even if it is possible for these products to use alternative lending, their sheer size means that they need to make very sizeable individual investments.

The total value of investment in business loans from retail investors is smaller than several individual retail funds, and so simply cannot show up on advisers’ radars.

Third party due diligence on lending platforms is still relatively limited when compared with the infrastructure available for more mainstream investments. Such

alternative lending doesn’t fit readily into this assessment and the providers of these investment risk profiles have not extended their models to cater for it yet.

Regulated financial advisers are obliged to hold professional indemnity insurance and it is not entirely clear whether all providers of this include alternative lending in the scope of their cover.

Lastly, there are a couple of secular challenges for alternative lending which may complicate an adviser’s perspective.

The FCA has not issued its final thoughts on the future shape of regulation of crowdfunded lending following its consultation in the summer of 2016.

before their shortfalls revealed themselves.

This is very difficult to tackle without the passage of time and the ease which comes with growing familiarity, but nevertheless is a real concern in some quarters.

That said, there is a very real and positive contribution that alternative lending can make – which few other retail assets can – to complicated scenarios like retirement planning. As awareness of this grows, it is likely that increasing numbers of advisers will want to overcome these barriers so that their clients can benefit from the advantages offered by alternative lending.

NACFB Magazine | 37

SPECIAL FEATURES

Damon Walford CDO ThinCats

According to the Cambridge Centre for Alternative Finance’s (CCAF) latest report, platform-led due diligence is critical to retail investors in business loans, but it seems that external, independent advice is not easily available.

36 | NACFB Magazine

SPECIAL FEATURES

The challenges of advising on business loan investments I t is not entirely clear from the CCAF report whether investors actually don’t want financial advice, or whether they can’t readily source it. There are some instances where financial advice is likely to be key – not necessarily just about which lender/ platform to use, but how to incorporate alternative lending in an overall portfolio.

For instance, it is clear from the average lender demographics in the same report that a very sizeable proportion of lenders are taking retirement income, or coming to it soon.

Financial planning for retirement can be extremely complicated; how to make the money work in the most effective way for each individual, how to use different tax wrappers and allowances to maximise post-tax income, and also how to plan for inheritance issues. Dividend allowances, savings allowances, different income tax bands, spouse allowances, SIPPs, SASSs and Isas are all potentially important aspects of a retirement-oriented portfolio.

Individual circumstances and investment objectives can vary enormously, so it can be difficult to make generalisations.

Unsurprisingly, it is likely to be a difficult area to research by yourself.

An asset class which generates relatively predictable and stable cashflow (particularly with amortising loans) is very interesting when designing retirement portfolios – and it is not surprising to see the popularity of alternative assets for institutional investors tackling the same challenges as private investors. However, retail investors are far more limited than institutional investors in their ability to access these types of assets - alternative lending offers one of the few opportunities for retail lenders to avoid market volatility and to offer a relatively attractive and stable yield. It is clearly unfortunate, therefore, if financial advice is not readily accessible to give a balanced explanation of the different options available.

T

here are a number of reasons as to why this might be the case, most of which stem from the fact that alternative lending is not traded on a public exchange (as opposed to dedicated secondary markets) or available in dedicated open-ended retail funds.

First, the bulk of advised assets tends to flow to the large investment platforms which can only handle funds or assets traded on a public exchange.

This complicates the adviser’s life as alternative lending then needs to be held separately. This all materially increases the adviser’s administrative overheads – for example, putting together a single snapshot of a client’s assets is more difficult if not all held together.

third party analysis is often fundamental to an adviser’s own due diligence and so its limited availability is also an issue.

A very common way to match different potential investments to individual client risk appetite is to assess the historical volatility of an investment. Again,

Additionally, while the main trade body – the Peer-to-Peer Finance Association – now requires its members to produce stress testing of their loan portfolios from 2018, concerns may linger that the industry is still relatively young and needs to stand the test of time. Advisers all remember different investments which became very popular

The total value of investment in business loans from retail investors is smaller than several individual retail funds, and so simply cannot show up on advisers’ radars A large proportion of advisers are not independent and are restricted to using centralised investment propositions which can amount to billions in size.

Even if it is possible for these products to use alternative lending, their sheer size means that they need to make very sizeable individual investments.

The total value of investment in business loans from retail investors is smaller than several individual retail funds, and so simply cannot show up on advisers’ radars.

Third party due diligence on lending platforms is still relatively limited when compared with the infrastructure available for more mainstream investments. Such

alternative lending doesn’t fit readily into this assessment and the providers of these investment risk profiles have not extended their models to cater for it yet.

Regulated financial advisers are obliged to hold professional indemnity insurance and it is not entirely clear whether all providers of this include alternative lending in the scope of their cover.

Lastly, there are a couple of secular challenges for alternative lending which may complicate an adviser’s perspective.

The FCA has not issued its final thoughts on the future shape of regulation of crowdfunded lending following its consultation in the summer of 2016.

before their shortfalls revealed themselves.

