NACFB Magazine - March 2017

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Issue 44 March 2017

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The magazine for the National Association of Commercial Finance Brokers

Commercial finance advice: could it ever be re-programmed?

In this issue

Building SME confidence after Article 50 Two Patrons debate the impact on small businesses

Refocusing the BTL model

New opportunities for property investors posttax relief changes

Changing approaches to financial education

Retooling broker skill sets for the future

Welcome | NACFB

Rob Lankey CEO NACFB

SPECIALISTS IN

GOOD SENSE

Due to the demand from our membership for more knowledge around the Financial Conduct Authority (FCA) regulatory and compliance requirements, we’ve launched a series of workshops throughout the country, the first of which took place on 7th March.

These events focus on business quality and the responsibilities we have as professionals in the commercial finance sector. We examine, in a workshop environment, the way in which FCA regulation impacts the way you deliver your services to clients, with particular focus on your regulated business activity.

AWA R D W I N N I N G S H O RT T E R M O F F E R I N G

We are defined by our close broker relationships and emphasise

As a result of attending these events, delegates will emerge with an understanding of what a robust commercial finance sales process actually looks like. They’ll be better equipped to challenge their own processes and procedures going forward to ensure they meet ‘treating customers fairly’ requirements and this will all help protect their businesses and reputations.

a personal, transparent approach to lending. Together, we can help provide the right outcome for your clients.

Solutions for individuals, Ltd companies & expats: Purchase & sell on Light & heavy refurbishment Add to a portfolio

The main objectives of these workshops are:

Pay down development finance

To consider the advice and product offerings to clients within a regulated environment in practical terms

Chain breaks

To understand the key steps in a regulated sales process To understand what a compliant client file should contain

C O N TA C T O U R D E D I C AT E D S H O RT T E R M L O A N T E A M T O D AY TO D I S C U S S YO U R C A S E S .

NACFB News 4 4 4 4 4 4

Our view on the FSCS levy Demand holds high Hot off the press Compliance visits continue Success at our roadshows Survey - we want to hear from you!

Notes from our sponsor Dates for your diary

6 6

Commercial Finance 8-10

Essential news bites

Top Story 12

Boost Capital to incentivise MyNACFB access

Introducing 14

NatWest launches new SME lending platform

Case Studies 16 17 18

Overcoming the challenges of lending against ‘hope value’ Light, camera: P2P lending in action Spotcap funds sustainable vehicle venture

Cover Story 20-21 Commercial finance advice: could it ever be reprogrammed?

To understand how you can control business quality in your firm

cm.broker@shawbrook.co.uk W W W. S H AW B R O O K . C O. U K

STL & REFURB

C O M M E RC I A L INVESTMENTS

TRADING BUSINESS

It’s all part of our renewed, heightened focus on compliance and ties in with our minimum standards documents, Member visits and the work we are doing behind the scenes and in our own offices with the FCA.

For further information

Best regards,

Vera Sugar, editor t. 0203 818 0171 71 Gloucester Place, London W1U 8JW Email: vera@medianett.co.uk

Rob Lankey

Spotlight 22-23 The NACFB’s inaugural Patrons’ Day

Patron Profile 24-25 Rivers Leasing - propelled for growth

Ask the Expert 26

Robin Skuse, press officer t. 020 7101 0359 Hamilton House, 1 Temple Avenue London EC4Y 0HA Email: admin@nacfb.org.uk

Lucy Armstrong

Special Features 28 30 32

More than just an account number Embracing change in the property finance market New approaches to financial education

Industry Guides 34-35 A guide to VAT and tax loans 36 PDR schemes: what you need to know

Debate 38-39 Building SME confidence after Article 50

Opinion & Commentary 40 42 44 46

To be able to discuss best regulatory practices with other delegates.

T 03301 234 521

SPECIALIST BTL

In this March issue

Is P2P funding and borrowing imbalanced?

Refocusing the buy-to-let model Advising the property market in 2017 Dealing with slow repayments for SMEs

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

THIS ADVERTISEMENT IS INTENDED FOR INTERMEDIARY USE ONLY AND MUST NOT BE DISTRIBUTED TO POTENTIAL CLIENTS NACFB Magazine | 3

Welcome | NACFB

Rob Lankey CEO NACFB

SPECIALISTS IN

GOOD SENSE

Due to the demand from our membership for more knowledge around the Financial Conduct Authority (FCA) regulatory and compliance requirements, we’ve launched a series of workshops throughout the country, the first of which took place on 7th March.

These events focus on business quality and the responsibilities we have as professionals in the commercial finance sector. We examine, in a workshop environment, the way in which FCA regulation impacts the way you deliver your services to clients, with particular focus on your regulated business activity.

AWA R D W I N N I N G S H O RT T E R M O F F E R I N G

We are defined by our close broker relationships and emphasise

As a result of attending these events, delegates will emerge with an understanding of what a robust commercial finance sales process actually looks like. They’ll be better equipped to challenge their own processes and procedures going forward to ensure they meet ‘treating customers fairly’ requirements and this will all help protect their businesses and reputations.

a personal, transparent approach to lending. Together, we can help provide the right outcome for your clients.

Solutions for individuals, Ltd companies & expats: Purchase & sell on Light & heavy refurbishment Add to a portfolio

The main objectives of these workshops are:

Pay down development finance

To consider the advice and product offerings to clients within a regulated environment in practical terms

Chain breaks

To understand the key steps in a regulated sales process To understand what a compliant client file should contain

C O N TA C T O U R D E D I C AT E D S H O RT T E R M L O A N T E A M T O D AY TO D I S C U S S YO U R C A S E S .

NACFB News 4 4 4 4 4 4

Our view on the FSCS levy Demand holds high Hot off the press Compliance visits continue Success at our roadshows Survey - we want to hear from you!

Notes from our sponsor Dates for your diary

6 6

Commercial Finance 8-10

Essential news bites

Top Story 12

Boost Capital to incentivise MyNACFB access

Introducing 14

NatWest launches new SME lending platform

Case Studies 16 17 18

Overcoming the challenges of lending against ‘hope value’ Light, camera: P2P lending in action Spotcap funds sustainable vehicle venture

Cover Story 20-21 Commercial finance advice: could it ever be reprogrammed?

To understand how you can control business quality in your firm

cm.broker@shawbrook.co.uk W W W. S H AW B R O O K . C O. U K

STL & REFURB

C O M M E RC I A L INVESTMENTS

TRADING BUSINESS

It’s all part of our renewed, heightened focus on compliance and ties in with our minimum standards documents, Member visits and the work we are doing behind the scenes and in our own offices with the FCA.

For further information

Best regards,

Vera Sugar, editor t. 0203 818 0171 71 Gloucester Place, London W1U 8JW Email: vera@medianett.co.uk

Rob Lankey

Spotlight 22-23 The NACFB’s inaugural Patrons’ Day

Patron Profile 24-25 Rivers Leasing - propelled for growth

Ask the Expert 26

Robin Skuse, press officer t. 020 7101 0359 Hamilton House, 1 Temple Avenue London EC4Y 0HA Email: admin@nacfb.org.uk

Lucy Armstrong

Special Features 28 30 32

More than just an account number Embracing change in the property finance market New approaches to financial education

Industry Guides 34-35 A guide to VAT and tax loans 36 PDR schemes: what you need to know

Debate 38-39 Building SME confidence after Article 50

Opinion & Commentary 40 42 44 46

To be able to discuss best regulatory practices with other delegates.

T 03301 234 521

SPECIALIST BTL

In this March issue

Is P2P funding and borrowing imbalanced?

Refocusing the buy-to-let model Advising the property market in 2017 Dealing with slow repayments for SMEs

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

THIS ADVERTISEMENT IS INTENDED FOR INTERMEDIARY USE ONLY AND MUST NOT BE DISTRIBUTED TO POTENTIAL CLIENTS NACFB Magazine | 3

NACFB | in the news Association news and updates for March 2017

Our view on the FSCS levy In our opinion, the £15m supplementary levy imposed on mortgage brokers will hit the bestqualified brokers hardest.

While one-fifth of our Members are involved in the residential mortgage market, only a small proportion of those offer investment advice. Even less offer any kind of unregulated investment scheme of the sort that has led to the levy being imposed by the Financial Services Compensation Scheme (FSCS).

Rob Lankey, CEO of the NACFB, said: “Of course we welcome any move that protects borrowers.

“The steps we’ve taken to embrace regulation have not been cost-free and our members are investing their own money into compliance, both through dedicated compliance schemes and in training and education. This laudable work means there is less spare money to spend on the FSCS levy, so this supplementary levy hits the best qualified brokers hardest of all.

“We note that the FSCS does not expect this level of costs to continue into future years. Unfortunately, measures of this sort do not send out the right message, whether or not each payment taken is

large enough to do financial damage to the broker.

“Given that one unspecified firm is reportedly responsible for the majority of the claims that led to the £15m levy, it seems unreasonable to target the good guys to cover the costs incurred by their less reputable rivals. This is particularly unreasonable when the activities concerned related to unregulated overseas investments, not to failings in the mortgage advice activities for which mortgage brokers pay their regulatory dues.”

Demand holds high Leads received from SMEs in January and February give no indication of supporting the recent Business Conditions summary that told us demand for finance was muted.

Funding enquiries on findSMEfinance.co.uk were up by almost a fifth in January this year compared with January 2016. After

Hot off the press

Compliance visits continue

Success at our roadshows

The NACFB has received good coverage since January on the BBC and Telegraph websites and featured in City AM and multiple trade titles.

We’re committed to commenting thoughtfully and openly on relevant news topics as they hit. This focus is really paying off as we extend our press reach in 2017.

At the time of writing, the NACFB has completed 280 compliance visits, which means we’re 35% of the way through the task of visiting every NACFB member by the end of the year.

Compliance visits are free of charge and serve as a reassuring bill of health for the compliant commercial finance broker.

Record numbers of delegates attended our first four roadshows in February, at an average of 88 attendees per day. More than 250 delegates have already registered for this year’s Commercial Finance Expo.

a quiet December, activity for the following month increased by 82%.

The strong appetite for finance continued in February, exceeding figures reported for the same period in 2016.

We want to hear from you!

On the lookout for a better refurbishment loan?

Offer your client fast, flexible finance on their extension, conversion or heavy refurbishment with a loan from LendInvest: £100k to £2 million GDV up to 70% Terms up to 18 months.

And with funds released in stages, they’ll benefit from improved cash flow as their project progresses.

To find out more, speak to Magnus today on 020 7118 1133 or visit intermediaries.lendinvest.com, your dedicated lending resource.

Please take a moment to fill out our magazine reader survey online. It only takes a few minutes, and will help us to keep providing you with the content you want to see.

Head to>> nacfbnewsletter.co.uk/survey Let us know what you think!

LendInvest is registered at 8 Mortimer Street, London W1T 3JJ (Company No.08146929), and is authorised and regulated by the FCA, no FSCS. Your property may be repossessed if you do not keep up repayments on your mortgage.

4 | NACFB Magazine

For intermediaries only.

NACFB | in the news Association news and updates for March 2017

Our view on the FSCS levy In our opinion, the £15m supplementary levy imposed on mortgage brokers will hit the bestqualified brokers hardest.

While one-fifth of our Members are involved in the residential mortgage market, only a small proportion of those offer investment advice. Even less offer any kind of unregulated investment scheme of the sort that has led to the levy being imposed by the Financial Services Compensation Scheme (FSCS).

Rob Lankey, CEO of the NACFB, said: “Of course we welcome any move that protects borrowers.

“The steps we’ve taken to embrace regulation have not been cost-free and our members are investing their own money into compliance, both through dedicated compliance schemes and in training and education. This laudable work means there is less spare money to spend on the FSCS levy, so this supplementary levy hits the best qualified brokers hardest of all.

“We note that the FSCS does not expect this level of costs to continue into future years. Unfortunately, measures of this sort do not send out the right message, whether or not each payment taken is

large enough to do financial damage to the broker.

“Given that one unspecified firm is reportedly responsible for the majority of the claims that led to the £15m levy, it seems unreasonable to target the good guys to cover the costs incurred by their less reputable rivals. This is particularly unreasonable when the activities concerned related to unregulated overseas investments, not to failings in the mortgage advice activities for which mortgage brokers pay their regulatory dues.”

Demand holds high Leads received from SMEs in January and February give no indication of supporting the recent Business Conditions summary that told us demand for finance was muted.

Funding enquiries on findSMEfinance.co.uk were up by almost a fifth in January this year compared with January 2016. After

Hot off the press

Compliance visits continue

Success at our roadshows

The NACFB has received good coverage since January on the BBC and Telegraph websites and featured in City AM and multiple trade titles.

We’re committed to commenting thoughtfully and openly on relevant news topics as they hit. This focus is really paying off as we extend our press reach in 2017.

At the time of writing, the NACFB has completed 280 compliance visits, which means we’re 35% of the way through the task of visiting every NACFB member by the end of the year.

Compliance visits are free of charge and serve as a reassuring bill of health for the compliant commercial finance broker.

Record numbers of delegates attended our first four roadshows in February, at an average of 88 attendees per day. More than 250 delegates have already registered for this year’s Commercial Finance Expo.

a quiet December, activity for the following month increased by 82%.

The strong appetite for finance continued in February, exceeding figures reported for the same period in 2016.

We want to hear from you!

On the lookout for a better refurbishment loan?

Offer your client fast, flexible finance on their extension, conversion or heavy refurbishment with a loan from LendInvest: £100k to £2 million GDV up to 70% Terms up to 18 months.

And with funds released in stages, they’ll benefit from improved cash flow as their project progresses.

To find out more, speak to Magnus today on 020 7118 1133 or visit intermediaries.lendinvest.com, your dedicated lending resource.

Please take a moment to fill out our magazine reader survey online. It only takes a few minutes, and will help us to keep providing you with the content you want to see.

Head to>> nacfbnewsletter.co.uk/survey Let us know what you think!

LendInvest is registered at 8 Mortimer Street, London W1T 3JJ (Company No.08146929), and is authorised and regulated by the FCA, no FSCS. Your property may be repossessed if you do not keep up repayments on your mortgage.

4 | NACFB Magazine

For intermediaries only.

NACFB NEWS

Tweet of the month Here’s what our followers think…

NACFB @NACFB . Feb 2

NACFB @NACFB . Feb 2

What kind of effect has Brexit had on your SME so far?

For those of you that are new to commercial finance, our glossary of industry terms might come in handy...

13% Positive 0%

Negative

http://bit.ly/2lKeRBT

87% Unnoticeable

4 Retweets . 2 Likes

Final results 1

1

Notes from our sponsor Karen Bennett Managing director of commercial mortgages Shawbrook Bank The first quarter of 2017 is now coming to a close, and I hope that the year has been kind to you so far on both a personal and professional level.

This edition of the magazine will have landed on your desk either barely before or just after the chancellor’s spring Budget announcement.

Whatever the outcome of this – although at the time of writing it seems nothing too dramatic is forecast – I think that both lenders and the NACFB’s brokers can feel buoyed by the continuing resilience of our market. This is despite the intense challenges we have encountered over the past year.

On behalf of the commercial mortgages team here at Shawbrook, I would like to thank the NACFB for its honest and informed leadership throughout. This continues to provide an educational platform for both lenders and intermediaries alike to explore responsible growth opportunities, while serving the individual needs of the customer. The educational aspect of the NACFB’s remit should never be underestimated and, in times of change, it’s something which continues to be of value to both brokers and their clients alike.

6 | NACFB Magazine

This year is the fourth that Shawbrook Commercial has acted as title sponsor of the NACFB, meaning each organisation has seen much change during that time. Whether it’s been the recent revision of underwriting standards, the introduction of the Mortgage Credit Directive or last year’s EU referendum bombshell, our partnership has weathered it all and we hope it has been a source of reliability and respectability throughout.

4

2

Dates for your diary Compliance Workshop: Business Quality When: 14th March Where: Hilton East Midlands Airport, Derby NACFB & Barcadia Commercial Finance Roadshows When: 23-26th May Where: South - various locations Summer drinks reception When: 20th June Where: Genting Hotel, Birmingham

C

M

Y

CM

MY

CY

CMY

K

We are as proud as ever to work side by side with the NACFB, striving to deliver pragmatic lending solutions for customers, based on good sense and transparent business practice.

These are strong principles which have served both the NACFB and Shawbrook well and will continue to do so in the future.

Commercial Finance Expo When: 21st June Where: NEC Birmingham

I would also like to extend my congratulations to Rob Lankey for being appointed NACFB CEO. Rob steps into big shoes, but his track record, wealth of industry knowledge and reputable standing among his peers puts him in good stead for this role. I am excited for Shawbrook to work in tandem with Rob and his team, and continuing our commitment to customer outcomes and the overall health of the commercial finance industry.

AGM at the Finance Professional Show When: 8th November Where: Olympia, London

NACFB & Barcadia Commercial Finance Roadshows When: 17-20th October Where: East - various locations

Gala Dinner & Industry Awards When: 30th November Where: Park Plaza Westminster Bridge, London

Your clients need low rate funding before the new financial year.

That’s why they came to you.

We’ll help you deliver it to them.

Instant quote

No early repayment fees

Decision typically within 2 working days

Loans from 6 months to 5 years

Unsecured loans up to £350,000 with a personal guarantee

Speak to a BDM today 0800 014 8642

NACFB NEWS

Tweet of the month Here’s what our followers think…

NACFB @NACFB . Feb 2

NACFB @NACFB . Feb 2

What kind of effect has Brexit had on your SME so far?

For those of you that are new to commercial finance, our glossary of industry terms might come in handy...

13% Positive 0%

Negative

http://bit.ly/2lKeRBT

87% Unnoticeable

4 Retweets . 2 Likes

Final results 1

1

Notes from our sponsor Karen Bennett Managing director of commercial mortgages Shawbrook Bank The first quarter of 2017 is now coming to a close, and I hope that the year has been kind to you so far on both a personal and professional level.

This edition of the magazine will have landed on your desk either barely before or just after the chancellor’s spring Budget announcement.

Whatever the outcome of this – although at the time of writing it seems nothing too dramatic is forecast – I think that both lenders and the NACFB’s brokers can feel buoyed by the continuing resilience of our market. This is despite the intense challenges we have encountered over the past year.

On behalf of the commercial mortgages team here at Shawbrook, I would like to thank the NACFB for its honest and informed leadership throughout. This continues to provide an educational platform for both lenders and intermediaries alike to explore responsible growth opportunities, while serving the individual needs of the customer. The educational aspect of the NACFB’s remit should never be underestimated and, in times of change, it’s something which continues to be of value to both brokers and their clients alike.