This is very difficult to tackle without the passage of time and the ease which comes with growing familiarity, but nevertheless is a real concern in some quarters.

That said, there is a very real and positive contribution that alternative lending can make – which few other retail assets can – to complicated scenarios like retirement planning. As awareness of this grows, it is likely that increasing numbers of advisers will want to overcome these barriers so that their clients can benefit from the advantages offered by alternative lending.

NACFB Magazine | 37

SPECIAL FEATURES

SPECIAL FEATURES

Waking sleeping dogs:

Bitcoin has taken the financial industry by storm in recent months, with its substantial growth in value taking centre stage in the cryptocurrency sector.

Martin Greenland Reporter Bridging & Commercial

O

ne single bitcoin was worth more than £10,000 at the time of writing, and in December 2017 it reached its highest-ever value.

Bitcoin has been constantly evolving over the past decade, since it was developed by an unknown person (rumoured to be Satoshi Nakamoto).

As is the case with all cryptocurrencies, there aren’t any physical bitcoins, only balances which are kept on a public ledger in the cloud that is verified by a significant amount of computing power.

Due to its volatile nature, opinions differ on how sustainable the bitcoin ‘bubble’ is, and

38 | NACFB Magazine

on whether we can expect the currency to come crashing down in the near future.

The basics In 2008, Satoshi Nakamoto published a document outlining the foundations of bitcoin, explaining that the currency would rely on what is essentially a peerto-peer network to facilitate instant payments, which uses proof-of-work to record a public history of transactions.

The public ledger – more commonly known as the blockchain – has the ability to record transactions between two parties efficiently and in a verifiable and permanent way. The ledger can be programmmed to record transactions automatically, which are protected from ever being deleted or tampered with, but can be revised and checked over once the ledger has been verified. The ledger also has the ability to record every agreement, every process, every task and every payment,

and it can be signed off with a digital signature that can be identified, validated, stored and shared retrospectively.

With cryptocurrencies dominating headlines since the end of 2017 and into the new year, many industries are already considering how the currencies, or the technology behind them, could influence their working environment. And, with the commercial finance industry well versed on the peer-to-peer sector, it poses the question: could bitcoin/ blockchain play a part in this industry too?

Trust is not the issue James Dear, chief technology officer and co-founder of iwoca, believes bitcoin or blockchain are neither useful nor relevant for the commercial finance industry.

“Bitcoin is an esoteric and highly volatile currency and so lending bitcoins is unlikely to be a big market.

“Blockchain enables transaction records to circumvent an established ‘source of truth’ (eg payment processors like banks and Visa).

“However, the challenges and opportunities in commercial finance are not the untrustworthiness of Visa’s payment records, but slow, cumbersome processes and unfairly rigid lending criteria.

“That’s why iwoca is not focusing on using bitcoin or blockchain, but on building technology so that small businesses can access finance in a matter of clicks whether through its website or its partner integrations powered by the iwoca lending API (such as the ones we have with Tide, Funding Options and Funding Xchange).

“Blockchain or bitcoin will not unlock economic growth for SMEs, but fairer and faster access to capital may well do.”

A long-term opportunity On the other hand, Paresh Raja, CEO at Market Financial Solutions, saw real opportunity in the new technology: “Blockchain technology has the potential to improve transparency, efficiency and cost savings but whether it will be easy to implement fully in the commercial finance market today is uncertain.

“It would require an overhaul of our current systems to make all data available in the commercial chain accurate and digital.

“This can be seen as a wake-up call to improve our current processes, which are bureaucratic and often paper-driven.

“This transaction-dependent contract would expedite the due diligence process and ensure that all the key points must be fully satisfied for the deal to go through.

“This would open up a transparent, open record-keeping system and an audit trail of all transactions would be easily obtainable.

“However, with anonymous identities and no central authority, the risks associated with illegal transactions and money laundering increases - it needs to have some form of regulation and legal backing to make it more trustworthy.”

“As more and more property and financerelated information becomes available in digital format, if this data can be accurately processed and recorded then, with the use of smart contracts, commercial finance can be transformed.

NACFB Magazine | 39

SPECIAL FEATURES

SPECIAL FEATURES

Waking sleeping dogs:

Bitcoin has taken the financial industry by storm in recent months, with its substantial growth in value taking centre stage in the cryptocurrency sector.

Martin Greenland Reporter Bridging & Commercial

O

ne single bitcoin was worth more than £10,000 at the time of writing, and in December 2017 it reached its highest-ever value.

Bitcoin has been constantly evolving over the past decade, since it was developed by an unknown person (rumoured to be Satoshi Nakamoto).

As is the case with all cryptocurrencies, there aren’t any physical bitcoins, only balances which are kept on a public ledger in the cloud that is verified by a significant amount of computing power.

Due to its volatile nature, opinions differ on how sustainable the bitcoin ‘bubble’ is, and

38 | NACFB Magazine

on whether we can expect the currency to come crashing down in the near future.

The basics In 2008, Satoshi Nakamoto published a document outlining the foundations of bitcoin, explaining that the currency would rely on what is essentially a peerto-peer network to facilitate instant payments, which uses proof-of-work to record a public history of transactions.

The public ledger – more commonly known as the blockchain – has the ability to record transactions between two parties efficiently and in a verifiable and permanent way. The ledger can be programmmed to record transactions automatically, which are protected from ever being deleted or tampered with, but can be revised and checked over once the ledger has been verified. The ledger also has the ability to record every agreement, every process, every task and every payment,

and it can be signed off with a digital signature that can be identified, validated, stored and shared retrospectively.

With cryptocurrencies dominating headlines since the end of 2017 and into the new year, many industries are already considering how the currencies, or the technology behind them, could influence their working environment. And, with the commercial finance industry well versed on the peer-to-peer sector, it poses the question: could bitcoin/ blockchain play a part in this industry too?

Trust is not the issue James Dear, chief technology officer and co-founder of iwoca, believes bitcoin or blockchain are neither useful nor relevant for the commercial finance industry.

“Bitcoin is an esoteric and highly volatile currency and so lending bitcoins is unlikely to be a big market.

“Blockchain enables transaction records to circumvent an established ‘source of truth’ (eg payment processors like banks and Visa).

“However, the challenges and opportunities in commercial finance are not the untrustworthiness of Visa’s payment records, but slow, cumbersome processes and unfairly rigid lending criteria.

“That’s why iwoca is not focusing on using bitcoin or blockchain, but on building technology so that small businesses can access finance in a matter of clicks whether through its website or its partner integrations powered by the iwoca lending API (such as the ones we have with Tide, Funding Options and Funding Xchange).

“Blockchain or bitcoin will not unlock economic growth for SMEs, but fairer and faster access to capital may well do.”

A long-term opportunity On the other hand, Paresh Raja, CEO at Market Financial Solutions, saw real opportunity in the new technology: “Blockchain technology has the potential to improve transparency, efficiency and cost savings but whether it will be easy to implement fully in the commercial finance market today is uncertain.

“It would require an overhaul of our current systems to make all data available in the commercial chain accurate and digital.

“This can be seen as a wake-up call to improve our current processes, which are bureaucratic and often paper-driven.

“This transaction-dependent contract would expedite the due diligence process and ensure that all the key points must be fully satisfied for the deal to go through.

“This would open up a transparent, open record-keeping system and an audit trail of all transactions would be easily obtainable.

“However, with anonymous identities and no central authority, the risks associated with illegal transactions and money laundering increases - it needs to have some form of regulation and legal backing to make it more trustworthy.”

“As more and more property and financerelated information becomes available in digital format, if this data can be accurately processed and recorded then, with the use of smart contracts, commercial finance can be transformed.

NACFB Magazine | 39

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

Keeping order with debentures Ben Lloyd Managing director Pure Commercial Finance

S

ecuring a loan can be great news for all involved, but what happens should the borrower’s financial situation change and they default on their responsibilities?

It could become a free-for-all. That’s where debentures could help. A debenture is an agreement between lender and borrower which, among many other things, will dictate the order in which any debts must be paid.

Secured corporate debentures are essential protection for many business owners. These bond-attached agreements filed at Companies House are preventative measures used to outline any fixed and floating charges, as well as terms and conditions, and are often used to differentiate between multiple layers of debt.

Commonly, they are used in line with a floating charge by company owners who seek to obtain priority of repayment of directors’ loans should their businesses be wound up. For example, should you put a substantial amount of your own money into developing your company, which later goes into insolvency, a debenture will ensure your loan will be repaid before any other debt from unsecured creditors.

Debentures are desirable to lenders as they also give a creditor the right to a fixed rate of interest from the company, which must be paid before paying any dividends to shareholders.

Debenture interest is also a deductible expense for tax purposes, meaning deductions can be made before tax liability payments are assessed.

Furthermore, if the debenture is secured against assets, it can prevent these assets from being sold without

40 | NACFB Magazine

consent in tough financial times, and will give a creditor authority to sell the assets in order to recover the loan.

Despite this control, debentures do not take any power away from shareholders and profit-sharing remains in the same proportion as before the agreement is taken out.

The repayment order Should a debenture be called into action, the repayment order would be as follows: Secured creditors – legal mortgage, legal charge or fixed charge Preferential creditors – wage and holiday payments to staff Unsecured creditors – debentures and any other debt such as VAT, PAYE, corporation tax etc.

Subordinated debentures, negative pledges and non-crystallisation If you’re risk-orientated, seek high yields and would like to have the opposite effect of a standard debenture, a subordinated debenture, also known as junior security, will dictate which debt is the lowest priority and therefore should be paid

after any other bonds or debts. This debt is not guaranteed to be paid back, in fact it is often only partially paid, if at all.

Should you find yourself in a situation where you’re purchasing a business or asset with a crystallised loan (when a floating charge becomes a fixed charge), be aware that the debt will come attached and you will not be able to progress without express permission from the lender. To avoid this, a letter of non-crystallisation should be used to confirm no crystallisation has taken place.