6 | NACFB Magazine

This year is the fourth that Shawbrook Commercial has acted as title sponsor of the NACFB, meaning each organisation has seen much change during that time. Whether it’s been the recent revision of underwriting standards, the introduction of the Mortgage Credit Directive or last year’s EU referendum bombshell, our partnership has weathered it all and we hope it has been a source of reliability and respectability throughout.

4

2

Dates for your diary Compliance Workshop: Business Quality When: 14th March Where: Hilton East Midlands Airport, Derby NACFB & Barcadia Commercial Finance Roadshows When: 23-26th May Where: South - various locations Summer drinks reception When: 20th June Where: Genting Hotel, Birmingham

C

M

Y

CM

MY

CY

CMY

K

We are as proud as ever to work side by side with the NACFB, striving to deliver pragmatic lending solutions for customers, based on good sense and transparent business practice.

These are strong principles which have served both the NACFB and Shawbrook well and will continue to do so in the future.

Commercial Finance Expo When: 21st June Where: NEC Birmingham

I would also like to extend my congratulations to Rob Lankey for being appointed NACFB CEO. Rob steps into big shoes, but his track record, wealth of industry knowledge and reputable standing among his peers puts him in good stead for this role. I am excited for Shawbrook to work in tandem with Rob and his team, and continuing our commitment to customer outcomes and the overall health of the commercial finance industry.

AGM at the Finance Professional Show When: 8th November Where: Olympia, London

NACFB & Barcadia Commercial Finance Roadshows When: 17-20th October Where: East - various locations

Gala Dinner & Industry Awards When: 30th November Where: Park Plaza Westminster Bridge, London

Your clients need low rate funding before the new financial year.

That’s why they came to you.

We’ll help you deliver it to them.

Instant quote

No early repayment fees

Decision typically within 2 working days

Loans from 6 months to 5 years

Unsecured loans up to £350,000 with a personal guarantee

Speak to a BDM today 0800 014 8642

Commercial Finance | news Essential news bites from the world of commercial finance Consumer new car finance volumes up 8%

The Finance & Leasing Association has found that new business in the point of sale (POS) consumer car finance market grew 12% by value and 8% by volume in 2016.

New business was up 3% by value and down 3% by volume in December, compared with the same month in 2015.

The POS consumer new car finance market reported new business up 1% by value and 8% lower by volume in December compared with the same month in 2015.

In 2016 as a whole, new business grew 12% by value and 6% by volume.

New valuation standards introduced

International Valuation Standards Council (IVSC) has introduced new criteria to improve industry practices across the world.

IVS 2017 sets requirements for the conduct of valuation assignments, such as establishing the terms of a valuation engagement, bases of value and reporting.

The move follows a request from council members, including major accountancy firms and other stakeholders, to introduce greater depth to the IVS.

RBS to provide accounting platform for small business customers

Royal Bank of Scotland (RBS) has partnered with fintech specialist FreeAgent to simplify accounting for small business owners.

8 | NACFB Magazine

The deal will enable NatWest and RBS to offer FreeAgent’s online accounting software to business customers who may otherwise have to spend more time concentrating on their tax returns.

RBS claims the platform will improve forecasting, save time and simplify the tax process through features such as allowing users to upload photos of receipts.

FCA to continue work on RegTech

The FCA has revealed it is to continue investing in technology to help promote fintech within the financial services industry.

The FCA has spent £1.8m on Project Innovate, with just over £90,000 going towards the regulatory sandbox, which was set up to provide a safe space for businesses to test new products and services.

Bob Ferguson, head of department for Project Innovate at the FCA, said RegTech was an area of great potential which had yet to be fully realised.

Misys opens crowdlending door for banks

Banking software provider Misys has launched a new crowdlending module to enable retail and corporate banks to grow their lending business.

Misys FusionBanking CrowdLending will help institutions deliver funding to all customers, ranging from individuals to SMEs and large corporations.

The move will open the door for banks to claim a stake in the global loan origination market, which it estimates could be worth approximately £400bn each year.

Four P2P platforms select Goji to build IFIsa service

Specialist provider of peer-topeer and marketplace lending products Goji has been selected to launch the Innovative Finance Isa (IFIsa) for four platforms.

Landbay, UK Bond Network, Downing and Peer Funding have all selected Goji to build and integrate a fully managed IFIsa service, capitalising on its service provider’s expertise, user experience and operational capabilities.

The above four were among the first peer-to-peer platforms to become authorised to offer the Isa and hope to see investor take-up following the 2016/17 tax year deadline.

Metro Bank to create 500 jobs for major expansion

At a time when other high street banks are closing branches, Metro Bank is on the lookout for 500 new recruits to support its plan to open more ‘stores’.

The challenger bank aims to open 12 new stores in 2017 as well as upgrade its mobile app and launch its fully integrated online account opening platform.

Metro Bank will be offering these jobs to candidates over the next 12 months with roles ranging from customer-facing, contact centre and head office positions.

Council takes shareholding in new challenger bank

Warrington Borough Council is set to own a 33% share in a new challenger business bank, investing a total of £30m.

The council will form a partnership with Acorn Financial Partners (AFP)

Nic: 020 7655 3397 Daniel: 020 7655 3388 which has recently submitted a banking licence application to the Financial Conduct Authority and the Prudential Regulation Authority.

Once authorised, AFP will be renamed Redwood Bank.

The council’s executive board approved the proposals to own the 33% share on 16th January and will invest an initial £10m, with the view to invest a further £20m over the following two years.

Brightstar to campaign for smarter FCA advice rules

Specialist distributor Brightstar has launched a new campaign to help the thousands of borrowers who wrongly believe they cannot get access to finance.

The ‘Could You? Would You? Should You?’ campaign aims to raise awareness of the specialist options available to borrowers with complex requirements or those who have been turned down for mainstream deals.

As part of the campaign, Brightstar will lobby for the regulation of advice from both the FCA and the Treasury.

The firm claimed that FCA regulation did not go far enough in expanding mortgage advice across all finance options, and that advisers had a moral obligation to inform consumers of what is available.

Consortium of banks to develop blockchain platform

Seven banks have agreed in principle to launch a shared platform to make domestic and cross-border commerce more accessible for small- and medium-sized enterprises.

The perfect partners for funding your development project.

Speak to us about fast finance. acceptances.co.uk

Commercial Finance | news Essential news bites from the world of commercial finance Consumer new car finance volumes up 8%

The Finance & Leasing Association has found that new business in the point of sale (POS) consumer car finance market grew 12% by value and 8% by volume in 2016.

New business was up 3% by value and down 3% by volume in December, compared with the same month in 2015.

The POS consumer new car finance market reported new business up 1% by value and 8% lower by volume in December compared with the same month in 2015.

In 2016 as a whole, new business grew 12% by value and 6% by volume.

New valuation standards introduced

International Valuation Standards Council (IVSC) has introduced new criteria to improve industry practices across the world.

IVS 2017 sets requirements for the conduct of valuation assignments, such as establishing the terms of a valuation engagement, bases of value and reporting.

The move follows a request from council members, including major accountancy firms and other stakeholders, to introduce greater depth to the IVS.

RBS to provide accounting platform for small business customers

Royal Bank of Scotland (RBS) has partnered with fintech specialist FreeAgent to simplify accounting for small business owners.

8 | NACFB Magazine

The deal will enable NatWest and RBS to offer FreeAgent’s online accounting software to business customers who may otherwise have to spend more time concentrating on their tax returns.

RBS claims the platform will improve forecasting, save time and simplify the tax process through features such as allowing users to upload photos of receipts.

FCA to continue work on RegTech

The FCA has revealed it is to continue investing in technology to help promote fintech within the financial services industry.

The FCA has spent £1.8m on Project Innovate, with just over £90,000 going towards the regulatory sandbox, which was set up to provide a safe space for businesses to test new products and services.

Bob Ferguson, head of department for Project Innovate at the FCA, said RegTech was an area of great potential which had yet to be fully realised.

Misys opens crowdlending door for banks

Banking software provider Misys has launched a new crowdlending module to enable retail and corporate banks to grow their lending business.

Misys FusionBanking CrowdLending will help institutions deliver funding to all customers, ranging from individuals to SMEs and large corporations.

The move will open the door for banks to claim a stake in the global loan origination market, which it estimates could be worth approximately £400bn each year.

Four P2P platforms select Goji to build IFIsa service

Specialist provider of peer-topeer and marketplace lending products Goji has been selected to launch the Innovative Finance Isa (IFIsa) for four platforms.

Landbay, UK Bond Network, Downing and Peer Funding have all selected Goji to build and integrate a fully managed IFIsa service, capitalising on its service provider’s expertise, user experience and operational capabilities.

The above four were among the first peer-to-peer platforms to become authorised to offer the Isa and hope to see investor take-up following the 2016/17 tax year deadline.

Metro Bank to create 500 jobs for major expansion

At a time when other high street banks are closing branches, Metro Bank is on the lookout for 500 new recruits to support its plan to open more ‘stores’.

The challenger bank aims to open 12 new stores in 2017 as well as upgrade its mobile app and launch its fully integrated online account opening platform.

Metro Bank will be offering these jobs to candidates over the next 12 months with roles ranging from customer-facing, contact centre and head office positions.

Council takes shareholding in new challenger bank

Warrington Borough Council is set to own a 33% share in a new challenger business bank, investing a total of £30m.

The council will form a partnership with Acorn Financial Partners (AFP)

Nic: 020 7655 3397 Daniel: 020 7655 3388 which has recently submitted a banking licence application to the Financial Conduct Authority and the Prudential Regulation Authority.

Once authorised, AFP will be renamed Redwood Bank.

The council’s executive board approved the proposals to own the 33% share on 16th January and will invest an initial £10m, with the view to invest a further £20m over the following two years.

Brightstar to campaign for smarter FCA advice rules

Specialist distributor Brightstar has launched a new campaign to help the thousands of borrowers who wrongly believe they cannot get access to finance.

The ‘Could You? Would You? Should You?’ campaign aims to raise awareness of the specialist options available to borrowers with complex requirements or those who have been turned down for mainstream deals.

As part of the campaign, Brightstar will lobby for the regulation of advice from both the FCA and the Treasury.

The firm claimed that FCA regulation did not go far enough in expanding mortgage advice across all finance options, and that advisers had a moral obligation to inform consumers of what is available.

Consortium of banks to develop blockchain platform

Seven banks have agreed in principle to launch a shared platform to make domestic and cross-border commerce more accessible for small- and medium-sized enterprises.

The perfect partners for funding your development project.

Speak to us about fast finance. acceptances.co.uk

COMMERCIAL FINANCE NEWS

A memorandum of understanding was signed by the banks in Brussels indicating they intend to collaboratively develop a new product called Digital Trade Chain (DTC), which utilises distributed ledger technology.

The European banks in the consortium are Deutsche Bank, HSBC, KBC, Natixis, Rabobank, Société Générale and UniCredit.

The product is based on a prototype developed by Luxembourg bank KBC, which won the Efma Accenture Innovation Award for ‘Best New Product or Service of 2016’ in October.

FSCS to levy industry £378m

The Financial Services Compensation Scheme (FSCS) has revealed that it expects to levy the industry £378m during the upcoming 2017/18 financial year.

This forecast sits lower than the £401m levied this year due to the announcement of three supplementary levies worth a total of £114m for 2016/17.

General insurers, life and pensions advisers, and home finance intermediaries will be asked for £63m, £36m and £15m respectively to meet unforeseen compensation costs.

HTB appoints asset finance MD

Hampshire Trust Bank (HTB) has announced the appointment of a new managing director of asset finance.

Jon Maycock joins from Aldermore Bank, where he initially worked as the national sales director of asset finance from September 2013, before becoming the commercial director of asset finance.

Jon will be responsible for enhancing HTB’s broker and block discounting channels, and will be supported by continued investment in the bank’s IT systems.

10 | NACFB Magazine

®

Bank launches Islamic BTL range in Scotland

Al Rayan Bank has announced the launch of a Shariacompliant buy-to-let (BTL) range in Scotland.

The new BTL purchase plans include a 35% deposit contribution with a fixed occupancy payment rate of 2.99% and discounted variable occupancy payment rate of 3.19% until 31st December 2018.

Al Rayan also offers a 25% deposit contribution with a fixed occupancy payment rate of 3.39% and discounted variable occupancy payment rate of 3.49% for the same period.

Once the fixed or discounted period ends, all occupancy payment rates will revert to the Bank of England base rate plus 4.99%.

OakNorth partners with British Business Bank

OakNorth has become the first challenger bank to join the British Business Bank’s Help to Grow programme.

The programme allows fastgrowth SMEs to take out a loan of up to £2m to support the development of new products and processes, invest in research and innovation and target new export markets.

OakNorth recently appointed three new directors after announcing plans to increase its loan book by £500m during 2017.

Half of brokers confident about business growth for 2017

Half of commercial and residential brokers are confident about their business growth for 2017, according to figures released by specialist lender Shawbrook.

Shawbrook Bank’s Broker Barometer measured commercial and residential sentiment and discovered

that 47% of brokers were confident about the postreferendum UK economy.

In total, 55% of commercial and 50% of residential brokers show confidence in growth for 2017.

Only 35% of commercial brokers and 26% of residential brokers believe the EU referendum has had a negative impact on the lending environment, while even fewer were concerned about its effect on clients – 27% of commercial and 25% of residential brokers.

Economic uncertainty still biggest threat for business

Uncertainty following the EU referendum could be the biggest threat to business in 2017, new research has revealed.

The Business in Britain report from Lloyds Bank found that economic uncertainty was the most commonly identified threat for UK firms over the next six months, with 26% of respondents expressing their concern.

A further 17% of respondents believed that weaker UK demand in the wake of Brexit could pose the greatest threat to their business.

Just Loans Group seeks to raise £50m through A-rated tradable bond

Prime commercial property rents on the rise

Financial services

Prime commercial property rents in the UK rose by 3.7% in 2016, according to CBRE’s latest Prime Rent and Yield Monitor.

Development funding

This figure was down on the annual growth achieved in 2015 (5%), while Q4 growth for prime commercial property rental values rose by a mere 0.4% – the lowest recorded quarterly growth of 2016.

Spotlight on: Regulated Bridging Finance

Does your client need help to bridge the gap?

The industrial sector was the best performing area of the market with prime rents in 2016 growing by 6.5%, followed by shops (5.4%), offices (2.8%), shopping centres (2%) and retail warehouses (1.2%).

London and North West industrial prime rents outperformed all other UK locations.

52% of SME owners ignore mainstream bank advice

With over 40 years’ experience in the specialist lending market, our expert team works in partnership with brokers to find the right solution for the client.

Almost half of SME owners (47%) have alleged that the advice they received from mainstream banks in the last year has had a negative impact on their business operations.

As a Bridging specialist, we could help with:

The research conducted by Amicus Commercial Finance found that 52% ignored the advice of their mainstream bank, while 40% did not rate the level of service as ‘good’.

Alternative lender Just Loans Group is looking to raise £50m of new funding through an A-rated tradable bond structure backed by a portfolio of small business loans.

The research found that SME owners felt there was a lack of human interaction available when looking for working capital or overdraft facility support.

The new bond will be fully tradable on a daily basis and has been issued through EscherMarwick PLC on behalf of Just Cash Flow PLC, which is part of the Just Loans Group.

The most common problems SMEs faced in dealing with a bank through a call centre was that it was time consuming (22%), frustrating (17%) and complicated (10%).

John Davies, director of Just Cashflow, claimed that the investment grade rating meant the bond was the first structure of its kind to fund SME cash flow loans.

Mortgages Second charge

– either as a first and first charge or a first and second charge

Nick Jones National Sales Manager

property, inheritance and a combination of remortgage and sale

Call us on 0161 933 7103 or visit togethermoney.com/meettheteam

COMMERCIAL FINANCE NEWS

A memorandum of understanding was signed by the banks in Brussels indicating they intend to collaboratively develop a new product called Digital Trade Chain (DTC), which utilises distributed ledger technology.

The European banks in the consortium are Deutsche Bank, HSBC, KBC, Natixis, Rabobank, Société Générale and UniCredit.

The product is based on a prototype developed by Luxembourg bank KBC, which won the Efma Accenture Innovation Award for ‘Best New Product or Service of 2016’ in October.

FSCS to levy industry £378m

The Financial Services Compensation Scheme (FSCS) has revealed that it expects to levy the industry £378m during the upcoming 2017/18 financial year.

This forecast sits lower than the £401m levied this year due to the announcement of three supplementary levies worth a total of £114m for 2016/17.

General insurers, life and pensions advisers, and home finance intermediaries will be asked for £63m, £36m and £15m respectively to meet unforeseen compensation costs.

HTB appoints asset finance MD

Hampshire Trust Bank (HTB) has announced the appointment of a new managing director of asset finance.

Jon Maycock joins from Aldermore Bank, where he initially worked as the national sales director of asset finance from September 2013, before becoming the commercial director of asset finance.

Jon will be responsible for enhancing HTB’s broker and block discounting channels, and will be supported by continued investment in the bank’s IT systems.

10 | NACFB Magazine

®

Bank launches Islamic BTL range in Scotland

Al Rayan Bank has announced the launch of a Shariacompliant buy-to-let (BTL) range in Scotland.

The new BTL purchase plans include a 35% deposit contribution with a fixed occupancy payment rate of 2.99% and discounted variable occupancy payment rate of 3.19% until 31st December 2018.

Al Rayan also offers a 25% deposit contribution with a fixed occupancy payment rate of 3.39% and discounted variable occupancy payment rate of 3.49% for the same period.

Once the fixed or discounted period ends, all occupancy payment rates will revert to the Bank of England base rate plus 4.99%.

OakNorth partners with British Business Bank

OakNorth has become the first challenger bank to join the British Business Bank’s Help to Grow programme.

The programme allows fastgrowth SMEs to take out a loan of up to £2m to support the development of new products and processes, invest in research and innovation and target new export markets.

OakNorth recently appointed three new directors after announcing plans to increase its loan book by £500m during 2017.

Half of brokers confident about business growth for 2017

Half of commercial and residential brokers are confident about their business growth for 2017, according to figures released by specialist lender Shawbrook.

Shawbrook Bank’s Broker Barometer measured commercial and residential sentiment and discovered

that 47% of brokers were confident about the postreferendum UK economy.

In total, 55% of commercial and 50% of residential brokers show confidence in growth for 2017.

Only 35% of commercial brokers and 26% of residential brokers believe the EU referendum has had a negative impact on the lending environment, while even fewer were concerned about its effect on clients – 27% of commercial and 25% of residential brokers.

Economic uncertainty still biggest threat for business

Uncertainty following the EU referendum could be the biggest threat to business in 2017, new research has revealed.

The Business in Britain report from Lloyds Bank found that economic uncertainty was the most commonly identified threat for UK firms over the next six months, with 26% of respondents expressing their concern.