When taking out a debenture, you may find a negative pledge clause in the bond indenture. This covenant will ensure that the issue cannot use any assets as security for the payment of other debts or liabilities if this would impact the level of risk on the bond in question.

Why now?

As governmental changes to property charges are implemented and more and more buy-to-let investors are choosing to purchase via limited companies – seven in 10 buy-to-let applications for house purchases were made via limited companies in the first nine months of 2017 – I believe it’s more important than ever that brokers understand the issue of debentures.

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

Interest charged from only 0.75% per calendar month.

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

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

Keeping order with debentures Ben Lloyd Managing director Pure Commercial Finance

S

ecuring a loan can be great news for all involved, but what happens should the borrower’s financial situation change and they default on their responsibilities?

It could become a free-for-all. That’s where debentures could help. A debenture is an agreement between lender and borrower which, among many other things, will dictate the order in which any debts must be paid.

Secured corporate debentures are essential protection for many business owners. These bond-attached agreements filed at Companies House are preventative measures used to outline any fixed and floating charges, as well as terms and conditions, and are often used to differentiate between multiple layers of debt.

Commonly, they are used in line with a floating charge by company owners who seek to obtain priority of repayment of directors’ loans should their businesses be wound up. For example, should you put a substantial amount of your own money into developing your company, which later goes into insolvency, a debenture will ensure your loan will be repaid before any other debt from unsecured creditors.

Debentures are desirable to lenders as they also give a creditor the right to a fixed rate of interest from the company, which must be paid before paying any dividends to shareholders.

Debenture interest is also a deductible expense for tax purposes, meaning deductions can be made before tax liability payments are assessed.

Furthermore, if the debenture is secured against assets, it can prevent these assets from being sold without

40 | NACFB Magazine

consent in tough financial times, and will give a creditor authority to sell the assets in order to recover the loan.

Despite this control, debentures do not take any power away from shareholders and profit-sharing remains in the same proportion as before the agreement is taken out.

The repayment order Should a debenture be called into action, the repayment order would be as follows: Secured creditors – legal mortgage, legal charge or fixed charge Preferential creditors – wage and holiday payments to staff Unsecured creditors – debentures and any other debt such as VAT, PAYE, corporation tax etc.

Subordinated debentures, negative pledges and non-crystallisation If you’re risk-orientated, seek high yields and would like to have the opposite effect of a standard debenture, a subordinated debenture, also known as junior security, will dictate which debt is the lowest priority and therefore should be paid

after any other bonds or debts. This debt is not guaranteed to be paid back, in fact it is often only partially paid, if at all.

Should you find yourself in a situation where you’re purchasing a business or asset with a crystallised loan (when a floating charge becomes a fixed charge), be aware that the debt will come attached and you will not be able to progress without express permission from the lender. To avoid this, a letter of non-crystallisation should be used to confirm no crystallisation has taken place.

When taking out a debenture, you may find a negative pledge clause in the bond indenture. This covenant will ensure that the issue cannot use any assets as security for the payment of other debts or liabilities if this would impact the level of risk on the bond in question.

Why now?

As governmental changes to property charges are implemented and more and more buy-to-let investors are choosing to purchase via limited companies – seven in 10 buy-to-let applications for house purchases were made via limited companies in the first nine months of 2017 – I believe it’s more important than ever that brokers understand the issue of debentures.

SPEED MEETS EXPERIENCE 020 7655 3388

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

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

Interest charged from only 0.75% per calendar month.

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

GUIDES

MFS

Turnaround to new finance Daniel Palmer Chief executive Peninsula Finance plc

T

he term ‘turnaround’ is one that can conjure up an extremely wide range of interpretations but, at the same time, generally is consigned to be the result of some negative or adverse situation where a business, or indeed an individual, have got themselves into trouble and require the assistance of a third party to enable some form of recovery.

In the context of finance, and specifically turnaround funding, this is certainly not always the case.

Such a broad brush can oversimplify and conceal the real background to the struggles that have been encountered and this can lead to the incorrect solution being offered.

This has never been more prevalent than over the last decade where the onset of the credit crunch and resulting recession led to many financial institutions at best tightening, and at worst withdrawing lending facilities from successful businesses with proven track records.

While continually low interest rates have led to a low level of insolvencies, there have been many businesses that have been tipped into a corporate recovery situation because of a loss of sector/ risk appetite from their senior debt provider. This is not, however, always a bad thing as in our experience many businesses have used these circumstances as an opportunity to shed a previous defunct finance provider and move forward with a new relationship on more flexible and favourable terms. The concept of debt forgiveness or debt relief can prove to be financially lucrative.

We have an established turnaround product that has been available to the market for the last five years. This can appeal to businesses looking to take advantage of settlement offers from their previous lender; alternatively, where the corporate recovery requires a new lender

42 | NACFB Magazine

partner as the existing funder is looking for an immediate exit, but where a two- or three-year period is required to allow time to repair the company balance sheet before a long-term solution can be secured.

In my experience, the key factors a broker should consider as part of a turnaround finance application include: Transparency – it is crucial that the full story is explained.

Leaving skeletons in the closet will invariably lead to a breakdown in the new lender relationship.

The turnaround lender will be geared up to appreciate the history of the case but will likely not be prepared to accept a deliberate lack of disclosure from the clients.

Security – our lending products are based on property in England, Scotland and Wales but any turnaround finance provider will want to ensure there is sufficient collateral for the loan being provided.

Projections – there will need to be some analysis of the business’s ability to demonstrate financial improvement (or, where the recovery situation is borne out

of the lender’s prerogative, that the previous numbers can be consistently maintained).

Exit – in most turnaround situations there is the requirement for flexibility and speed. These two elements are key to our product proposition as there will usually be deadlines to meet etc. This does also mean that a long-term solution will be another step away, so the broker introducing the case will need to evidence that there is a full repayment plan in place for the clients.

When it comes to property, speed is everything MFS specialise in fast, flexible bridging loans

It is true that no two turnaround finance scenarios are ever identical.

There will always be nuances in each case so it is critical that we, as the turnaround finance provider, are prepared to exercise flexibility on the case but, at the same time, are experienced enough to provide some judgement on whether the finance is viable as this will not always be the case.

Introducing a new special offer: Free valuations on all properties for bridging – £500,000 to £1.5 million

The variance in circumstances for each case also means that manual underwriting will almost always need to be employed, with an existing relationship and rapport between lender and broker being of equal importance.

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

T: 020 7060 1234 E: info@mfsuk.com W: mfsuk.com Berkeley Square House, Berkeley Square, Mayfair, London, W1J 6BD

GUIDES

MFS

Turnaround to new finance Daniel Palmer Chief executive Peninsula Finance plc

T

he term ‘turnaround’ is one that can conjure up an extremely wide range of interpretations but, at the same time, generally is consigned to be the result of some negative or adverse situation where a business, or indeed an individual, have got themselves into trouble and require the assistance of a third party to enable some form of recovery.

In the context of finance, and specifically turnaround funding, this is certainly not always the case.

Such a broad brush can oversimplify and conceal the real background to the struggles that have been encountered and this can lead to the incorrect solution being offered.

This has never been more prevalent than over the last decade where the onset of the credit crunch and resulting recession led to many financial institutions at best tightening, and at worst withdrawing lending facilities from successful businesses with proven track records.

While continually low interest rates have led to a low level of insolvencies, there have been many businesses that have been tipped into a corporate recovery situation because of a loss of sector/ risk appetite from their senior debt provider. This is not, however, always a bad thing as in our experience many businesses have used these circumstances as an opportunity to shed a previous defunct finance provider and move forward with a new relationship on more flexible and favourable terms. The concept of debt forgiveness or debt relief can prove to be financially lucrative.

We have an established turnaround product that has been available to the market for the last five years. This can appeal to businesses looking to take advantage of settlement offers from their previous lender; alternatively, where the corporate recovery requires a new lender

42 | NACFB Magazine

partner as the existing funder is looking for an immediate exit, but where a two- or three-year period is required to allow time to repair the company balance sheet before a long-term solution can be secured.

In my experience, the key factors a broker should consider as part of a turnaround finance application include: Transparency – it is crucial that the full story is explained.

Leaving skeletons in the closet will invariably lead to a breakdown in the new lender relationship.

The turnaround lender will be geared up to appreciate the history of the case but will likely not be prepared to accept a deliberate lack of disclosure from the clients.

Security – our lending products are based on property in England, Scotland and Wales but any turnaround finance provider will want to ensure there is sufficient collateral for the loan being provided.

Projections – there will need to be some analysis of the business’s ability to demonstrate financial improvement (or, where the recovery situation is borne out

of the lender’s prerogative, that the previous numbers can be consistently maintained).

Exit – in most turnaround situations there is the requirement for flexibility and speed. These two elements are key to our product proposition as there will usually be deadlines to meet etc. This does also mean that a long-term solution will be another step away, so the broker introducing the case will need to evidence that there is a full repayment plan in place for the clients.

When it comes to property, speed is everything MFS specialise in fast, flexible bridging loans

It is true that no two turnaround finance scenarios are ever identical.

There will always be nuances in each case so it is critical that we, as the turnaround finance provider, are prepared to exercise flexibility on the case but, at the same time, are experienced enough to provide some judgement on whether the finance is viable as this will not always be the case.

Introducing a new special offer: Free valuations on all properties for bridging – £500,000 to £1.5 million

The variance in circumstances for each case also means that manual underwriting will almost always need to be employed, with an existing relationship and rapport between lender and broker being of equal importance.

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

T: 020 7060 1234 E: info@mfsuk.com W: mfsuk.com Berkeley Square House, Berkeley Square, Mayfair, London, W1J 6BD

Opinion | & commentary Thought leadership from our Patrons and Members

A happy client will return The relationship between brokers and lenders is a complex one. At its core is that both parties wish to execute a loan with a borrower in a manner which results in a positive experience for all involved.