A further 17% of respondents believed that weaker UK demand in the wake of Brexit could pose the greatest threat to their business.

Just Loans Group seeks to raise £50m through A-rated tradable bond

Prime commercial property rents on the rise

Financial services

Prime commercial property rents in the UK rose by 3.7% in 2016, according to CBRE’s latest Prime Rent and Yield Monitor.

Development funding

This figure was down on the annual growth achieved in 2015 (5%), while Q4 growth for prime commercial property rental values rose by a mere 0.4% – the lowest recorded quarterly growth of 2016.

Spotlight on: Regulated Bridging Finance

Does your client need help to bridge the gap?

The industrial sector was the best performing area of the market with prime rents in 2016 growing by 6.5%, followed by shops (5.4%), offices (2.8%), shopping centres (2%) and retail warehouses (1.2%).

London and North West industrial prime rents outperformed all other UK locations.

52% of SME owners ignore mainstream bank advice

With over 40 years’ experience in the specialist lending market, our expert team works in partnership with brokers to find the right solution for the client.

Almost half of SME owners (47%) have alleged that the advice they received from mainstream banks in the last year has had a negative impact on their business operations.

As a Bridging specialist, we could help with:

The research conducted by Amicus Commercial Finance found that 52% ignored the advice of their mainstream bank, while 40% did not rate the level of service as ‘good’.

Alternative lender Just Loans Group is looking to raise £50m of new funding through an A-rated tradable bond structure backed by a portfolio of small business loans.

The research found that SME owners felt there was a lack of human interaction available when looking for working capital or overdraft facility support.

The new bond will be fully tradable on a daily basis and has been issued through EscherMarwick PLC on behalf of Just Cash Flow PLC, which is part of the Just Loans Group.

The most common problems SMEs faced in dealing with a bank through a call centre was that it was time consuming (22%), frustrating (17%) and complicated (10%).

John Davies, director of Just Cashflow, claimed that the investment grade rating meant the bond was the first structure of its kind to fund SME cash flow loans.

Mortgages Second charge

– either as a first and first charge or a first and second charge

Nick Jones National Sales Manager

property, inheritance and a combination of remortgage and sale

Call us on 0161 933 7103 or visit togethermoney.com/meettheteam

Top | story

Market Financial Solutions Bridging with Finesse

Our pick of the latest patron news

Boost Capital to incentivise MyNACFB access programme. Non-members get membership for less than half price. This way, with Boost Capital’s help, we get the chance to raise the standards across the whole industry.”

Vera Sugar Editor NACFB Magazine

Boost Capital has teamed up with the NACFB to provide an additional incentive to its broker Members.

The partner deal, which will be available throughout 2017, will provide an enticement to both members and those not yet registered with the Association.

How to qualify To qualify for the rewards of the partner deal, a broker need only place one funded deal with Boost. The rewards offered by the partnership are: 50% off NACFB membership for nonmembers for a 12-month package Free 12-month MyNACFB access for all existing members.

Rewards are available for one registered individual per broker firm.

What are the benefits?

The NACFB will check all new member applicants to see whether the broker qualifies for Boost Capital’s 50% discount offer, which means a reduced membership fee of just £250 per annum. The offer covers the fee payable by sole traders and those firms with a single registered individual.

The benefits of the deal for new members include access to exclusive member events, networking opportunities, unique deals and the broker’s business being listed in the NACFB directory.

For NACFB members, Boost is offering 12 months of free access to MyNACFB,

SPECIALIST IN COMPLEX DEALS

Boost offers its broker partners an opportunity to add unsecured small business finance to their portfolios, as well as a tiered commission structure for brokers, based on application involvement. Offering loans from £3,000 to £500,000 for any business expense, loans are attainable in as little as two days.

the Association’s learning portal, which provides members with numerous resources for continuing professional development (CPD). With the Association having raised its minimum CPD requirements for 2017, this is a free opportunity for members to complete the five required modules in the portal and meet CPD targets. Additionally, MyNACFB grants access to unlimited mock exams and case studies, as well as fully-accredited training modules created in conjunction with high street banks.

Speaking of the new partnership, Alex Littner, managing director of Boost, commented: ‘‘Boost Capital is proud to have been a Patron of the NACFB for the last five years. Our new partnership marks another step forward in our joint effort to better service both the broker and SME communities.

“Our leading partnership programme attracts brokers of all shapes and sizes, but it’s always especially encouraging to see so many NACFB-registered members coming through our doors. Owing to the NACFB membership process, we know that our broker partners are experienced, fully up to date and committed to sourcing the right kind of finance for their clients’ needs.’’

Rob Lankey, CEO of the NACFB, praised the benefits of the deal: “What makes Boost Capital’s initiative so welcome is [that] it is all-inclusive. Current members get free access to our growing training and education

Loans come with a four- to 18-month proposition, and are designed to be repaid quickly. Funding can be used for any number of business expenses, including cash flow, stock, equipment and expansion.

Boost, a leading specialist lender to the SME sector, offers quick and flexible loans to businesses across various industries throughout the UK. As a provider of unsecured, small business loans to sectors such as retail, hospitality or dental, Boost has established itself as a reliable alternative lender for businesses that may be deemed risky by high street establishments.

SPEEDY DECISIONS SO YOU GROW FASTER

C

M

Y

CM

MY

CY

CMY

SMART BRIDGING

K

Boost Capital is the UK arm of the US-based BFS Capital, which has been a leader in the industry since 2002, having funded more than £1bn to date.

The NACFB has in the past partnered with several Patrons, such as Hitachi Capital Business Finance in 2015 to launch its first ever apprenticeship scheme, and with Borro in 2014, which announced a £500 exclusive bonus for any successful NACFB referrals in August that year.

Market Financial Solutions is an award winning independent Bridging Finance provider that deals with a range of innovative bridging solutions that are fast and flexible for all our intermediaries and clients.

0845 303 8686 info@mfsuk.com www.mfsuk.com

12 | NACFB Magazine

INDEPENDENT LENDERS WITH IN-HOUSE FUNDING

Berkeley Square House, Mayfair, London W1J 6BD

Top | story

Market Financial Solutions Bridging with Finesse

Our pick of the latest patron news

Boost Capital to incentivise MyNACFB access programme. Non-members get membership for less than half price. This way, with Boost Capital’s help, we get the chance to raise the standards across the whole industry.”

Vera Sugar Editor NACFB Magazine

Boost Capital has teamed up with the NACFB to provide an additional incentive to its broker Members.

The partner deal, which will be available throughout 2017, will provide an enticement to both members and those not yet registered with the Association.

How to qualify To qualify for the rewards of the partner deal, a broker need only place one funded deal with Boost. The rewards offered by the partnership are: 50% off NACFB membership for nonmembers for a 12-month package Free 12-month MyNACFB access for all existing members.

Rewards are available for one registered individual per broker firm.

What are the benefits?

The NACFB will check all new member applicants to see whether the broker qualifies for Boost Capital’s 50% discount offer, which means a reduced membership fee of just £250 per annum. The offer covers the fee payable by sole traders and those firms with a single registered individual.

The benefits of the deal for new members include access to exclusive member events, networking opportunities, unique deals and the broker’s business being listed in the NACFB directory.

For NACFB members, Boost is offering 12 months of free access to MyNACFB,

SPECIALIST IN COMPLEX DEALS

Boost offers its broker partners an opportunity to add unsecured small business finance to their portfolios, as well as a tiered commission structure for brokers, based on application involvement. Offering loans from £3,000 to £500,000 for any business expense, loans are attainable in as little as two days.

the Association’s learning portal, which provides members with numerous resources for continuing professional development (CPD). With the Association having raised its minimum CPD requirements for 2017, this is a free opportunity for members to complete the five required modules in the portal and meet CPD targets. Additionally, MyNACFB grants access to unlimited mock exams and case studies, as well as fully-accredited training modules created in conjunction with high street banks.

Speaking of the new partnership, Alex Littner, managing director of Boost, commented: ‘‘Boost Capital is proud to have been a Patron of the NACFB for the last five years. Our new partnership marks another step forward in our joint effort to better service both the broker and SME communities.

“Our leading partnership programme attracts brokers of all shapes and sizes, but it’s always especially encouraging to see so many NACFB-registered members coming through our doors. Owing to the NACFB membership process, we know that our broker partners are experienced, fully up to date and committed to sourcing the right kind of finance for their clients’ needs.’’

Rob Lankey, CEO of the NACFB, praised the benefits of the deal: “What makes Boost Capital’s initiative so welcome is [that] it is all-inclusive. Current members get free access to our growing training and education

Loans come with a four- to 18-month proposition, and are designed to be repaid quickly. Funding can be used for any number of business expenses, including cash flow, stock, equipment and expansion.

Boost, a leading specialist lender to the SME sector, offers quick and flexible loans to businesses across various industries throughout the UK. As a provider of unsecured, small business loans to sectors such as retail, hospitality or dental, Boost has established itself as a reliable alternative lender for businesses that may be deemed risky by high street establishments.

SPEEDY DECISIONS SO YOU GROW FASTER

C

M

Y

CM

MY

CY

CMY

SMART BRIDGING

K

Boost Capital is the UK arm of the US-based BFS Capital, which has been a leader in the industry since 2002, having funded more than £1bn to date.

The NACFB has in the past partnered with several Patrons, such as Hitachi Capital Business Finance in 2015 to launch its first ever apprenticeship scheme, and with Borro in 2014, which announced a £500 exclusive bonus for any successful NACFB referrals in August that year.

Market Financial Solutions is an award winning independent Bridging Finance provider that deals with a range of innovative bridging solutions that are fast and flexible for all our intermediaries and clients.

0845 303 8686 info@mfsuk.com www.mfsuk.com

12 | NACFB Magazine

INDEPENDENT LENDERS WITH IN-HOUSE FUNDING

Berkeley Square House, Mayfair, London W1J 6BD

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

NatWest launches new SME lending platform Vera Sugar Editor NACFB Magazine

NatWest has launched the trial of its new, digital-lending platform in late February in response to innovative direct and peer-to-peer (P2P) lending.

Esme Loans is an automated platform which originates unsecured, unregulated loans of up to £150,000 for UK SMEs for a maximum of five years – regardless of whether they are NatWest customers or not. The aim of the platform is to speed up and simplify the lending process.

The platform was developed in response to rising automation in online lending and P2P finance, and was designed in collaboration with fintech specialist and business lender ezbob Limited.

Esme will target UK SMEs with a turnover of between £15,000 and £25m. Businesses need to be limited companies and trading for a minimum of 18 months.

Alison Rose, CEO of commercial and private banking at NatWest, said: “We are excited to launch the trial of Esme […] offering SMEs yet more choice in how they access the funding they need to invest and grow.

“Through Capital Connections – our panel of five P2P and alternative lenders – we’ve already broadened choices for customers, but we wanted to go one step further and create our own alternative lending platform.

Business-boosting loans up to £500,000 Fixed rate loans with no set up fees or early repayment charges Security may be required. Product fees may apply.

Over 18s only. Business turnover of up to £2 million.

Excludes refinance and Commercial Real Estate Finance.

“Esme will offer SMEs a quick decision and almost instant funding, allowing those customers to go on and do what they do best: run a business.”

Customers will be given a fast decision on their lending application when applying for Esme Loans. If successful, funding can potentially be obtained within an hour. The platform will not be charging for early repayment.

NatWest is also planning to invest a further £70m in non-personal banking customers’ digital experience over the next five years. The bank’s innovation and digital agenda previously saw the launch of Nift in December, a software platform that makes reading and understanding terms and conditions easier for customers.

Today, the bank works with several NACFB Patrons through Capital Connections – the alternative lender panel collaborating with NatWest to provide financial products to businesses when the bank is unable to do so. Together, iwoca, Assetz Capital and Funding Circle are all members of the panel.

Email us at brokerteam@natwest.com ANY PROPERTY USED AS SECURITY, WHICH MAY INCLUDE YOUR HOME, MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR OTHER DEBT SECURED ON IT.

14 | NACFB Magazine

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

NatWest launches new SME lending platform Vera Sugar Editor NACFB Magazine

NatWest has launched the trial of its new, digital-lending platform in late February in response to innovative direct and peer-to-peer (P2P) lending.

Esme Loans is an automated platform which originates unsecured, unregulated loans of up to £150,000 for UK SMEs for a maximum of five years – regardless of whether they are NatWest customers or not. The aim of the platform is to speed up and simplify the lending process.

The platform was developed in response to rising automation in online lending and P2P finance, and was designed in collaboration with fintech specialist and business lender ezbob Limited.

Esme will target UK SMEs with a turnover of between £15,000 and £25m. Businesses need to be limited companies and trading for a minimum of 18 months.

Alison Rose, CEO of commercial and private banking at NatWest, said: “We are excited to launch the trial of Esme […] offering SMEs yet more choice in how they access the funding they need to invest and grow.

“Through Capital Connections – our panel of five P2P and alternative lenders – we’ve already broadened choices for customers, but we wanted to go one step further and create our own alternative lending platform.

Business-boosting loans up to £500,000 Fixed rate loans with no set up fees or early repayment charges Security may be required. Product fees may apply.

Over 18s only. Business turnover of up to £2 million.

Excludes refinance and Commercial Real Estate Finance.

“Esme will offer SMEs a quick decision and almost instant funding, allowing those customers to go on and do what they do best: run a business.”

Customers will be given a fast decision on their lending application when applying for Esme Loans. If successful, funding can potentially be obtained within an hour. The platform will not be charging for early repayment.

NatWest is also planning to invest a further £70m in non-personal banking customers’ digital experience over the next five years. The bank’s innovation and digital agenda previously saw the launch of Nift in December, a software platform that makes reading and understanding terms and conditions easier for customers.

Today, the bank works with several NACFB Patrons through Capital Connections – the alternative lender panel collaborating with NatWest to provide financial products to businesses when the bank is unable to do so. Together, iwoca, Assetz Capital and Funding Circle are all members of the panel.

Email us at brokerteam@natwest.com ANY PROPERTY USED AS SECURITY, WHICH MAY INCLUDE YOUR HOME, MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR OTHER DEBT SECURED ON IT.

14 | NACFB Magazine

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

Overcoming the challenges of lending against ‘hope value’ Sarah Jackson Underwriting manager Pivot Lending against ‘hope value’ – the value of a site that reflects the prospect of a more valuable future use or development in excess of the existing use – is not widely offered by lenders.

However, Pivot offers this as one of our core product lines and are able to do so due to the deep property and planning experience held by the principals and underwriting team.

Recently, one of Pivot’s existing borrowers – a company with extensive experience in the London development market – approached the business with a complex and challenging transaction that required a bespoke solution incorporating the use of a range of products across residential, commercial, development and preplan. It also consolidated securities with existing charges.

Having assessed the borrower’s requirements, it was clear the transaction had to be structured as two separate facilities running concurrently to lend a total of £1.9m.

The first loan of £1.5m was secured against a second charge on the main residence of the sole company shareholder at a LTV of 70%. Funds were to be used to purchase a residential investment property in north London, which the borrower wished to extend and renovate ahead of it being sold. Planning was already in place and the borrower demonstrated they had sufficient funds available for the required works. So far, a very standard bridging deal.

16 | NACFB Magazine

The second loan is where Pivot’s planning and development knowledge became vital in assessing the transaction risk. The borrower was looking to purchase projects for the year ahead, which consisted of a residential investment property and a plot of land without planning permission in north London.

To release enough funding that would enable the borrower to purchase the sites, various small commercial buildings in the South East were given as additional security and Pivot was asked to lend against the ‘hope value’ of the land obtaining planning permission.

Here, it was critical to understand the borrower’s plans and the viability of the proposed scheme for Pivot to be able to lend over and above the organisation’s normal commercial maximum LTV of 65% gross.

Having roots in property development enabled the team to assess the viability of the scheme and price the planning risk. Often, as with this case, Pivot’s assessment and expertise is used to revise schemes prior to submission. In this case, an external planning opinion was also obtained to confirm Pivot’s analysis and the viability of the revised scheme.

The outcome of the borrower’s preapplication meeting was positive and it was a condition of the loan that the borrower adheres to any recommendations in the opinion obtained. This response gave Pivot the comfort to instruct a valuer to appraise the revised scheme.

This case demonstrates how Pivot takes a holistic approach to underwriting and is not a credit score-based lender. Factors such as

As one of Europe’s largest peer-to-peer business lenders ...

ThinCats has arranged over £200m in loans to a vast range of UK SMEs since 2011

Lights, camera: P2P lending in action David Sherrington Origination manager ThinCats

Factors such as quality of security, the local market, exit and credit of the borrower are all considered together when assessing transaction risk quality of security, the local market, exit and credit of the borrower are all considered together when assessing transaction risk. In this case, Pivot was able to lend 85% of the ‘hope value’ against the land without planning permission. Once permission was granted, the development was then funded over a series of drawdowns.

Shahil Kotecha, CEO of Pivot, commented: “Pivot was born out of a property development company and this enables us to fully understand planning and development risk.

The team here has built up an extensive knowledge of the planning process which can be fraught with complications. We are able to offer this unique product because we selffund these transactions, so we are not restricted by the LTVs of external funding lines.”

It doesn’t get much more exciting than an opportunity to help make television programmes, and that’s just what online peer-to-peer (P2P) business lending specialist ThinCats did with the first loan of £300,000 to 3DD Entertainment in January 2014.

Involved in making a raft of programmes for Netflix, Sky and UKTV, among others, the company was looking to expand its production and editing business. Diminished bank lending had made traditional borrowing difficult, so 3DD began searching for alternative avenues, and found F&P Sponsors Limited, which recommended the ThinCats platform. Deborah Conway, director at F&P, explained: “We specialise in organising loans for SMEs, and TV production is one of our areas of expertise. Once we have assessed the business and determined the validity of the proposal, we can provide loans quickly and efficiently, usually getting to drawdown before a bank committee can deliberate.”

This was certainly the case when the loan was listed on the ThinCats platform, and 3DD has received a total of 10 loans through the platform since.

Dominic Saville, CEO at 3DD, described how the loans helped drive the business forward: “They enabled us to maintain our capital expenditure on new production strands, as well as rely less on outside post-production services at their higher rates. Our catalogue of programmes has grown by 300% over the three years and this has allowed the business to widen its buyer base.”

Their global business needs a particular contract style with extended payment terms and long-term commitments, as Dominic explained: “ThinCats and F&P understood our business, and the strength of these business relationships, and have been able to see a successful initial three years of working together.”

And what does the future hold?

Dominic is very optimistic for the long term: “We want to keep growing the core series and adding further series each year. As with all production outfits – whether large Hollywood studios or small enterprises – you need funding to keep the business growth moving and the core brands strong.”