Michael Strange Managing director Funding 365

H

appy borrowers can often transform into repeat borrowers, which is really the ultimate goal for both lenders and brokers.

However, while teamwork is required, there is a necessary conflict that exists between lenders and brokers which needs to be carefully managed.

A broker has to balance a number of varying criteria when weighing up which lenders to approach and, ultimately, to recommend to the borrower. This includes the loan pricing, the LTV that can be achieved, and the style of service of the lender in question. So far, this is all fairly straightforward. However, the complicating factor arises when procuration fees differ

44 | NACFB Magazine

between lenders (whether upfront fees or those earned through volume-based incentives). Does a broker recommend a loan to a borrower which is certainly the best loan, but would leave the broker with a considerably lower fee?

First, let’s examine what a regulated brokerage should do upon receipt of a loan application. Quite simply, the brokerage must approach the lenders that it feels are most suited to the loan application in question and obtain terms from each. There seems to be a rule of thumb that suggests that obtaining three quotations is sufficient to meet regulatory obligations. Unless the loan is, in some way, of a specialist nature (or with a very short execution window), it would seem that a vanilla bridging loan should be shown to the three lenders with the cheapest interest rates in the market.

The brokerage then needs to present the loan terms received to the borrower, perhaps alongside any qualitative aspects

that are important (such as a lender’s ability to complete rapidly, or its flexibility, should diligence uncover some adverse news). At this stage, it is highly important for a broker to think about what is best for the borrower – ignoring completely the fee that he or she is going to receive on the recommended loan. I suspect that this is easier to say than to do.

It is my opinion that if a broker continually provides clients with the best bridging loan available, regardless of the fee that the broker is receiving, then this will enhance their reputation and ensure repeat business. I have long lived by the mantra that you can shear a sheep many times, but skin it only once. Trying to push sub-optimal loans on to borrowers to line its own pocket is ultimately a poor business decision for a brokerage.

How do we define a brokerage that operates with good values that are aligned to ours? At Funding 365, we would expect

Providing clients with the best loan available, regardless of the fee that the broker is receiving, will enhance reputation and ensure repeat business to be approached by any broker in the market which has a vanilla bridging loan opportunity (residential or commercial) that they wish to execute in a fairly rapid fashion.

Our interest rates are among the lowest in the market across the LTV spectrum and are only rivalled by banks – most of whom, to be fair, take considerably longer to execute a bridging loan than we do. Therefore, any broker who is truly looking out for the best deal for his client really must approach us to ask for a quotation. Do we win every deal? No. We will win some and lose some. That is simply fair competition that, ultimately, leads to improved products and pricing for borrowers.

S

o, how have we found the bridging broker universe when it comes to application of the above values? Funding 365 has completed bridging loans through over 70 brokers to date. A fair and honest summary would be to say that it is a bit of a mixed bag. There are plenty of brokers who operate with integrity and it is clearly obvious that they are acting in the best interests of the borrower.

However, there are many other examples of brokers in our market who frequently exclusively show loan opportunities to the lender who provides them with the highest procuration fees. Given that Funding 365 has (we believe) the lowest interest rates for commercial property

bridging loans (particularly at higher LTV levels), we feel that we should be seeing every opportunity in the market. We don’t. This leads me to believe that there is still a lot of work to do in the bridging space to ensure that borrowers are getting the best deal they possibly can.

It is, however, gratifying to note that the brokers who we believe have the best core values in the market are also those who are currently flourishing. Long may it continue.

NACFB Magazine | 45

Opinion | & commentary Thought leadership from our Patrons and Members

A happy client will return The relationship between brokers and lenders is a complex one. At its core is that both parties wish to execute a loan with a borrower in a manner which results in a positive experience for all involved.

Michael Strange Managing director Funding 365

H

appy borrowers can often transform into repeat borrowers, which is really the ultimate goal for both lenders and brokers.

However, while teamwork is required, there is a necessary conflict that exists between lenders and brokers which needs to be carefully managed.

A broker has to balance a number of varying criteria when weighing up which lenders to approach and, ultimately, to recommend to the borrower. This includes the loan pricing, the LTV that can be achieved, and the style of service of the lender in question. So far, this is all fairly straightforward. However, the complicating factor arises when procuration fees differ

44 | NACFB Magazine

between lenders (whether upfront fees or those earned through volume-based incentives). Does a broker recommend a loan to a borrower which is certainly the best loan, but would leave the broker with a considerably lower fee?

First, let’s examine what a regulated brokerage should do upon receipt of a loan application. Quite simply, the brokerage must approach the lenders that it feels are most suited to the loan application in question and obtain terms from each. There seems to be a rule of thumb that suggests that obtaining three quotations is sufficient to meet regulatory obligations. Unless the loan is, in some way, of a specialist nature (or with a very short execution window), it would seem that a vanilla bridging loan should be shown to the three lenders with the cheapest interest rates in the market.