As one of Europe’s largest P2P business lenders specialising in loans with security, ThinCats has arranged over £200m in loans to a vast range of UK SMEs since 2011. From industries as diverse as financial services, transport and manufacturing, to technology and renewables, we have helped support management buyouts, refinancing, consolidation, development capital and bridging, providing loans to suit the needs of the business.

Damon Walford, CDO at ThinCats, believes that variety is an important factor in its popularity. “We are very proud of our reputation among our extensive investor community for providing exciting lending opportunities and working with brokers to deliver alternative finance for businesses across a multitude of sectors nationwide.”

We are unique among P2P lending platforms because of our close partnerships with commercial brokers – our sponsors, who support every loan we offer. This has given the ThinCats platform a name for quality investment opportunities. The relationships that we nurture with our sponsors are extremely important to us; we have invested a huge amount of time and effort in the past year to develop the infrastructure, resources and processes necessary to provide superior service and committed support to these financial experts.

NACFB Magazine | 17

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

Overcoming the challenges of lending against ‘hope value’ Sarah Jackson Underwriting manager Pivot Lending against ‘hope value’ – the value of a site that reflects the prospect of a more valuable future use or development in excess of the existing use – is not widely offered by lenders.

However, Pivot offers this as one of our core product lines and are able to do so due to the deep property and planning experience held by the principals and underwriting team.

Recently, one of Pivot’s existing borrowers – a company with extensive experience in the London development market – approached the business with a complex and challenging transaction that required a bespoke solution incorporating the use of a range of products across residential, commercial, development and preplan. It also consolidated securities with existing charges.

Having assessed the borrower’s requirements, it was clear the transaction had to be structured as two separate facilities running concurrently to lend a total of £1.9m.

The first loan of £1.5m was secured against a second charge on the main residence of the sole company shareholder at a LTV of 70%. Funds were to be used to purchase a residential investment property in north London, which the borrower wished to extend and renovate ahead of it being sold. Planning was already in place and the borrower demonstrated they had sufficient funds available for the required works. So far, a very standard bridging deal.

16 | NACFB Magazine

The second loan is where Pivot’s planning and development knowledge became vital in assessing the transaction risk. The borrower was looking to purchase projects for the year ahead, which consisted of a residential investment property and a plot of land without planning permission in north London.

To release enough funding that would enable the borrower to purchase the sites, various small commercial buildings in the South East were given as additional security and Pivot was asked to lend against the ‘hope value’ of the land obtaining planning permission.

Here, it was critical to understand the borrower’s plans and the viability of the proposed scheme for Pivot to be able to lend over and above the organisation’s normal commercial maximum LTV of 65% gross.

Having roots in property development enabled the team to assess the viability of the scheme and price the planning risk. Often, as with this case, Pivot’s assessment and expertise is used to revise schemes prior to submission. In this case, an external planning opinion was also obtained to confirm Pivot’s analysis and the viability of the revised scheme.

The outcome of the borrower’s preapplication meeting was positive and it was a condition of the loan that the borrower adheres to any recommendations in the opinion obtained. This response gave Pivot the comfort to instruct a valuer to appraise the revised scheme.

This case demonstrates how Pivot takes a holistic approach to underwriting and is not a credit score-based lender. Factors such as

As one of Europe’s largest peer-to-peer business lenders ...

ThinCats has arranged over £200m in loans to a vast range of UK SMEs since 2011

Lights, camera: P2P lending in action David Sherrington Origination manager ThinCats

Factors such as quality of security, the local market, exit and credit of the borrower are all considered together when assessing transaction risk quality of security, the local market, exit and credit of the borrower are all considered together when assessing transaction risk. In this case, Pivot was able to lend 85% of the ‘hope value’ against the land without planning permission. Once permission was granted, the development was then funded over a series of drawdowns.

Shahil Kotecha, CEO of Pivot, commented: “Pivot was born out of a property development company and this enables us to fully understand planning and development risk.

The team here has built up an extensive knowledge of the planning process which can be fraught with complications. We are able to offer this unique product because we selffund these transactions, so we are not restricted by the LTVs of external funding lines.”

It doesn’t get much more exciting than an opportunity to help make television programmes, and that’s just what online peer-to-peer (P2P) business lending specialist ThinCats did with the first loan of £300,000 to 3DD Entertainment in January 2014.

Involved in making a raft of programmes for Netflix, Sky and UKTV, among others, the company was looking to expand its production and editing business. Diminished bank lending had made traditional borrowing difficult, so 3DD began searching for alternative avenues, and found F&P Sponsors Limited, which recommended the ThinCats platform. Deborah Conway, director at F&P, explained: “We specialise in organising loans for SMEs, and TV production is one of our areas of expertise. Once we have assessed the business and determined the validity of the proposal, we can provide loans quickly and efficiently, usually getting to drawdown before a bank committee can deliberate.”

This was certainly the case when the loan was listed on the ThinCats platform, and 3DD has received a total of 10 loans through the platform since.

Dominic Saville, CEO at 3DD, described how the loans helped drive the business forward: “They enabled us to maintain our capital expenditure on new production strands, as well as rely less on outside post-production services at their higher rates. Our catalogue of programmes has grown by 300% over the three years and this has allowed the business to widen its buyer base.”

Their global business needs a particular contract style with extended payment terms and long-term commitments, as Dominic explained: “ThinCats and F&P understood our business, and the strength of these business relationships, and have been able to see a successful initial three years of working together.”

And what does the future hold?

Dominic is very optimistic for the long term: “We want to keep growing the core series and adding further series each year. As with all production outfits – whether large Hollywood studios or small enterprises – you need funding to keep the business growth moving and the core brands strong.”

As one of Europe’s largest P2P business lenders specialising in loans with security, ThinCats has arranged over £200m in loans to a vast range of UK SMEs since 2011. From industries as diverse as financial services, transport and manufacturing, to technology and renewables, we have helped support management buyouts, refinancing, consolidation, development capital and bridging, providing loans to suit the needs of the business.

Damon Walford, CDO at ThinCats, believes that variety is an important factor in its popularity. “We are very proud of our reputation among our extensive investor community for providing exciting lending opportunities and working with brokers to deliver alternative finance for businesses across a multitude of sectors nationwide.”

We are unique among P2P lending platforms because of our close partnerships with commercial brokers – our sponsors, who support every loan we offer. This has given the ThinCats platform a name for quality investment opportunities. The relationships that we nurture with our sponsors are extremely important to us; we have invested a huge amount of time and effort in the past year to develop the infrastructure, resources and processes necessary to provide superior service and committed support to these financial experts.

NACFB Magazine | 17

CASE STUDIES

Spotcap funds sustainable vehicle venture Kevin Vendel Senior partnership manager Spotcap UK UK brokers have long been spoiled for choice when it comes to alternative finance solutions for their clients, so why should the entry of Spotcap, an unsecured business lender, be of interest?

Founded in 2014, Spotcap aims to empower SMEs with tailored finance in order to allow them to focus on what really matters – their business.

The manufacturing industry has shown strong interest in Spotcap’s offering since its UK launch in November. One of the early cases came through Clear Asset Finance.

The company – a mid-sized manufacturer in the automotive industry – approached Clear Asset Finance with a financing request for a new production line that would position them for future growth by tapping into the electrical vehicle market. Their core business is geared towards selling products to some of the world’s most well-known, high-end car manufacturers, but the government’s recent strong push towards sustainable and environmentally friendly transportation opened up a door to diversify and to tap into a new market. The challenge was finding the capital required. Due to the nature of the business (large payable, but outstanding invoices) cash flow is often under pressure.

Steve Green, director & founder of Clear Asset Finance, said: “The businesses I work with tell me what they need and my team goes out and finds the best fit possible. We started working with Spotcap shortly after they entered the UK market as they provided three key differentiators: no director’s guarantee required, competitive pricing and a simple and straightforward user experience both for us and our clients.

18 | NACFB Magazine

[Spotcap] provided three key differentiators: no director’s guarantee, competitive pricing and a simple and straightforward user experience both for us and our clients “The business plan and strategy I received was very sensible and my team and I were committed to finding a good solution. Once we had settled on Spotcap – the competitive pricing being a key selling point – I found it very easy to upload the financial information required.

Kevin Vendel, senior partnership manager at Spotcap, reflected: “Using our partnership offering, Steve’s client is able to fully focus on tackling the challenges of setting up a new business as opposed to spending time trying to source the right financing.

“In the end, that’s what it’s about.

We want the financing experience to be a positive and seamless experience for all involved.

“Working closely with brokers has always been an important part of the picture.

“As a global company operating in five markets, we have a strong understanding of what it means to support them. We continuously seek their feedback, which has allowed us to streamline our offering and user experience to suit them and their clients. Our goal is to be viewed by the broker and business community as a true partner that delivers the best client experience out there.”

An open mind + Cash ready to go = More approvals For 24 years Ashley has been saying ‘yes’ when other lenders say no. We boost small businesses with much needed cash minus the negative judgement. Even for those without a good credit rating, we take the time to understand each situation and find a way to make it work.

With millions ready to lend, more flexible products and supportive service, we solve the financial problems of small businesses.

Just ask ashleyfinance.co.uk

“It was slick and quick and a credit line for £100,000 was set up within 24 hours.”

Problem solved

CASE STUDIES

Spotcap funds sustainable vehicle venture Kevin Vendel Senior partnership manager Spotcap UK UK brokers have long been spoiled for choice when it comes to alternative finance solutions for their clients, so why should the entry of Spotcap, an unsecured business lender, be of interest?

Founded in 2014, Spotcap aims to empower SMEs with tailored finance in order to allow them to focus on what really matters – their business.

The manufacturing industry has shown strong interest in Spotcap’s offering since its UK launch in November. One of the early cases came through Clear Asset Finance.

The company – a mid-sized manufacturer in the automotive industry – approached Clear Asset Finance with a financing request for a new production line that would position them for future growth by tapping into the electrical vehicle market. Their core business is geared towards selling products to some of the world’s most well-known, high-end car manufacturers, but the government’s recent strong push towards sustainable and environmentally friendly transportation opened up a door to diversify and to tap into a new market. The challenge was finding the capital required. Due to the nature of the business (large payable, but outstanding invoices) cash flow is often under pressure.

Steve Green, director & founder of Clear Asset Finance, said: “The businesses I work with tell me what they need and my team goes out and finds the best fit possible. We started working with Spotcap shortly after they entered the UK market as they provided three key differentiators: no director’s guarantee required, competitive pricing and a simple and straightforward user experience both for us and our clients.

18 | NACFB Magazine

[Spotcap] provided three key differentiators: no director’s guarantee, competitive pricing and a simple and straightforward user experience both for us and our clients “The business plan and strategy I received was very sensible and my team and I were committed to finding a good solution. Once we had settled on Spotcap – the competitive pricing being a key selling point – I found it very easy to upload the financial information required.

Kevin Vendel, senior partnership manager at Spotcap, reflected: “Using our partnership offering, Steve’s client is able to fully focus on tackling the challenges of setting up a new business as opposed to spending time trying to source the right financing.

“In the end, that’s what it’s about.

We want the financing experience to be a positive and seamless experience for all involved.

“Working closely with brokers has always been an important part of the picture.

“As a global company operating in five markets, we have a strong understanding of what it means to support them. We continuously seek their feedback, which has allowed us to streamline our offering and user experience to suit them and their clients. Our goal is to be viewed by the broker and business community as a true partner that delivers the best client experience out there.”

An open mind + Cash ready to go = More approvals For 24 years Ashley has been saying ‘yes’ when other lenders say no. We boost small businesses with much needed cash minus the negative judgement. Even for those without a good credit rating, we take the time to understand each situation and find a way to make it work.

With millions ready to lend, more flexible products and supportive service, we solve the financial problems of small businesses.

Just ask ashleyfinance.co.uk

“It was slick and quick and a credit line for £100,000 was set up within 24 hours.”

Problem solved

Cover Story | feature

Commercial finance brokers remain at the heart of the operation and, in fact, play a significant role in the way that technology is being used in the sector

Commercial finance advice:

The Panel said that it had seen a lot of traditional advice firms working on automated tools to complement their existing services, which further demonstrates that a hybrid approach – rather than competition – is the right way forward.

Piotr Twaits, sales director of Synergy Commercial Finance, added that a hybrid approach could also benefit the broker community by allowing for a wider search to identify potential solutions for clients.

could it ever be re-programmed?

While robo-advisers are becoming increasingly popular in the consumer sector, the traditional model of commercial finance advice via specialist brokers remains strong. But could this kind of innovation assist the work of the commercial finance broker one day?

The landscape of the robo-market Going back to August 2015, the Financial Advice Market Review (FAMR) was launched with the aim of understanding how financial advice could work better for consumers. The review highlighted concerns of an ‘advice gap’, with the significant costs of providing face-to-face advice seen as one of the main contributors.

FAMR believed that new technologies could play a major role in driving down these costs, along with offering a more effective way to engage with consumers.

As a result, the FCA formed a dedicated advice unit as part of its Project Innovate to assist and provide regulatory feedback to firms which are developing mass-market, automated advice models so that they could be brought to market faster. Since then, the advice unit has attracted 19 applications, nine of which got the green light by the FCA. During a speech in September last year, Christopher Woolard, director of strategy and competition at the FCA, said: “The nine successful firms have begun the process of engaging with the advice unit, who will seek to provide regulatory feedback on the automated advice models they are developing. “…There will be lessons for everyone – from regulators to firms.”

In December, the robo-market came under fire over its lack of

20 | NACFB Magazine

“This can support the broker in seeking the most appropriate solutions in a timely manner, also evidencing a whole-of-market review of options.”

While the traditional advice model has been criticised over the possibility of human error, data malfunctions could also cause detriment to robo-advisers. For example, robo-advice could disregard products that may have been more suitable for the client.

transparency regarding costing and its inability to communicate clearly.

“Our research showed it is far from clear to consumers whether many of the current online services are providing regulated financial advice with firms accepting liability for the appropriateness of the product sale, or whether the customer is transacting ‘execution-only’ and shouldering all the responsibility,” said the Financial Services Consumer Panel.

“What is important is that it is absolutely clear to consumers whether they are receiving regulated advice or not, what it will cost them and the extent to which they would receive regulatory protection in the event of something going wrong.”

Do borrowers want to speak to a computer?

Research by Accenture Financial Services revealed that 70% of global consumers would welcome robo-advice for certain banking and insurance products. However, as the NACFB would expect, nearly two-thirds still want human interaction from a specialist for more complex needs, and consumers still expect first-class human interaction.

“Successful financial services firms will therefore need a ‘phygital’ strategy that seamlessly integrates technology, branch networks and staff to provide a service that combines physical and digital capabilities and gives consumers a choice,” said Piercarlo Gera, senior managing director of Accenture Financial Services.

a day in my lifetime where a robot could replace the value-add of experienced, specialist commercial finance brokers.

An example is the recent launch of NatWest’s Esme Loans, which follows a peer-to-peer lending platform model; showing that there is more focus on improving SMEs’ options to access finance than to work against the traditional model.

Rather than reducing face-to-face interaction, the focus is on new technologies which can provide assistance with backoffice processes, such as the automated e-signing and verification system launched

by DSG Financial Services earlier this year.

Commercial finance Robo-advisers today enjoy a growing share in areas such as online investment portfolio management and mortgage advice – however, they have yet to show influence on the commercial finance sector. The signs of the continued need for human interaction are all there, and many influencers in the market are working to keep it that way.

However, commercial finance brokers remain at the heart of the operation and, in fact, play a significant role in the way that technology is being used in the sector. An example is Shawbrook’s E-AIP platform, which was specifically designed to aid commercial finance brokers’ operations, with the benefits for brokers and their clients at its core.

Rob Lankey, CEO of the NACFB, said: “I’ve worked in the intermediated commercial finance market for 25 years, and whilst it’s fair to say that technology has moved light years over that time, I personally don’t see

“That said, I’ll be watching this space with interest as a robo-approach may well be able to help with some of the repetitive tasks with lenders.”

Jim Moulton, marketing director of the property finance division at Shawbrook, explained: “The Shawbrook data and projects team is committed to … understanding broker needs, and translating this into the necessary system

upgrades is of key importance. We have always been champions of the broker market, and building a system to help make their lives and the lives of their clients easier was the starting point for what has become a very successful addition to the Shawbrook proposition.”

The invaluable advice that a professional adviser – such as a Member of the NACFB – provides not only means avoiding doubts regarding the advice received, but creates a trust between borrower and intermediary that cannot be recreated by technology.

This face-to-face interaction remains one of the key steps for applying for finance.

A hybrid David Golder, client proposition director of SimplyBiz, believes that technology should support and not replace the traditional model, stating that a number of initiatives aimed at simplifying financial advice over the years had not replaced the value added by financial advisers.

“Advisers bring skills, experience and nuance, which cannot be replaced by technology.

Creating cohesive financial solutions for most clients is not a series of binary choices.”

“Robo-advice works on data input and can deselect the most appropriate solution,” Piotr said. “This could disadvantage a client as the robo-advice will only present what it thinks is applicable.”

The future of advice “I believe that you will see an increase in the use of robo options, but [from] experience in other markets, some [businesses] do not advertise on the robo-equivalent site and you can only access the exclusives by working with an intermediary or direct,” Piotr concluded.

“I believe the role of a professional broker will remain central [to] this market to ensure that the whole-of-market is considered, and decisions made by the robo-process are sanity-[checked] to ensure clients are not disadvantaged.”

Although we are yet to see how this hybrid approach will develop, brokers will continue to lead the path to excellence until we do.

Beth Fisher Editor Medianett

NACFB Magazine | 21

Cover Story | feature

Commercial finance brokers remain at the heart of the operation and, in fact, play a significant role in the way that technology is being used in the sector

Commercial finance advice:

The Panel said that it had seen a lot of traditional advice firms working on automated tools to complement their existing services, which further demonstrates that a hybrid approach – rather than competition – is the right way forward.

Piotr Twaits, sales director of Synergy Commercial Finance, added that a hybrid approach could also benefit the broker community by allowing for a wider search to identify potential solutions for clients.

could it ever be re-programmed?

While robo-advisers are becoming increasingly popular in the consumer sector, the traditional model of commercial finance advice via specialist brokers remains strong. But could this kind of innovation assist the work of the commercial finance broker one day?

The landscape of the robo-market Going back to August 2015, the Financial Advice Market Review (FAMR) was launched with the aim of understanding how financial advice could work better for consumers. The review highlighted concerns of an ‘advice gap’, with the significant costs of providing face-to-face advice seen as one of the main contributors.

FAMR believed that new technologies could play a major role in driving down these costs, along with offering a more effective way to engage with consumers.

As a result, the FCA formed a dedicated advice unit as part of its Project Innovate to assist and provide regulatory feedback to firms which are developing mass-market, automated advice models so that they could be brought to market faster. Since then, the advice unit has attracted 19 applications, nine of which got the green light by the FCA. During a speech in September last year, Christopher Woolard, director of strategy and competition at the FCA, said: “The nine successful firms have begun the process of engaging with the advice unit, who will seek to provide regulatory feedback on the automated advice models they are developing. “…There will be lessons for everyone – from regulators to firms.”

In December, the robo-market came under fire over its lack of

20 | NACFB Magazine

“This can support the broker in seeking the most appropriate solutions in a timely manner, also evidencing a whole-of-market review of options.”

While the traditional advice model has been criticised over the possibility of human error, data malfunctions could also cause detriment to robo-advisers. For example, robo-advice could disregard products that may have been more suitable for the client.

transparency regarding costing and its inability to communicate clearly.

“Our research showed it is far from clear to consumers whether many of the current online services are providing regulated financial advice with firms accepting liability for the appropriateness of the product sale, or whether the customer is transacting ‘execution-only’ and shouldering all the responsibility,” said the Financial Services Consumer Panel.

“What is important is that it is absolutely clear to consumers whether they are receiving regulated advice or not, what it will cost them and the extent to which they would receive regulatory protection in the event of something going wrong.”

Do borrowers want to speak to a computer?

Research by Accenture Financial Services revealed that 70% of global consumers would welcome robo-advice for certain banking and insurance products. However, as the NACFB would expect, nearly two-thirds still want human interaction from a specialist for more complex needs, and consumers still expect first-class human interaction.

“Successful financial services firms will therefore need a ‘phygital’ strategy that seamlessly integrates technology, branch networks and staff to provide a service that combines physical and digital capabilities and gives consumers a choice,” said Piercarlo Gera, senior managing director of Accenture Financial Services.

a day in my lifetime where a robot could replace the value-add of experienced, specialist commercial finance brokers.

An example is the recent launch of NatWest’s Esme Loans, which follows a peer-to-peer lending platform model; showing that there is more focus on improving SMEs’ options to access finance than to work against the traditional model.

Rather than reducing face-to-face interaction, the focus is on new technologies which can provide assistance with backoffice processes, such as the automated e-signing and verification system launched

by DSG Financial Services earlier this year.

Commercial finance Robo-advisers today enjoy a growing share in areas such as online investment portfolio management and mortgage advice – however, they have yet to show influence on the commercial finance sector. The signs of the continued need for human interaction are all there, and many influencers in the market are working to keep it that way.

However, commercial finance brokers remain at the heart of the operation and, in fact, play a significant role in the way that technology is being used in the sector. An example is Shawbrook’s E-AIP platform, which was specifically designed to aid commercial finance brokers’ operations, with the benefits for brokers and their clients at its core.

Rob Lankey, CEO of the NACFB, said: “I’ve worked in the intermediated commercial finance market for 25 years, and whilst it’s fair to say that technology has moved light years over that time, I personally don’t see

“That said, I’ll be watching this space with interest as a robo-approach may well be able to help with some of the repetitive tasks with lenders.”

Jim Moulton, marketing director of the property finance division at Shawbrook, explained: “The Shawbrook data and projects team is committed to … understanding broker needs, and translating this into the necessary system

upgrades is of key importance. We have always been champions of the broker market, and building a system to help make their lives and the lives of their clients easier was the starting point for what has become a very successful addition to the Shawbrook proposition.”

The invaluable advice that a professional adviser – such as a Member of the NACFB – provides not only means avoiding doubts regarding the advice received, but creates a trust between borrower and intermediary that cannot be recreated by technology.

This face-to-face interaction remains one of the key steps for applying for finance.

A hybrid David Golder, client proposition director of SimplyBiz, believes that technology should support and not replace the traditional model, stating that a number of initiatives aimed at simplifying financial advice over the years had not replaced the value added by financial advisers.

“Advisers bring skills, experience and nuance, which cannot be replaced by technology.

Creating cohesive financial solutions for most clients is not a series of binary choices.”

“Robo-advice works on data input and can deselect the most appropriate solution,” Piotr said. “This could disadvantage a client as the robo-advice will only present what it thinks is applicable.”

The future of advice “I believe that you will see an increase in the use of robo options, but [from] experience in other markets, some [businesses] do not advertise on the robo-equivalent site and you can only access the exclusives by working with an intermediary or direct,” Piotr concluded.

“I believe the role of a professional broker will remain central [to] this market to ensure that the whole-of-market is considered, and decisions made by the robo-process are sanity-[checked] to ensure clients are not disadvantaged.”

Although we are yet to see how this hybrid approach will develop, brokers will continue to lead the path to excellence until we do.

Beth Fisher Editor Medianett

NACFB Magazine | 21

Spotlight

We need to work together, and support one another in shining the light on to any remaining areas of the commercial finance market where standards still need to improve

Unmissable industry coverage

The NACFB’s inaugural Patrons’ Day

Sharing a concern, he said: “It’s only been three months that I’ve been in post, but I have to admit to being worried about the variable knowledge in the market, amongst brokers and Patrons alike, on the matter of broker-related regulation.

that all the brokers you have on your panels are compliant? Do they have a company structure chart, a compliance monitoring plan, up to date compliance procedures, documented key business risks, an overall business plan and procedures for TCF and AML?

We are some three years down the road with this regulation, and it’s my view that, as an industry, we should be better placed than we are.

“And are you sure that all those are written down and can be evidenced?

All of those things I listed are required, even if your brokers are only trading under limited permission, as opposed to full permission.”

“I have to admit that when I was wearing a Patron’s hat in my former life, I didn’t understand the implications of the regulation as much as I should have done.

“And I would ask you this: could you all, hand on heart, confidently affirm

Rob Lankey CEO NACFB More than 50 representatives of NACFB Patrons joined us at our inaugural Patrons’ Day on 21st February.

During the event, which ran from 3 to 6pm, NACFB chairman Paul Goodman, and CEO Rob Lankey talked about the Association’s compliance focus for the coming 10 months.

Deputy CEO Norman Chambers talked about why it’s important to understand how brokers are structured within the Association, and clarified any confusion about the term ‘registered individual’.

Roger Deane, our compliance MD, set out the Association’s exciting plans around compliance.

In his opening speech, Rob summed up the Association’s plans for the coming months, and shared some concerns with attendees.

22 | NACFB Magazine

The Association has always engaged its Patrons, either individually or in small groups; but we’ve never done anything like this before.

“And this is why, over the last three years, we’ve been working closely with the FCA, our broker Members and yourselves to promote best practice and demonstrate what this looks like.

“2017 is a truly significant year for the NACFB. It’s significant not only because it is our 25th anniversary which, in itself, is a major milestone, but also because of the plans we have to develop the Association further.

“You may remember how we created the minimum standards document to extend and develop understanding amongst brokers of the requirements for the regulated activity of broking ostensibly, ensuring they all have the correct processes and procedures embedded in their business.

“From our humble beginnings through to today, spanning a quarter of a century, one thing that has always underpinned the Association is our passion for improving standards in the commercial finance industry, as we bring brokers and Patrons together.

“There was once a time when broker standards were more of a virtue than a necessity … but those days are well and truly gone. You’ll know as well as I do that the regulatory gearbox has no reverse gear. Will current forms of unregulated lending become regulated one day? Of course they will, in time. It’s inevitable.

Rob closed by saying: One of the key areas we really do need your help with is for you, our Patrons, to support us, and get behind our plans for the future as if you were

all one combined force. I understand you all have competitors in the room … but I’m not talking about competing.

“I’m talking about linking arms with the Association, in a way we’ve never done before, to demonstrate our solidarity and our commitment to driving consistent standards and compliance across the commercial finance industry.

“We need to work together, and support one another in shining the light on to any remaining areas of the commercial finance market where standards still need to improve. That can only be a good thing for creating better outcomes for you, for your brokers and most importantly, for your customers.”

BUSINESS FINANCE

“Over the last year, we started, and continue to visit and review our Members against those MTF BELIEVE BRIDGING SHOULD BE FIT FOR standards, inAline with LOAN our wellPURPOSE, NOT ONEof FITpractice.

FOR ALL. established code “One of the key things I realised when I became chief executive is that the NACFB and its role in our industry has never been more relevant than it is now.”

0203 051 2331 W W W. M T- F I N A N C E . C O M E N Q U I R I E S @ M T- F I N A N C E . C O M

Rob added he hoped Patrons would agree with him on this by the time the presentations were completed.

NACFB Magazine | 23

Spotlight

We need to work together, and support one another in shining the light on to any remaining areas of the commercial finance market where standards still need to improve

Unmissable industry coverage

The NACFB’s inaugural Patrons’ Day

Sharing a concern, he said: “It’s only been three months that I’ve been in post, but I have to admit to being worried about the variable knowledge in the market, amongst brokers and Patrons alike, on the matter of broker-related regulation.

that all the brokers you have on your panels are compliant? Do they have a company structure chart, a compliance monitoring plan, up to date compliance procedures, documented key business risks, an overall business plan and procedures for TCF and AML?

We are some three years down the road with this regulation, and it’s my view that, as an industry, we should be better placed than we are.

“And are you sure that all those are written down and can be evidenced?

All of those things I listed are required, even if your brokers are only trading under limited permission, as opposed to full permission.”

“I have to admit that when I was wearing a Patron’s hat in my former life, I didn’t understand the implications of the regulation as much as I should have done.

“And I would ask you this: could you all, hand on heart, confidently affirm

Rob Lankey CEO NACFB More than 50 representatives of NACFB Patrons joined us at our inaugural Patrons’ Day on 21st February.

During the event, which ran from 3 to 6pm, NACFB chairman Paul Goodman, and CEO Rob Lankey talked about the Association’s compliance focus for the coming 10 months.

Deputy CEO Norman Chambers talked about why it’s important to understand how brokers are structured within the Association, and clarified any confusion about the term ‘registered individual’.

Roger Deane, our compliance MD, set out the Association’s exciting plans around compliance.

In his opening speech, Rob summed up the Association’s plans for the coming months, and shared some concerns with attendees.

22 | NACFB Magazine

The Association has always engaged its Patrons, either individually or in small groups; but we’ve never done anything like this before.

“And this is why, over the last three years, we’ve been working closely with the FCA, our broker Members and yourselves to promote best practice and demonstrate what this looks like.

“2017 is a truly significant year for the NACFB. It’s significant not only because it is our 25th anniversary which, in itself, is a major milestone, but also because of the plans we have to develop the Association further.

“You may remember how we created the minimum standards document to extend and develop understanding amongst brokers of the requirements for the regulated activity of broking ostensibly, ensuring they all have the correct processes and procedures embedded in their business.

“From our humble beginnings through to today, spanning a quarter of a century, one thing that has always underpinned the Association is our passion for improving standards in the commercial finance industry, as we bring brokers and Patrons together.

“There was once a time when broker standards were more of a virtue than a necessity … but those days are well and truly gone. You’ll know as well as I do that the regulatory gearbox has no reverse gear. Will current forms of unregulated lending become regulated one day? Of course they will, in time. It’s inevitable.

Rob closed by saying: One of the key areas we really do need your help with is for you, our Patrons, to support us, and get behind our plans for the future as if you were

all one combined force. I understand you all have competitors in the room … but I’m not talking about competing.

“I’m talking about linking arms with the Association, in a way we’ve never done before, to demonstrate our solidarity and our commitment to driving consistent standards and compliance across the commercial finance industry.

“We need to work together, and support one another in shining the light on to any remaining areas of the commercial finance market where standards still need to improve. That can only be a good thing for creating better outcomes for you, for your brokers and most importantly, for your customers.”

BUSINESS FINANCE

“Over the last year, we started, and continue to visit and review our Members against those MTF BELIEVE BRIDGING SHOULD BE FIT FOR standards, inAline with LOAN our wellPURPOSE, NOT ONEof FITpractice.

FOR ALL. established code “One of the key things I realised when I became chief executive is that the NACFB and its role in our industry has never been more relevant than it is now.”

0203 051 2331 W W W. M T- F I N A N C E . C O M E N Q U I R I E S @ M T- F I N A N C E . C O M

Rob added he hoped Patrons would agree with him on this by the time the presentations were completed.

NACFB Magazine | 23

Patron | profile

Rivers Leasingpropelled for growth Team Britannia powerboat

Established in 2010, Rivers Leasing is an independent, niche asset finance funder with strong experience and a dedicated team that is exclusively involved in running its own book in small ticket, soft asset leases and loans.

24 | NACFB Magazine

Tim Shand Broker manager Rivers Leasing Ltd Three things set us apart: our diverse and innovative team, our quick decision-making process and our personal attention to the individual client and their story.

What we do Rivers was founded by Ratan Daryani, who has a professional history in management and finance at international corporations, including the Virgin Group. His experience has brought a combination of good corporate governance and practical, flexible policies and procedures to Rivers Leasing. As a result, we work in a sustainable way towards positive outcomes rather than sticking to a prescriptive rule book.

Concentrating on lease values between £2,000 and £50,000, our approach hinges on a can-do attitude and short communication lines. Rivers is interested in a wide range of business sectors and has a variety of assets within scope. Brokers are central to the way we work, harnessing highly valued, long-term partnerships for healthy business.

Sustainable growth Now in its seventh year, Rivers Leasing has built a stable and proven platform that has made the business ready to expand. This process began to accelerate in the latter part of 2016 with investments in new talent to facilitate steady and sustainable growth, while allowing for the preservation of the personality of the business. The purpose was to enhance the already reliable and professional team which is made up of a potent fusion of highlyvalued experience and new ideas.

Brokers are central to our business Key to that growth is the continued development of relationships with brokers, who are the way forward for the long-term growth that we value.

We believe relationships with talented people drive good business, allowing us to adhere to our core values of efficiency, flexibility, simplicity and quality, providing a fast service where credit decisions are made quickly and with minimal fuss.

Focusing on individual stories There is a lot of emphasis in the leasing industry on streamlined processes and fitting customers into a template. This is where Rivers Leasing differs because we are interested in the client’s narrative as well as the metrics, and will always listen to their story before making a decision.

We are not a company who will put the customer through a computer system and see what it says; our decisions are

based on knowledge and experience alongside new ideas and new ways of thinking.

For example, while the essence of Rivers Leasing supports the nuts and bolts of business, one of 2016’s more glossy projects saw funds provided for a refinance of assets to Team Britannia. This was in order to keep the construction of their £1.8m powerboat on track for their round the world record attempt, with the boat launching at the end of this month.

Rivers Leasing finds value in primarily dealing on a person-by-person basis, and it’s with this approach that we have made our name in the market and are projected to grow over the coming years. Throughout this period of growth, however, there will be an emphasis on preserving the values, personality and attributes that make Rivers different.

Rivers at a glance Well-established, mature, ownbook funder Centred on broker market Concentrates on business asset finance Deal size £2,000-50,000 Simple product and procedures Experienced staff Considers the narrative as well as the metrics Believes in common sense versus rigid rules Expanding at a sustainable pace

NACFB Magazine | 25

Patron | profile

Rivers Leasingpropelled for growth Team Britannia powerboat

Established in 2010, Rivers Leasing is an independent, niche asset finance funder with strong experience and a dedicated team that is exclusively involved in running its own book in small ticket, soft asset leases and loans.

24 | NACFB Magazine

Tim Shand Broker manager Rivers Leasing Ltd Three things set us apart: our diverse and innovative team, our quick decision-making process and our personal attention to the individual client and their story.

What we do Rivers was founded by Ratan Daryani, who has a professional history in management and finance at international corporations, including the Virgin Group. His experience has brought a combination of good corporate governance and practical, flexible policies and procedures to Rivers Leasing. As a result, we work in a sustainable way towards positive outcomes rather than sticking to a prescriptive rule book.

Concentrating on lease values between £2,000 and £50,000, our approach hinges on a can-do attitude and short communication lines. Rivers is interested in a wide range of business sectors and has a variety of assets within scope. Brokers are central to the way we work, harnessing highly valued, long-term partnerships for healthy business.

Sustainable growth Now in its seventh year, Rivers Leasing has built a stable and proven platform that has made the business ready to expand. This process began to accelerate in the latter part of 2016 with investments in new talent to facilitate steady and sustainable growth, while allowing for the preservation of the personality of the business. The purpose was to enhance the already reliable and professional team which is made up of a potent fusion of highlyvalued experience and new ideas.

Brokers are central to our business Key to that growth is the continued development of relationships with brokers, who are the way forward for the long-term growth that we value.

We believe relationships with talented people drive good business, allowing us to adhere to our core values of efficiency, flexibility, simplicity and quality, providing a fast service where credit decisions are made quickly and with minimal fuss.

Focusing on individual stories There is a lot of emphasis in the leasing industry on streamlined processes and fitting customers into a template. This is where Rivers Leasing differs because we are interested in the client’s narrative as well as the metrics, and will always listen to their story before making a decision.

We are not a company who will put the customer through a computer system and see what it says; our decisions are

based on knowledge and experience alongside new ideas and new ways of thinking.

For example, while the essence of Rivers Leasing supports the nuts and bolts of business, one of 2016’s more glossy projects saw funds provided for a refinance of assets to Team Britannia. This was in order to keep the construction of their £1.8m powerboat on track for their round the world record attempt, with the boat launching at the end of this month.

Rivers Leasing finds value in primarily dealing on a person-by-person basis, and it’s with this approach that we have made our name in the market and are projected to grow over the coming years. Throughout this period of growth, however, there will be an emphasis on preserving the values, personality and attributes that make Rivers different.

Rivers at a glance Well-established, mature, ownbook funder Centred on broker market Concentrates on business asset finance Deal size £2,000-50,000 Simple product and procedures Experienced staff Considers the narrative as well as the metrics Believes in common sense versus rigid rules Expanding at a sustainable pace

NACFB Magazine | 25

Ask | the expert Answers and help from among the most knowledgeable of NACFB associates

Lucy Armstrong, the independent chair of the Asset Based Finance Association’s (ABFA) Professional Standards Council (PSC), considers the regulation of financial services provided to SMEs

Q A

What is the standards framework and why was it introduced?

The framework enforces the standards that ABFA Members must meet in the provision of invoice finance and asset-based lending.

Now overseen by the independent PSC – which I have chaired since its inception in 2013 – the framework incorporates an independent complaints process provided by Ombudsman Services and the ABFA code.

The latter sets the standards that ABFA Members commit to meeting in the treatment of their clients. The former provides independent means of investigation and, where necessary, redress if those standards are not met.

Q A

Does it cover all providers of invoice finance and asset-based lending?

We would hope that all responsible providers would aspire to meet the standards set by the framework, but it’s currently a voluntary system through Membership of the ABFA. The criteria for ABFA Membership were reviewed shortly after its introduction and we believe that it’s accessible to any finance provider that wishes to send a strong signal about the standards they work to.