The brokerage then needs to present the loan terms received to the borrower, perhaps alongside any qualitative aspects

that are important (such as a lender’s ability to complete rapidly, or its flexibility, should diligence uncover some adverse news). At this stage, it is highly important for a broker to think about what is best for the borrower – ignoring completely the fee that he or she is going to receive on the recommended loan. I suspect that this is easier to say than to do.

It is my opinion that if a broker continually provides clients with the best bridging loan available, regardless of the fee that the broker is receiving, then this will enhance their reputation and ensure repeat business. I have long lived by the mantra that you can shear a sheep many times, but skin it only once. Trying to push sub-optimal loans on to borrowers to line its own pocket is ultimately a poor business decision for a brokerage.

How do we define a brokerage that operates with good values that are aligned to ours? At Funding 365, we would expect

Providing clients with the best loan available, regardless of the fee that the broker is receiving, will enhance reputation and ensure repeat business to be approached by any broker in the market which has a vanilla bridging loan opportunity (residential or commercial) that they wish to execute in a fairly rapid fashion.

Our interest rates are among the lowest in the market across the LTV spectrum and are only rivalled by banks – most of whom, to be fair, take considerably longer to execute a bridging loan than we do. Therefore, any broker who is truly looking out for the best deal for his client really must approach us to ask for a quotation. Do we win every deal? No. We will win some and lose some. That is simply fair competition that, ultimately, leads to improved products and pricing for borrowers.

S

o, how have we found the bridging broker universe when it comes to application of the above values? Funding 365 has completed bridging loans through over 70 brokers to date. A fair and honest summary would be to say that it is a bit of a mixed bag. There are plenty of brokers who operate with integrity and it is clearly obvious that they are acting in the best interests of the borrower.

However, there are many other examples of brokers in our market who frequently exclusively show loan opportunities to the lender who provides them with the highest procuration fees. Given that Funding 365 has (we believe) the lowest interest rates for commercial property

bridging loans (particularly at higher LTV levels), we feel that we should be seeing every opportunity in the market. We don’t. This leads me to believe that there is still a lot of work to do in the bridging space to ensure that borrowers are getting the best deal they possibly can.

It is, however, gratifying to note that the brokers who we believe have the best core values in the market are also those who are currently flourishing. Long may it continue.

NACFB Magazine | 45

OPINION & COMMENTARY

Answering the call of 2018 Faith Sylvia BDM The Route - Finance

F

ollowing a year of rapid growth, The Route – Finance is making several changes to its Private Debt Platform in order to facilitate further expansion and success throughout 2018.

Over the course of the last several months, the company has taken steps towards increasing its presence in the UK lending space, including a significant increase in funding, as well as advances in technology and an investment in human capital.

Now celebrating its 10th anniversary, the company is poised to start its second decade with a strong infrastructure and record demand. Having lent over £41m to UK borrowers in 2017 alone, the platform more than tripled the funds deployed the year before, and already has £44m in the pipeline for 2018.

46 | NACFB Magazine

work closely with new and existing borrowers as their first point of contact.

As part of The Route - Finance’s effort to boost its secured loan offering, the company has secured several new partnerships with institutional co-funders.

These collaborations increase both the number and size of deals that The Route can fund. Global Alternatives, a London-based parent company of several marketplaces for alternative investments, was one of the first institutional partners to finance loans on the Private Debt Platform through its property crowdfunding platform, Property Crowd. Rohin Modasia, founder and CEO of Global Alternatives, said of the collaboration: “We are delighted to be partnering with The Route – Finance to raise capital for property-related investment opportunities.

“At Global Alternatives, our property crowdfunding platform, Property Crowd, brings institutional standards to the fastgrowing alternative finance real-estate sector. This means that, instead of trying to do everything ourselves under one roof, we work closely with a range of experts, including international law firms for due diligence and established principal lenders who arrange and manage the deals on

our behalf. While our crowd investors still have to vet deals themselves before investing, they have the comfort of knowing that they are co-funding with credible and experienced professionals who have already scrutinised the opportunities available to them and are sharing the risk.”

A second major development has been the launch of the Private Debt Platform portal, an online ‘shop window’ for investors and co-funders to preview upcoming deals, get updates on existing schemes and view their portfolios. Although the portal is not transactional, it serves to give shape to the Private Debt Platform, while also providing transparency for investors. This will facilitate a faster and more concise approach to funding deals, which in turn is sure to enhance the experience of borrowers and brokers alike. The portal has already generated increased investor interest in deals, and will serve to streamline The Route – Finance’s role as a conduit between its investors and borrowers.

A number of other initiatives are under way, including the re-launch of The Route - Finance’s euro loan offering and the introduction of an Innovative Finance Isa tax wrapper for its investors.

No system changes, apply in minutes Online calculator gives an indicative assessment of whether a portfolio meets our criteria Our three simple forms make it easy to capture additional portfolio information, but we accept this in any format Dedicated Portfolio Team to key all additional information into the system on your behalf The portfolio assessment is valid for 6 months to make subsequent applications easier (where the information is still up to date)

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 (1)

In order to keep up with increased demand, The Route – Finance has recently made two new significant appointments.