Q

The FCA is looking at the protections provided to SMEs as users of financial services. What is your view on this?

A

Many of the challenges identified by the FCA have been ones that we have sought to address, in our own way,

in the establishment of the standards framework. These have included: How to establish a system that focuses on principles and outcomes rather than processes Recognising that SMEs come in all shapes and sizes and that the needs of the smallest businesses will be very different to those of a mid-sized one Where the balance should be struck between the rights of a business as a user of financial services and its responsibilities.

I certainly do not claim that we have found all the answers. However, we believe that the approach taken here – voluntary in the sense that all significant responsible providers choose to follow it – has so far been effective.

We look forward to continuing the conversation on how it could evolve.

Q A

Does the code have any implications for brokers?

The code applies to Members of the ABFA and does not directly apply to intermediaries or other third parties. However, we would expect those parties to follow relevant professional codes such as the NACFB’s, and we would further expect any third parties to support ABFA Members in meeting their requirements under the framework.

More specifically, the ABFA code requires disclosure where commissions are payable to a third party along with the name of that party. Moreover, if requested, the ABFA

Unlike our developers, we don’t build walls

Member must provide details of the amount and/or method of calculation of commission.

We undertook some constructive consultation with the NACFB as well as with wider stakeholders on this issue in 2016 and it’s an area that the PSC remains interested in.

Q

Does the PSC have a view on the potential merger of a number of the financial services trade associations including, potentially, the ABFA?

A

The PSC is agnostic; how financial services providers choose to organise their representation and advocacy is up to them.

The PSC’s objective is to ensure that the delivery of the objectives of the standards framework will be safeguarded, even if it may be done through different mechanisms in the future.

Lending without the box ticking Our development finance specialists deal with each case personally, and can usually help customers who don’t fit neatly into the more traditional banks’ rules.

For more information about our development finance products please contact us on 020 7036 2000 or email development@masthaven.co.uk

Q A

Where can people go for more information?

Full details of the framework are available at www.abfa.org.uk/standards or contact alex.waterman@abfa.org.uk.

The PSC’s role is to take a view of the effectiveness of the framework as a whole and not, as a rule, to consider individual complaints. Those should be directed towards the ABFA Member in the first instance, and then on to the ABFA or ombudsman. However, if there is anything that should be brought to the attention of the PSC, stakeholders are welcome to contact me and can do so via lucy.armstrong@the-alchemists.com.

masthaven.co.uk Your property, provided as security for the loan, may be repossessed if you do not keep up with payments.

Masthaven Bank Limited is a company registered in England & Wales with registration number 09660012 and whose registered office is at: 4th Floor, 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).

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.

26 | NACFB Magazine

Ask | the expert Answers and help from among the most knowledgeable of NACFB associates

Lucy Armstrong, the independent chair of the Asset Based Finance Association’s (ABFA) Professional Standards Council (PSC), considers the regulation of financial services provided to SMEs

Q A

What is the standards framework and why was it introduced?

The framework enforces the standards that ABFA Members must meet in the provision of invoice finance and asset-based lending.

Now overseen by the independent PSC – which I have chaired since its inception in 2013 – the framework incorporates an independent complaints process provided by Ombudsman Services and the ABFA code.

The latter sets the standards that ABFA Members commit to meeting in the treatment of their clients. The former provides independent means of investigation and, where necessary, redress if those standards are not met.

Q A

Does it cover all providers of invoice finance and asset-based lending?

We would hope that all responsible providers would aspire to meet the standards set by the framework, but it’s currently a voluntary system through Membership of the ABFA. The criteria for ABFA Membership were reviewed shortly after its introduction and we believe that it’s accessible to any finance provider that wishes to send a strong signal about the standards they work to.

Q

The FCA is looking at the protections provided to SMEs as users of financial services. What is your view on this?

A

Many of the challenges identified by the FCA have been ones that we have sought to address, in our own way,

in the establishment of the standards framework. These have included: How to establish a system that focuses on principles and outcomes rather than processes Recognising that SMEs come in all shapes and sizes and that the needs of the smallest businesses will be very different to those of a mid-sized one Where the balance should be struck between the rights of a business as a user of financial services and its responsibilities.

I certainly do not claim that we have found all the answers. However, we believe that the approach taken here – voluntary in the sense that all significant responsible providers choose to follow it – has so far been effective.

We look forward to continuing the conversation on how it could evolve.

Q A

Does the code have any implications for brokers?

The code applies to Members of the ABFA and does not directly apply to intermediaries or other third parties. However, we would expect those parties to follow relevant professional codes such as the NACFB’s, and we would further expect any third parties to support ABFA Members in meeting their requirements under the framework.

More specifically, the ABFA code requires disclosure where commissions are payable to a third party along with the name of that party. Moreover, if requested, the ABFA

Unlike our developers, we don’t build walls

Member must provide details of the amount and/or method of calculation of commission.

We undertook some constructive consultation with the NACFB as well as with wider stakeholders on this issue in 2016 and it’s an area that the PSC remains interested in.

Q

Does the PSC have a view on the potential merger of a number of the financial services trade associations including, potentially, the ABFA?

A

The PSC is agnostic; how financial services providers choose to organise their representation and advocacy is up to them.

The PSC’s objective is to ensure that the delivery of the objectives of the standards framework will be safeguarded, even if it may be done through different mechanisms in the future.

Lending without the box ticking Our development finance specialists deal with each case personally, and can usually help customers who don’t fit neatly into the more traditional banks’ rules.

For more information about our development finance products please contact us on 020 7036 2000 or email development@masthaven.co.uk

Q A

Where can people go for more information?

Full details of the framework are available at www.abfa.org.uk/standards or contact alex.waterman@abfa.org.uk.

The PSC’s role is to take a view of the effectiveness of the framework as a whole and not, as a rule, to consider individual complaints. Those should be directed towards the ABFA Member in the first instance, and then on to the ABFA or ombudsman. However, if there is anything that should be brought to the attention of the PSC, stakeholders are welcome to contact me and can do so via lucy.armstrong@the-alchemists.com.

masthaven.co.uk Your property, provided as security for the loan, may be repossessed if you do not keep up with payments.

Masthaven Bank Limited is a company registered in England & Wales with registration number 09660012 and whose registered office is at: 4th Floor, 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).

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.

26 | NACFB Magazine

Special | features

A FS GROU P

An up-to-date insight into the industry

More than just an account number Ian Walters Managing director business banking Metro Bank

Be your own boss. Stand on your own two feet.

Make it big. Innovate. Be a game-changer.

There are thousands of reasons why businesses first open their doors, but the common thread is that someone has an idea, sees an opportunity and invests their time, their passion and often their own resources into making it a reality. Businesses aren’t intangible, remote entities – they’re made up of the dreams, blood, sweat and, sometimes, tears of real people.

And that’s the exact point where banking forgot its reason for being. For years, banks lost sight of the fundamental fact that they only existed to serve customers – not eight-digit account numbers. They forgot who their customer was. Trust was lost, then came indifference. Countless times I have heard stories of big banks carelessly neglecting decade-old relationships, whether they were simply not listening, not taking the time to understand or just not caring.

Changing expectations Businesses are the lifeblood of the economy.

They’re crucial. Fundamental even. But that doesn’t equate to an easy ride. I’ve worked in the sector for more than 30 years, meeting business owners and managers face to face, discussing their plans and their ambitions, and what crops up time after time is their hunger to grow, often hindered by a lack of time, funding and guidance.

But, things are changing. New lenders such as Metro Bank are helping to drive up expectations with a focus on relationship banking and bringing in a new chapter for one of the most underserved communities in British banking. Earlier

this year, we announced that we had ring-fenced £1bn of funds for businesses and also boosted the number of business managers in our high street stores by 30%.

Ultimately, we hired more people to listen to our business customers, and made sure there was sufficient funds to be lent.

Investing in relationships Only a couple of months into the year and we’re already seeing an influx of businesses contacting us, looking not just for debt, but for help navigating the often complex demands of managing a business. Running a business can feel lonely and pressured.

Making the right choice for your organisation can be the difference between success and failure. Businesses approach us because we invest in our relationships and have the support structures in place to help them succeed, whether that’s through our partnerships with the likes of Xero – the business accounting software specialists – or the hundreds of networking events that we host in our growing number of stores. Businesses need their bank to be an active, rather than a silent partner.

Alongside an obvious strengthening of confidence in the economy, technological advances are providing new sources of data on customers and the industries they operate in, giving lenders a much more detailed overview of their customers than ever before, and in turn giving us more confidence to lend. If you add to this a greater emphasis on customer relationships and the services that businesses truly value, you’re beginning to see an unmistakable gear change in the lending environment.

For us, relationship-banking isn’t just a marketing strapline; it’s an approach that enables you to really understand your business customers and their needs and make a tangible difference to their business.

BROKER IN A BOX assetfinancesolutions.com

28 | NACFB Magazine

WE’VE GOT YOU COVERED

STRONGER TOGETHER

afscompliance.co.uk

synergy.finance

Asset Finance Solutions (UK) Ltd and Synergy Commercial Finance Limited are an Appointed Representative of AFS Compliance Ltd, which is Authorised and Regulated by the Financial Conduct Authority under number 625035.

Special | features

A FS GROU P

An up-to-date insight into the industry

More than just an account number Ian Walters Managing director business banking Metro Bank

Be your own boss. Stand on your own two feet.

Make it big. Innovate. Be a game-changer.

There are thousands of reasons why businesses first open their doors, but the common thread is that someone has an idea, sees an opportunity and invests their time, their passion and often their own resources into making it a reality. Businesses aren’t intangible, remote entities – they’re made up of the dreams, blood, sweat and, sometimes, tears of real people.

And that’s the exact point where banking forgot its reason for being. For years, banks lost sight of the fundamental fact that they only existed to serve customers – not eight-digit account numbers. They forgot who their customer was. Trust was lost, then came indifference. Countless times I have heard stories of big banks carelessly neglecting decade-old relationships, whether they were simply not listening, not taking the time to understand or just not caring.

Changing expectations Businesses are the lifeblood of the economy.

They’re crucial. Fundamental even. But that doesn’t equate to an easy ride. I’ve worked in the sector for more than 30 years, meeting business owners and managers face to face, discussing their plans and their ambitions, and what crops up time after time is their hunger to grow, often hindered by a lack of time, funding and guidance.

But, things are changing. New lenders such as Metro Bank are helping to drive up expectations with a focus on relationship banking and bringing in a new chapter for one of the most underserved communities in British banking. Earlier

this year, we announced that we had ring-fenced £1bn of funds for businesses and also boosted the number of business managers in our high street stores by 30%.

Ultimately, we hired more people to listen to our business customers, and made sure there was sufficient funds to be lent.

Investing in relationships Only a couple of months into the year and we’re already seeing an influx of businesses contacting us, looking not just for debt, but for help navigating the often complex demands of managing a business. Running a business can feel lonely and pressured.

Making the right choice for your organisation can be the difference between success and failure. Businesses approach us because we invest in our relationships and have the support structures in place to help them succeed, whether that’s through our partnerships with the likes of Xero – the business accounting software specialists – or the hundreds of networking events that we host in our growing number of stores. Businesses need their bank to be an active, rather than a silent partner.

Alongside an obvious strengthening of confidence in the economy, technological advances are providing new sources of data on customers and the industries they operate in, giving lenders a much more detailed overview of their customers than ever before, and in turn giving us more confidence to lend. If you add to this a greater emphasis on customer relationships and the services that businesses truly value, you’re beginning to see an unmistakable gear change in the lending environment.

For us, relationship-banking isn’t just a marketing strapline; it’s an approach that enables you to really understand your business customers and their needs and make a tangible difference to their business.

BROKER IN A BOX assetfinancesolutions.com

28 | NACFB Magazine

WE’VE GOT YOU COVERED

STRONGER TOGETHER

afscompliance.co.uk

synergy.finance

Asset Finance Solutions (UK) Ltd and Synergy Commercial Finance Limited are an Appointed Representative of AFS Compliance Ltd, which is Authorised and Regulated by the Financial Conduct Authority under number 625035.

BIG in commercial loans

SPECIAL FEATURES

Embracing change in the property finance market

and others now have a significant slice of the cake and should be on every broker’s database.

Brian Rubins Managing director Alternative Bridging Corporation

Whereas peer-to-peer lenders started as a source of finance to fill the gap in the small business arena, they too have widened their horizons. Many are also financing property for both the business community and the property industry. Online there are 23 such organisations listed, some with a few tens of millions loaned, but also larger players such as Funding Circle and LendInvest with £600m and £1.5bn respectively.

If change does not find you on the back foot, it’s wonderful.

Often it results from the need to solve newly identified problems, but just as change places demands on you, for the inventive and alert it offers new opportunities. The financial services industry has always responded quickly to change and benefited from it. Whether it has been changes in tax legislation or in the economy, the industry has turned challenge into opportunity and so it is with property finance in this post-referendum era.

A shift in bridging Bridging finance has changed too. Previously employing relatively small sums – and used for chain-breaking and when mainstream lenders did not perform – it’s now an alternative source of funds for intermediaries to access. It’s often used when time is of the essence or until assets have been improved by way of letting or refurbishment and are ready for refinancing in the conventional market. For intermediaries, it’s a great opportunity to not only deal with immediate requirements, but to earn a second commission when the exit strategy is refinance.

Movement in property lending The property industry in particular is fuelled by availability of debt and it’s no secret that many would-be borrowers either do not have, or have seen a decline in, their banking relationships; in fact, it’s only the minority who have had ongoing support since the financial crisis of 2008.

Many of the more established bridging finance companies such as Goldentree, Amicus and Alternative Bridging Corporation now also finance the development of new homes, conversion and refurbishment of existing properties. In fact, bridging lenders are morphing into alternative short-term lenders with annual new origination thought to be in excess of £3bn.

For some, they have needed to rebuild their credibility, and for others the lenders who supported them before, such as Allied Dunbar and some of the Irish banks, no longer exist; or, like Nationwide, they have withdrawn from commercial property lending. Added to this is an important group of borrowers who are relatively new to the UK and who invest in, trade and develop property, but have not yet established their banking relationships.

Since the crash of 2008, a number of the mainstream lenders withdrew or significantly changed their criteria. Intermediaries can no longer just rely on the high-street lenders and other old friends to satisfy client demand, and must build alliances with the new sources of finance. Without the crash, would the challenger banks have made the serious inroads into banking that they have?

Metro, Aldermore, OneSavings, Shawbrook

30 | NACFB Magazine

We are Principal Lenders and provide commercial property loans from £250,000 up to £10m. Up to 70% LTV and interest rates from 0.65% p.m.

Without the crash, would the challenger banks have made the serious inroads into banking that they have?

Era of change It’s often said that as one door closes, another opens and so it is in the property finance world. For intermediaries, this is an era of change, a time for learning new tricks. Those who are proactive will be able to provide their clients with a larger marketplace than ever before. There are immense opportunities for intermediaries who widen their horizons and grab them.

RETAIL UNITS • INDUSTRIAL PREMISES • OFFICE BLOCKS • SHOPPING CENTRES

C

M

Y

CM

MY

CY

CMY

K

Let’s Talk!

020 8349 5190 finance@alternativebridging.co.uk @ABC_Bridging C O MMERC IAL

•

RES IDEN T IAL

•

A PRINCIPAL LENDER

DEVEL O P M E NT

BIG in commercial loans

SPECIAL FEATURES

Embracing change in the property finance market

and others now have a significant slice of the cake and should be on every broker’s database.

Brian Rubins Managing director Alternative Bridging Corporation

Whereas peer-to-peer lenders started as a source of finance to fill the gap in the small business arena, they too have widened their horizons. Many are also financing property for both the business community and the property industry. Online there are 23 such organisations listed, some with a few tens of millions loaned, but also larger players such as Funding Circle and LendInvest with £600m and £1.5bn respectively.

If change does not find you on the back foot, it’s wonderful.

Often it results from the need to solve newly identified problems, but just as change places demands on you, for the inventive and alert it offers new opportunities. The financial services industry has always responded quickly to change and benefited from it. Whether it has been changes in tax legislation or in the economy, the industry has turned challenge into opportunity and so it is with property finance in this post-referendum era.

A shift in bridging Bridging finance has changed too. Previously employing relatively small sums – and used for chain-breaking and when mainstream lenders did not perform – it’s now an alternative source of funds for intermediaries to access. It’s often used when time is of the essence or until assets have been improved by way of letting or refurbishment and are ready for refinancing in the conventional market. For intermediaries, it’s a great opportunity to not only deal with immediate requirements, but to earn a second commission when the exit strategy is refinance.

Movement in property lending The property industry in particular is fuelled by availability of debt and it’s no secret that many would-be borrowers either do not have, or have seen a decline in, their banking relationships; in fact, it’s only the minority who have had ongoing support since the financial crisis of 2008.

Many of the more established bridging finance companies such as Goldentree, Amicus and Alternative Bridging Corporation now also finance the development of new homes, conversion and refurbishment of existing properties. In fact, bridging lenders are morphing into alternative short-term lenders with annual new origination thought to be in excess of £3bn.

For some, they have needed to rebuild their credibility, and for others the lenders who supported them before, such as Allied Dunbar and some of the Irish banks, no longer exist; or, like Nationwide, they have withdrawn from commercial property lending. Added to this is an important group of borrowers who are relatively new to the UK and who invest in, trade and develop property, but have not yet established their banking relationships.

Since the crash of 2008, a number of the mainstream lenders withdrew or significantly changed their criteria. Intermediaries can no longer just rely on the high-street lenders and other old friends to satisfy client demand, and must build alliances with the new sources of finance. Without the crash, would the challenger banks have made the serious inroads into banking that they have?

Metro, Aldermore, OneSavings, Shawbrook

30 | NACFB Magazine

We are Principal Lenders and provide commercial property loans from £250,000 up to £10m. Up to 70% LTV and interest rates from 0.65% p.m.

Without the crash, would the challenger banks have made the serious inroads into banking that they have?

Era of change It’s often said that as one door closes, another opens and so it is in the property finance world. For intermediaries, this is an era of change, a time for learning new tricks. Those who are proactive will be able to provide their clients with a larger marketplace than ever before. There are immense opportunities for intermediaries who widen their horizons and grab them.

RETAIL UNITS • INDUSTRIAL PREMISES • OFFICE BLOCKS • SHOPPING CENTRES

C

M

Y

CM

MY

CY

CMY

K

Let’s Talk!

020 8349 5190 finance@alternativebridging.co.uk @ABC_Bridging C O MMERC IAL

•

RES IDEN T IAL

•

A PRINCIPAL LENDER

DEVEL O P M E NT

SPECIAL FEATURES

New approaches to financial education Alex Lynn Reporter Medianett

Dramatic advances in the way finance changes hands will require commercial finance brokers to retool their skill set in the coming years.

This is according to Daniel Broby, director of the Centre for Financial Regulation and Innovation at the University of Strathclyde, who in January oversaw the launch of the UK’s first masters course in financial technology, or fintech.

With recent studies showing that, on average, blockchain could cut bank infrastructure costs by 30% and the many fintech start-ups now flocking to the nation’s capital, it comes as little surprise to hear that commercial intermediaries may soon need to re-educate themselves in order to stay ahead.

“Fintech will become increasingly important in the commercial finance sector as the rollout and adoption of digital strategies takes place,” Daniel explained.

“The promise of fintech - faster, cheaper and more secure financial transactions over the internet - will dramatically change the architecture of financial payments, transactions and settlements.”

Daniel warned that the next generation of financial professionals would even need to understand how to read and write computer programming code.

offer to commercial specialists. Among these is a masters and postgraduate diploma in Islamic banking and finance from the University of Salford, Manchester, which offers modules in areas such as accounting and regulation.

Similarly, besides the well-known CeMAP qualification, the London Institute of Banking & Finance offers a diploma in asset finance which it developed in partnership with the Finance & Leasing Association.

However, regardless of these academic qualifications, commercial intermediaries are also expected to regularly pursue their own professional education. This is achieved through tools such as the NACFB’s own MyNACFB portal, which asks members to complete a minimum of 35 hours of continuing professional development (CPD) per year in areas such as tax changes, accounting procedures and industry regulations.

Brokers need to help themselves “I understand that at a recent specialist broker forum in the North, the whole room demanded more emphasis on education support,” revealed Keith Aldridge, managing director of Amicus Property Finance.

“Financial professionals will need to retool and re-train as technologies such as blockchain, distributed ledgers, big data analytics and artificial intelligence become ubiquitous.”

“The challenge lenders face is no matter how determined they are to help commercial brokers understand the market and the product offerings better, sometimes those same brokers need to help themselves and be more challenging in what they demand from lenders.”

School’s out While academics such as Daniel have made some progress towards educating the financial sector on what lies ahead, there already exists a range of qualifications on

Although CPD is ubiquitous among financial advisers, Chris Treadwell, head of commercial and development at Enness Private Clients, insisted that variation was key to ensuring its effectiveness.

32 | NACFB Magazine

“There isn’t a ‘one-size-fits-all’ solution for CPD,” he argued.

“I think a regular mixture is the healthiest option, giving the best results.

“I can’t see how anyone can be an effective broker if they are not undertaking a regular amount of learning, whether it be on a formal basis or simply getting the low down on who is lending what.”

Specialist finance.

By specialists Amicus group provides outstanding solutions for specialist markets. Working with us means you work with real people: talented teams with the drive, experience and insight to make things happen.

Becoming a specialist Information aside, Wendy Taylor, global HR director at Bibby Financial Services, also stressed the importance of using CPD to develop oneself on a more personal level.

“It is important to ensure that a person can fulfil their potential and grow as a finance expert into a broader leader of people and contribute to overall business growth.

“Often in technical roles, the former is very well delivered and the emphasis on the second part is less, leaving businesses exposed to a lack of strong leaders in technical functions.”

Keith suggested that this growth could be achieved through greater co-operation between lenders and brokers.

property finance

commercial finance

asset finance

Bespoke short-term lending

Flexible invoice discounting

Specialist asset finance

“A specialist is defined by our friends at the Oxford English Dictionary as: ‘A person highly qualified in a specific and restricted field’.

“In order to get more brokers to be comfortable with satisfying that definition, all parties must collaborate to design programmes that will improve the lenders’ knowledge of what a broker wants, and a broker’s knowledge of what a lender needs.”

Discover more at amicusplc.co.uk

Amicus is a trading name of Amicus Finance PLC. Registered in England & Wales, no. 06994954.

Registered office: 7 Air Street, London W1B 5AD.

Helping Fund UK Business

SPECIAL FEATURES

New approaches to financial education Alex Lynn Reporter Medianett

Dramatic advances in the way finance changes hands will require commercial finance brokers to retool their skill set in the coming years.

This is according to Daniel Broby, director of the Centre for Financial Regulation and Innovation at the University of Strathclyde, who in January oversaw the launch of the UK’s first masters course in financial technology, or fintech.

With recent studies showing that, on average, blockchain could cut bank infrastructure costs by 30% and the many fintech start-ups now flocking to the nation’s capital, it comes as little surprise to hear that commercial intermediaries may soon need to re-educate themselves in order to stay ahead.

“Fintech will become increasingly important in the commercial finance sector as the rollout and adoption of digital strategies takes place,” Daniel explained.

“The promise of fintech - faster, cheaper and more secure financial transactions over the internet - will dramatically change the architecture of financial payments, transactions and settlements.”

Daniel warned that the next generation of financial professionals would even need to understand how to read and write computer programming code.

offer to commercial specialists. Among these is a masters and postgraduate diploma in Islamic banking and finance from the University of Salford, Manchester, which offers modules in areas such as accounting and regulation.

Similarly, besides the well-known CeMAP qualification, the London Institute of Banking & Finance offers a diploma in asset finance which it developed in partnership with the Finance & Leasing Association.

However, regardless of these academic qualifications, commercial intermediaries are also expected to regularly pursue their own professional education. This is achieved through tools such as the NACFB’s own MyNACFB portal, which asks members to complete a minimum of 35 hours of continuing professional development (CPD) per year in areas such as tax changes, accounting procedures and industry regulations.

Brokers need to help themselves “I understand that at a recent specialist broker forum in the North, the whole room demanded more emphasis on education support,” revealed Keith Aldridge, managing director of Amicus Property Finance.

“Financial professionals will need to retool and re-train as technologies such as blockchain, distributed ledgers, big data analytics and artificial intelligence become ubiquitous.”

“The challenge lenders face is no matter how determined they are to help commercial brokers understand the market and the product offerings better, sometimes those same brokers need to help themselves and be more challenging in what they demand from lenders.”

School’s out While academics such as Daniel have made some progress towards educating the financial sector on what lies ahead, there already exists a range of qualifications on

Although CPD is ubiquitous among financial advisers, Chris Treadwell, head of commercial and development at Enness Private Clients, insisted that variation was key to ensuring its effectiveness.

32 | NACFB Magazine

“There isn’t a ‘one-size-fits-all’ solution for CPD,” he argued.

“I think a regular mixture is the healthiest option, giving the best results.

“I can’t see how anyone can be an effective broker if they are not undertaking a regular amount of learning, whether it be on a formal basis or simply getting the low down on who is lending what.”

Specialist finance.

By specialists Amicus group provides outstanding solutions for specialist markets. Working with us means you work with real people: talented teams with the drive, experience and insight to make things happen.

Becoming a specialist Information aside, Wendy Taylor, global HR director at Bibby Financial Services, also stressed the importance of using CPD to develop oneself on a more personal level.

“It is important to ensure that a person can fulfil their potential and grow as a finance expert into a broader leader of people and contribute to overall business growth.

“Often in technical roles, the former is very well delivered and the emphasis on the second part is less, leaving businesses exposed to a lack of strong leaders in technical functions.”

Keith suggested that this growth could be achieved through greater co-operation between lenders and brokers.

property finance

commercial finance

asset finance

Bespoke short-term lending

Flexible invoice discounting

Specialist asset finance

“A specialist is defined by our friends at the Oxford English Dictionary as: ‘A person highly qualified in a specific and restricted field’.

“In order to get more brokers to be comfortable with satisfying that definition, all parties must collaborate to design programmes that will improve the lenders’ knowledge of what a broker wants, and a broker’s knowledge of what a lender needs.”

Discover more at amicusplc.co.uk

Amicus is a trading name of Amicus Finance PLC. Registered in England & Wales, no. 06994954.

Registered office: 7 Air Street, London W1B 5AD.

Helping Fund UK Business

Industry | guides Enhancing your sector knowledge

A guide to VAT and tax loans Callum Stevenson Head of broker LDF

The value of overdue corporation tax payments has hit a significant high, increasing by 15% in 2016, with UK businesses also owing almost £2.6bn to HMRC in overdue VAT payments.

The slowdown in economic terms since the referendum last year could also mean companies have more trouble with their cash flow, as uncertainty may cause customers to delay payments. Many companies are now, however, starting to invest in business growth again by improving their infrastructure, purchasing new equipment and expanding the workforce. Ensuring that this investment does not impact cash flow and the ability to meet payment deadlines remains a crucial consideration for your clients – and a handy solution to help manage business cash flow and ease the burden of planning ahead are corporation tax and VAT loans.

Why spread the cost of corporation tax or VAT? Tax bills can fall at the most inopportune of times and planning for this costly expense can place an unwelcome strain on business cash flow. Whether a business is looking to fund corporation tax or VAT, the ability to finance this cost can help you to

34 | NACFB Magazine

regain control of your cash flow by streamlining the process, giving your clients the opportunity to spread the cost of the tax demand.

Benefits of spreading tax include:

available to cover those costs, freeing up their own capital to invest in other areas of their business.”

Benefits of a corporation tax and VAT loan include:

Allowing your clients the ability to pay in instalments rather than as a one-off payment, meaning there is no initial large outlay

Options to pay monthly or quarterly

Providing the ability to invest in other areas of the business such as:

Rapid payment release

»

refurbishment

»

expansion

»

recruitment

Callum Stevenson, head of broker at LDF, explained: “Corporation tax and VAT funding are great ways to help a client improve and manage their cash flow. Given the regular nature of when these bills are due, it can give great comfort to a business owner knowing they have funding

unnecessary paperwork or processes, we’re able to treat you as a human being, not just a tick-box on a form.

That’s why LDF brings money into your business, not bureaucracy.

As an LDF broker you can access a fresh line of credit that suits your customers’ needs, whether that is an asset finance solution, or a commercial loan that can be used for a variety of requirements, including corporation tax and VAT.

Loans can be completed in as little as 24 hours

Payment can be made directly to HMRC or paid into your bank account.

Additionally, corporation tax and VAT loans can ensure the avoidance of overdue tax penalties or asset seizures

by HMRC. What sets LDF apart?

We’ve eliminated red tape from our own business, and we pass the benefits on to you. You’ll always speak to the same person, who will get to know you and your needs.

And, because we’re not burdened by

Tax bills can fall at the most inopportune of times and planning for this costly expense can place an unwelcome strain on business cash flow

By offering your customers the means to cover their corporation tax and VAT bills, a consistent expense, business owners will be able to free up their cash flow in order to invest into the desired areas of their business.

NACFB Magazine | 35

Industry | guides Enhancing your sector knowledge

A guide to VAT and tax loans Callum Stevenson Head of broker LDF

The value of overdue corporation tax payments has hit a significant high, increasing by 15% in 2016, with UK businesses also owing almost £2.6bn to HMRC in overdue VAT payments.

The slowdown in economic terms since the referendum last year could also mean companies have more trouble with their cash flow, as uncertainty may cause customers to delay payments. Many companies are now, however, starting to invest in business growth again by improving their infrastructure, purchasing new equipment and expanding the workforce. Ensuring that this investment does not impact cash flow and the ability to meet payment deadlines remains a crucial consideration for your clients – and a handy solution to help manage business cash flow and ease the burden of planning ahead are corporation tax and VAT loans.

Why spread the cost of corporation tax or VAT? Tax bills can fall at the most inopportune of times and planning for this costly expense can place an unwelcome strain on business cash flow. Whether a business is looking to fund corporation tax or VAT, the ability to finance this cost can help you to

34 | NACFB Magazine

regain control of your cash flow by streamlining the process, giving your clients the opportunity to spread the cost of the tax demand.

Benefits of spreading tax include:

available to cover those costs, freeing up their own capital to invest in other areas of their business.”

Benefits of a corporation tax and VAT loan include:

Allowing your clients the ability to pay in instalments rather than as a one-off payment, meaning there is no initial large outlay

Options to pay monthly or quarterly

Providing the ability to invest in other areas of the business such as:

Rapid payment release

»

refurbishment

»

expansion

»

recruitment

Callum Stevenson, head of broker at LDF, explained: “Corporation tax and VAT funding are great ways to help a client improve and manage their cash flow. Given the regular nature of when these bills are due, it can give great comfort to a business owner knowing they have funding

unnecessary paperwork or processes, we’re able to treat you as a human being, not just a tick-box on a form.

That’s why LDF brings money into your business, not bureaucracy.

As an LDF broker you can access a fresh line of credit that suits your customers’ needs, whether that is an asset finance solution, or a commercial loan that can be used for a variety of requirements, including corporation tax and VAT.

Loans can be completed in as little as 24 hours

Payment can be made directly to HMRC or paid into your bank account.

Additionally, corporation tax and VAT loans can ensure the avoidance of overdue tax penalties or asset seizures

by HMRC. What sets LDF apart?

We’ve eliminated red tape from our own business, and we pass the benefits on to you. You’ll always speak to the same person, who will get to know you and your needs.

And, because we’re not burdened by

Tax bills can fall at the most inopportune of times and planning for this costly expense can place an unwelcome strain on business cash flow

By offering your customers the means to cover their corporation tax and VAT bills, a consistent expense, business owners will be able to free up their cash flow in order to invest into the desired areas of their business.

NACFB Magazine | 35

GUIDES

PDR schemes: what you need to know Derek Bradstock Head of property finance Wellesley Finance

MUSIC TO YOUR EARS Short term finance, long term benefits.

Permitted development rights (PDR) are, in essence, the right to make certain changes to a building without the need to apply for planning consent. The most interesting aspect of this is that PDR can be used to convert offices into residential properties.

There are clearly risks associated with conversions compared with a newbuild approach, such as unexpected property defects and electrical issues. That said, the majority of construction risks can be mitigated by choosing the right contractor and experienced build team.

In addition, there are major advantages: Build time is considerably shorter than a conventional new build

1% arrangement fee 2% exit fee – based on gross facility

The projects support regeneration and the local community is often supportive Projects can transform redundant eyesores into quality residential stock The right buildings can offer really interesting and unusual accommodation.

Wellesley Finance is highly supportive of PDR schemes, with preference for large multi-unit schemes, which are located close to an existing residential area. Developer experience is very important to us and as such we can show a considerable amount of flexibility for the right clients.

Our typical terms are: Up to 65% of the gross development value (GDV), subject to no more than 90% of costs (these include land, construction and professional fees) 8% pa interest rates on drawn balances

We have just recently issued a formal offer on our largest PDR scheme to date, which is in excess of 200 units with a GDV of more than £50m and a debt size of more than £30m. We also support smaller schemes with our typical gross facility size range being £2m-20m.

In some cases, the developer will build out on the basis of the PDR consent; in other cases, they will seek acquisition funding to purchase the building and will then seek enhanced planning for a larger scheme. Sometimes the developer will service interest over the planning application period, particularly if there’s an existing rental income. In other cases, they will ask for interest to be added to the loan if the property is already vacant. Whatever the specifics, we are open to these structures.

One of our overarching objectives is to directly support UK developers and housebuilders, so PDR schemes work well for us, and we are keen to review new proposals from NACFB Members.

Site visits are particularly important for PDR schemes as the only way to assess if the location will support a residential scheme is to see it first-hand. The best site visit is one that is done early in the process, and we are often on site to meet the client within a week of the initial proposal.

PDR is a robust and fast-growing market which we will continue to actively support, alongside other property development finance projects which fit the middle-ofthe-market price points and are located in areas where significant buyer demand is perceived. As our business is built on our clients’ trust and loyalty, we are committed to being clear right from the start about what deals we can and cannot do, and back that up with high-quality loan underwriting and relationship management when we proceed.

Loans from £30,000 to £1,000,000 1st & 2nd charge Bridging loans Up to 70% LTV Rates from as little as 1% pcm*

w: www.kuflink.co.uk | t: 01474 33 44 88

No non-utilisation fees

36 | NACFB Magazine

This advert is for intermediary use only and not intended for consumers.

Kuflink Bridging Ltd is fully authorised and regulated by the Financial Conduct Authority (723495).

Your property may be repossed if you do not keep up with repayments. *Rate subject to underwriting criteria.

GUIDES

PDR schemes: what you need to know Derek Bradstock Head of property finance Wellesley Finance

MUSIC TO YOUR EARS Short term finance, long term benefits.

Permitted development rights (PDR) are, in essence, the right to make certain changes to a building without the need to apply for planning consent. The most interesting aspect of this is that PDR can be used to convert offices into residential properties.

There are clearly risks associated with conversions compared with a newbuild approach, such as unexpected property defects and electrical issues. That said, the majority of construction risks can be mitigated by choosing the right contractor and experienced build team.

In addition, there are major advantages: Build time is considerably shorter than a conventional new build

1% arrangement fee 2% exit fee – based on gross facility

The projects support regeneration and the local community is often supportive Projects can transform redundant eyesores into quality residential stock The right buildings can offer really interesting and unusual accommodation.

Wellesley Finance is highly supportive of PDR schemes, with preference for large multi-unit schemes, which are located close to an existing residential area. Developer experience is very important to us and as such we can show a considerable amount of flexibility for the right clients.

Our typical terms are: Up to 65% of the gross development value (GDV), subject to no more than 90% of costs (these include land, construction and professional fees) 8% pa interest rates on drawn balances

We have just recently issued a formal offer on our largest PDR scheme to date, which is in excess of 200 units with a GDV of more than £50m and a debt size of more than £30m. We also support smaller schemes with our typical gross facility size range being £2m-20m.

In some cases, the developer will build out on the basis of the PDR consent; in other cases, they will seek acquisition funding to purchase the building and will then seek enhanced planning for a larger scheme. Sometimes the developer will service interest over the planning application period, particularly if there’s an existing rental income. In other cases, they will ask for interest to be added to the loan if the property is already vacant. Whatever the specifics, we are open to these structures.

One of our overarching objectives is to directly support UK developers and housebuilders, so PDR schemes work well for us, and we are keen to review new proposals from NACFB Members.

Site visits are particularly important for PDR schemes as the only way to assess if the location will support a residential scheme is to see it first-hand. The best site visit is one that is done early in the process, and we are often on site to meet the client within a week of the initial proposal.

PDR is a robust and fast-growing market which we will continue to actively support, alongside other property development finance projects which fit the middle-ofthe-market price points and are located in areas where significant buyer demand is perceived. As our business is built on our clients’ trust and loyalty, we are committed to being clear right from the start about what deals we can and cannot do, and back that up with high-quality loan underwriting and relationship management when we proceed.

Loans from £30,000 to £1,000,000 1st & 2nd charge Bridging loans Up to 70% LTV Rates from as little as 1% pcm*

w: www.kuflink.co.uk | t: 01474 33 44 88

No non-utilisation fees

36 | NACFB Magazine

This advert is for intermediary use only and not intended for consumers.