Alex Innes has joined the team as head of legal, risk and due diligence, having moved from the role of partner at leading law firm Addleshaw Goddard LLP. With over 30 years of experience in advising financial institutions, Alex will continue to develop The Route – Finance’s due diligence capabilities, bringing a unique legal perspective to its processes. Allen Priaulx has been recruited as borrower relationship manager (RM). Coming from an RM role at Coutts, Allen will

Here at Precise Mortgages we’ve kept our portfolio process simple to save you time.

Get in touch

With the release of the fourth UK Alternative Finance Industry Report by the Cambridge Centre for Alternative Finance in December 2017, it is evident that The Route’s evolution is part of a wider industry trend. The report, aptly entitled ‘Entrenching Innovation’, confirms what several industry leaders predicted over the course of the last two years: that after a period of rapid and unbridled growth, the sector is starting to settle, with several platforms closing their doors and fewer new ones entering the market.

With slowing, and even negative, growth throughout most of the industry, the companies that have proven their resilience are finally able to come into their own.

Portfolios without the heavy lifting

OPINION & COMMENTARY

Answering the call of 2018 Faith Sylvia BDM The Route - Finance

F

ollowing a year of rapid growth, The Route – Finance is making several changes to its Private Debt Platform in order to facilitate further expansion and success throughout 2018.

Over the course of the last several months, the company has taken steps towards increasing its presence in the UK lending space, including a significant increase in funding, as well as advances in technology and an investment in human capital.

Now celebrating its 10th anniversary, the company is poised to start its second decade with a strong infrastructure and record demand. Having lent over £41m to UK borrowers in 2017 alone, the platform more than tripled the funds deployed the year before, and already has £44m in the pipeline for 2018.

46 | NACFB Magazine

work closely with new and existing borrowers as their first point of contact.

As part of The Route - Finance’s effort to boost its secured loan offering, the company has secured several new partnerships with institutional co-funders.

These collaborations increase both the number and size of deals that The Route can fund. Global Alternatives, a London-based parent company of several marketplaces for alternative investments, was one of the first institutional partners to finance loans on the Private Debt Platform through its property crowdfunding platform, Property Crowd. Rohin Modasia, founder and CEO of Global Alternatives, said of the collaboration: “We are delighted to be partnering with The Route – Finance to raise capital for property-related investment opportunities.

“At Global Alternatives, our property crowdfunding platform, Property Crowd, brings institutional standards to the fastgrowing alternative finance real-estate sector. This means that, instead of trying to do everything ourselves under one roof, we work closely with a range of experts, including international law firms for due diligence and established principal lenders who arrange and manage the deals on

our behalf. While our crowd investors still have to vet deals themselves before investing, they have the comfort of knowing that they are co-funding with credible and experienced professionals who have already scrutinised the opportunities available to them and are sharing the risk.”

A second major development has been the launch of the Private Debt Platform portal, an online ‘shop window’ for investors and co-funders to preview upcoming deals, get updates on existing schemes and view their portfolios. Although the portal is not transactional, it serves to give shape to the Private Debt Platform, while also providing transparency for investors. This will facilitate a faster and more concise approach to funding deals, which in turn is sure to enhance the experience of borrowers and brokers alike. The portal has already generated increased investor interest in deals, and will serve to streamline The Route – Finance’s role as a conduit between its investors and borrowers.

A number of other initiatives are under way, including the re-launch of The Route - Finance’s euro loan offering and the introduction of an Innovative Finance Isa tax wrapper for its investors.

No system changes, apply in minutes Online calculator gives an indicative assessment of whether a portfolio meets our criteria Our three simple forms make it easy to capture additional portfolio information, but we accept this in any format Dedicated Portfolio Team to key all additional information into the system on your behalf The portfolio assessment is valid for 6 months to make subsequent applications easier (where the information is still up to date)

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 (1)

In order to keep up with increased demand, The Route – Finance has recently made two new significant appointments.

Alex Innes has joined the team as head of legal, risk and due diligence, having moved from the role of partner at leading law firm Addleshaw Goddard LLP. With over 30 years of experience in advising financial institutions, Alex will continue to develop The Route – Finance’s due diligence capabilities, bringing a unique legal perspective to its processes. Allen Priaulx has been recruited as borrower relationship manager (RM). Coming from an RM role at Coutts, Allen will

Here at Precise Mortgages we’ve kept our portfolio process simple to save you time.

Get in touch

With the release of the fourth UK Alternative Finance Industry Report by the Cambridge Centre for Alternative Finance in December 2017, it is evident that The Route’s evolution is part of a wider industry trend. The report, aptly entitled ‘Entrenching Innovation’, confirms what several industry leaders predicted over the course of the last two years: that after a period of rapid and unbridled growth, the sector is starting to settle, with several platforms closing their doors and fewer new ones entering the market.

With slowing, and even negative, growth throughout most of the industry, the companies that have proven their resilience are finally able to come into their own.

Portfolios without the heavy lifting

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