Kuflink Bridging Ltd is fully authorised and regulated by the Financial Conduct Authority (723495).

Your property may be repossed if you do not keep up with repayments. *Rate subject to underwriting criteria.

Debate | the burning issues Two Patrons discuss the hot topics affecting the industry

Building SME SME talent vital for UK self-reliance Christoph Rieche CEO iwoca

Small business owners are used to dealing with uncertainty, but the impact of Britain leaving the EU has proven especially confounding.

Initially, the government released little definitive information on their negotiating strategy or vision for a post-Brexit Britain. “Brexit means Brexit” is hardly a strategy on which you can make substantial investment and hiring decisions.

So what has been the impact of June’s referendum so far? A survey conducted in August 2016 by CitySprint found that 47% of small business owners felt that Brexit would have no detrimental impact on their business. Nonetheless, overall business confidence did take a hit.

While 68% of business owners still report feeling either equally or more confident about their commercial prospects compared to the previous year, this was still a 16 percentage point drop from the 2015 survey.

A more concrete measure of current SME confidence can be seen in the demand for loans. The British Bankers’ Association recently found that “there is clearly lower demand for finance from businesses compared to the same quarter a year ago”. The “subdued demand” is likely to be due to “the sense of uncertainty” felt in particular among smaller firms. Business owners are opting to

38 | NACFB Magazine

postpone investment plans until the Brexit trajectory becomes more clear.

Quitting the single market Over recent months, the government’s strategy has become gradually clearer. Theresa May has indicated that the UK will be leaving the single market - ie it will be a hard Brexit.

This will cause real disruption for small businesses that rely on access to the single market, such as the 82% of UK SMEs that export to the EU, according to research by the Department for Business Innovation & Skills. In terms of demand for finance, we expect that many of these businesses will be less likely to look for long-term investment loans as confidence wanes. However, demand for short-term cash flow finance should remain strong and may even grow as companies have to deal with more delayed or missed payments.

On the other hand, there are already signs of some companies taking advantage of the post-Brexit environment to further their growth.

Developments such as the weaker pound have helped export-driven companies to boost sales in the short term. Retailers have benefited from an influx of Brexit tourists whose spending in the Christmas period, according to the Guardian, was 22% higher than in 2015.

In the longer term, it’s possible that leaving the single market will give British SMEs better support for reaching new markets. Theresa May’s push to create a “truly global Britain” has also led to more government support for new market development by SMEs. For example, numerous smaller firms were included in the government’s trade delegation to India in October.

Access to talent While most discussion about the impact of Brexit on small businesses focuses on challenges such as tariffs, inflation and rising costs for manufacturing inputs, one of the biggest concerns we hear from our customers is access to talent. While business leaders know that the new economic realities require foresight and flexibility, a new commercial strategy is only as valuable as the people who can execute it. SMEs are waiting to see whether it will become more difficult to make good hires once article 50 is triggered and Britain formally begins the process to leave the EU. This affects all industries – it’s as much about restaurants finding motivated waiters and builders finding skilled bricklayers as it is about tech companies hiring software engineers.

In fact, the businesses that will suffer most are the ones that rely on hiring foreign labour with harder to define skills or on a temporary basis, since visas will be much harder to sponsor.

As the UK pushes forward with its plan of self-reliance, the government must recognise it will be more reliant on the entrepreneurial talents of SMEs than ever before. Providing clear, timely and wide-ranging guidance on Brexit policies will help SME business leaders craft strategies for the new economic environment, and perhaps decide that it is once again time to seek financing for their next big move.

[Hard Brexit] will cause real disruption for small businesses that rely on access to the single market, such as the 82% of UK SMEs that export to the EU

confidence after Article 50 Resilient businesses will find a way Anil Stocker Co-founder and CEO MarketInvoice

Much water has passed under the bridge since the Brexit vote in 2016. With the announcement of Theresa May’s 12-point Brexit plan, the Supreme Court ruling and publication of the Brexit Bill, there is now greater certainty and clarity on process and expectations for all.

Our view immediately after the vote, despite the short-term macroeconomic volatility, was that SMEs would adopt a ‘keep calm and carry on’ attitude. This has been reinforced by several major trend surveys since confirming that business confidence among SMEs has not been dented. This is also our view from focus groups and conversations with businesses.

Looking forward, our view now is that Brexit presents a positive development for small business.

We’ve seen an overwhelming boom for businesses trading with countries outside of the UK thanks to, in no small part, the devaluation of the pound. Three months after the result was announced, we’ve seen an 18% increase in the number of EU invoices being processed through the MarketInvoice platform, and interviews with customers show exporters are benefiting as they’re paid in international currencies – both USD and euro.

It’s not all rosy, however. Life after Article 50 will bring rumours of

recession and could spell a time of some uncertainty. There could be tricky times ahead for retailers, wholesalers and construction industries – any business that relies on imports. If the pound devalues, the costs of their imports will be higher and profit margins will be squeezed. Anyone who imports from China and India and sells on the high street will need to investigate other avenues of revenue generation.

Likewise, construction is geared around demand. If companies aren’t sure about moving to bigger office space, this industry could be very severely impacted. We’re watching these sectors very carefully to see how we can support our customers in a positive way.

Carrying on Even if growth slows in the short term, businesses will still be coming to work, running operations, paying suppliers and covering overheads.

Many of the businesses using MarketInvoice are resilient and ambitious; they’ll figure out a way of navigating this latest challenge, and we’ll be there to help them.

MarketInvoice’s model of providing cash flow solutions to businesses is relevant throughout the economic cycle. Over the past 50 years, the market for working capital finance (think overdrafts, invoice finance) has remained strong even in economic recessions. So, while there might be market volatility in the short run, we’re confident that overall it’s business as usual.

committed to saving businesses £10bn by cutting red tape and improving payment times for small businesses. We anticipate demand for alternative finance to grow.

We’re pleased to see Brexit secretary David Davis calling out the need to protect the rights of EU citizens in the UK – SMEs thrive on the breadth of skills brought by its international workforce. It’s essential for the future success of UK business that we continue to get unhampered access to international talent, so it’s good news that this is already something the government has earmarked as a priority.

Ready for what’s ahead We created our platform to help UK companies access funding through good times and bad. The majority of our funding comes from UK investors who take a long-term view of the asset class and its potential to perform through the cycle. Furthermore, we are expanding our services to allow businesses to fund one invoice or their whole ledger, testament to demand from both businesses and investors. Our team remains excited about building a hugely meaningful European business from London.

Although it’s clear the economy faces a period of short-term uncertainty, we’re even more focused on our mission in supporting our customers in the days, weeks and years ahead.

Moreover, the UK government has announced several measures to support small businesses, including an additional £400m of venture capital funding through the British Business Bank, and are

NACFB Magazine | 39

Debate | the burning issues Two Patrons discuss the hot topics affecting the industry

Building SME SME talent vital for UK self-reliance Christoph Rieche CEO iwoca

Small business owners are used to dealing with uncertainty, but the impact of Britain leaving the EU has proven especially confounding.

Initially, the government released little definitive information on their negotiating strategy or vision for a post-Brexit Britain. “Brexit means Brexit” is hardly a strategy on which you can make substantial investment and hiring decisions.

So what has been the impact of June’s referendum so far? A survey conducted in August 2016 by CitySprint found that 47% of small business owners felt that Brexit would have no detrimental impact on their business. Nonetheless, overall business confidence did take a hit.

While 68% of business owners still report feeling either equally or more confident about their commercial prospects compared to the previous year, this was still a 16 percentage point drop from the 2015 survey.

A more concrete measure of current SME confidence can be seen in the demand for loans. The British Bankers’ Association recently found that “there is clearly lower demand for finance from businesses compared to the same quarter a year ago”. The “subdued demand” is likely to be due to “the sense of uncertainty” felt in particular among smaller firms. Business owners are opting to

38 | NACFB Magazine

postpone investment plans until the Brexit trajectory becomes more clear.

Quitting the single market Over recent months, the government’s strategy has become gradually clearer. Theresa May has indicated that the UK will be leaving the single market - ie it will be a hard Brexit.

This will cause real disruption for small businesses that rely on access to the single market, such as the 82% of UK SMEs that export to the EU, according to research by the Department for Business Innovation & Skills. In terms of demand for finance, we expect that many of these businesses will be less likely to look for long-term investment loans as confidence wanes. However, demand for short-term cash flow finance should remain strong and may even grow as companies have to deal with more delayed or missed payments.

On the other hand, there are already signs of some companies taking advantage of the post-Brexit environment to further their growth.

Developments such as the weaker pound have helped export-driven companies to boost sales in the short term. Retailers have benefited from an influx of Brexit tourists whose spending in the Christmas period, according to the Guardian, was 22% higher than in 2015.

In the longer term, it’s possible that leaving the single market will give British SMEs better support for reaching new markets. Theresa May’s push to create a “truly global Britain” has also led to more government support for new market development by SMEs. For example, numerous smaller firms were included in the government’s trade delegation to India in October.

Access to talent While most discussion about the impact of Brexit on small businesses focuses on challenges such as tariffs, inflation and rising costs for manufacturing inputs, one of the biggest concerns we hear from our customers is access to talent. While business leaders know that the new economic realities require foresight and flexibility, a new commercial strategy is only as valuable as the people who can execute it. SMEs are waiting to see whether it will become more difficult to make good hires once article 50 is triggered and Britain formally begins the process to leave the EU. This affects all industries – it’s as much about restaurants finding motivated waiters and builders finding skilled bricklayers as it is about tech companies hiring software engineers.

In fact, the businesses that will suffer most are the ones that rely on hiring foreign labour with harder to define skills or on a temporary basis, since visas will be much harder to sponsor.

As the UK pushes forward with its plan of self-reliance, the government must recognise it will be more reliant on the entrepreneurial talents of SMEs than ever before. Providing clear, timely and wide-ranging guidance on Brexit policies will help SME business leaders craft strategies for the new economic environment, and perhaps decide that it is once again time to seek financing for their next big move.

[Hard Brexit] will cause real disruption for small businesses that rely on access to the single market, such as the 82% of UK SMEs that export to the EU

confidence after Article 50 Resilient businesses will find a way Anil Stocker Co-founder and CEO MarketInvoice

Much water has passed under the bridge since the Brexit vote in 2016. With the announcement of Theresa May’s 12-point Brexit plan, the Supreme Court ruling and publication of the Brexit Bill, there is now greater certainty and clarity on process and expectations for all.

Our view immediately after the vote, despite the short-term macroeconomic volatility, was that SMEs would adopt a ‘keep calm and carry on’ attitude. This has been reinforced by several major trend surveys since confirming that business confidence among SMEs has not been dented. This is also our view from focus groups and conversations with businesses.

Looking forward, our view now is that Brexit presents a positive development for small business.

We’ve seen an overwhelming boom for businesses trading with countries outside of the UK thanks to, in no small part, the devaluation of the pound. Three months after the result was announced, we’ve seen an 18% increase in the number of EU invoices being processed through the MarketInvoice platform, and interviews with customers show exporters are benefiting as they’re paid in international currencies – both USD and euro.

It’s not all rosy, however. Life after Article 50 will bring rumours of

recession and could spell a time of some uncertainty. There could be tricky times ahead for retailers, wholesalers and construction industries – any business that relies on imports. If the pound devalues, the costs of their imports will be higher and profit margins will be squeezed. Anyone who imports from China and India and sells on the high street will need to investigate other avenues of revenue generation.

Likewise, construction is geared around demand. If companies aren’t sure about moving to bigger office space, this industry could be very severely impacted. We’re watching these sectors very carefully to see how we can support our customers in a positive way.

Carrying on Even if growth slows in the short term, businesses will still be coming to work, running operations, paying suppliers and covering overheads.

Many of the businesses using MarketInvoice are resilient and ambitious; they’ll figure out a way of navigating this latest challenge, and we’ll be there to help them.

MarketInvoice’s model of providing cash flow solutions to businesses is relevant throughout the economic cycle. Over the past 50 years, the market for working capital finance (think overdrafts, invoice finance) has remained strong even in economic recessions. So, while there might be market volatility in the short run, we’re confident that overall it’s business as usual.

committed to saving businesses £10bn by cutting red tape and improving payment times for small businesses. We anticipate demand for alternative finance to grow.

We’re pleased to see Brexit secretary David Davis calling out the need to protect the rights of EU citizens in the UK – SMEs thrive on the breadth of skills brought by its international workforce. It’s essential for the future success of UK business that we continue to get unhampered access to international talent, so it’s good news that this is already something the government has earmarked as a priority.

Ready for what’s ahead We created our platform to help UK companies access funding through good times and bad. The majority of our funding comes from UK investors who take a long-term view of the asset class and its potential to perform through the cycle. Furthermore, we are expanding our services to allow businesses to fund one invoice or their whole ledger, testament to demand from both businesses and investors. Our team remains excited about building a hugely meaningful European business from London.

Although it’s clear the economy faces a period of short-term uncertainty, we’re even more focused on our mission in supporting our customers in the days, weeks and years ahead.

Moreover, the UK government has announced several measures to support small businesses, including an additional £400m of venture capital funding through the British Business Bank, and are

NACFB Magazine | 39

Opinion | & commentary Thought leadership from our Patrons and Members

Is P2P funding and borrowing imbalanced?

So what should you be asking any Principal firm that you are currently with or are considering joining?

On-boarding A Principal firm should undertake a comprehensive pre-vetting and on-boarding process. This not only protects the Principal, but also all the Appointed Representatives that work with it.

But it’s a fair question and one that sheds some light on the model, and I think it merits a proper answer. So here’s why I think concerns are misplaced.

P2P lending is a simple concept. Platforms match investors, with money to lend, with people who want to borrow. Platforms such as RateSetter act as a hub for thousands of these transactions to take place between lender and borrower.

A question of risk First, it’s worth considering whether such a situation exists. The sector has flourished, and from the point of view of investors, it’s not hard to see why. Currently, the average instant access bank account pays 0.15%. A bank promises safety for your money, so you may be happy to settle for a low interest rate in exchange for that. But if you want to grow your money and are prepared to take on some risk, then P2P lending can offer you higher returns which are more predictable

40 | NACFB Magazine

AFS GROUP

The FCA has concluded that many Principal firms that engage the services of appointed representatives (ARs) do not understand their supervisory requirements and are exposing themselves to future repercussions and penalties.

I’m regularly asked questions about the peer-to-peer (P2P) lending industry. An interesting one that was put to me recently is whether P2P lending attracts more investors – ie people with capital to lend – than borrowers. The short answer is no; I don’t think that there’s a fundamental problem with balancing supply and demand.

And, indeed, these platforms need to balance supply and demand. If you have £100m that people are willing to lend out and £50m of loan requests, how do you reconcile those two?

There are two avenues to authorisation by the FCA, applying for direct authorisation or working under an approved Principal firm as an Appointed Representative.

You may remember Joanne Davis stated last year that:

Paul Marston Managing director commercial finance RateSetter

In practice, there are, of course, complexities and platforms add value by addressing them.

For example, P2P platforms generally do the credit checking and process the repayments.

THE PRINCIPAL QUESTION?

?

Systems A Principal firm should have adequate oversight to ensure the firms working under it are acting in a compliant manner, again failure to do this could jeopardise all network members.

JOANNE DAVIS Partner and Head of Asset & Consumer Finance, Locke Lord (UK) LLP

Resource A Principal firm should have a full time compliance department with enough trained staff to oversee the activities of the network members. If they don’t you have to question how they can undertake their supervisory responsibilities.

Training and Competency Anyone working within the regulated market is required to undertake ongoing training to ensure they are up to date and competent to carry out the duties of an authorised party.

A Principal firm is required to have a formal training and competency plan in place.

than stocks and shares. You’re unlikely to shoot the lights out, but RateSetter investors have earned an average of 4.7% per annum since we launched in 2010.

A self-righting mechanism The attraction for businesses is a little more nuanced. Although we may often be cheaper than a bank, we’re not setting out to simply undercut the market. We’re competing on two other important aspects: speed and service. Naturally, it takes time to earn a positive reputation, and based on that, I think it’s fair to say that currently there’s more awareness of our proposition among investors than among business borrowers.

In practice, though, we have an edge here: our rates are set by our investors and borrowers, based on supply and demand in the market. So, if we have an increase in investors, we would expect the increased

supply of money to push rates down, making it cheaper to borrow and less attractive to invest. In a perfect market, this triggers a sort of self-righting mechanism, which is why we’re broadly comfortable with shifting levels of supply and demand.

Of course, no market is perfect and we occasionally have days or weeks where we have more borrowers than investors, for example, and the reverse is also true. But the general trend is that the market will find its own clearing rate, and the deeper and wider it becomes, the more responsive and balanced it will be.

On top of everything above you should also consider whether the Principal firm you are considering helps you with data security; encrypting data you hold, provides you with Professional Indemnity Insurance and membership of trade bodies?

Can your Principal firm answer YES to all the above questions? If not, then you have to consider whether they are the right long term partner for your business, as by not complying with their regulatory responsibilities they are potentially open to sanction by the FCA.

assetfinancesolutions.com

WE’VE GOT YOU COVERED

STRONGER TOGETHER

afscompliance.co.uk

synergy.finance

AFS COMPLIANCE HEAD OFFICE: Suite 4, First Floor, Challenge House, Challenge Way, Greenbank Business Park, Blackburn BB1 5QB tel: 0844 555 5116 I email: enquiries@afsuk.com I afscompliance.co.uk AFS Compliance Ltd is Authorised and Regulated by the Financial Conduct Authority. Company Number 05365369.

Opinion | & commentary Thought leadership from our Patrons and Members

Is P2P funding and borrowing imbalanced?

So what should you be asking any Principal firm that you are currently with or are considering joining?

On-boarding A Principal firm should undertake a comprehensive pre-vetting and on-boarding process. This not only protects the Principal, but also all the Appointed Representatives that work with it.

But it’s a fair question and one that sheds some light on the model, and I think it merits a proper answer. So here’s why I think concerns are misplaced.

P2P lending is a simple concept. Platforms match investors, with money to lend, with people who want to borrow. Platforms such as RateSetter act as a hub for thousands of these transactions to take place between lender and borrower.

A question of risk First, it’s worth considering whether such a situation exists. The sector has flourished, and from the point of view of investors, it’s not hard to see why. Currently, the average instant access bank account pays 0.15%. A bank promises safety for your money, so you may be happy to settle for a low interest rate in exchange for that. But if you want to grow your money and are prepared to take on some risk, then P2P lending can offer you higher returns which are more predictable

40 | NACFB Magazine

AFS GROUP

The FCA has concluded that many Principal firms that engage the services of appointed representatives (ARs) do not understand their supervisory requirements and are exposing themselves to future repercussions and penalties.

I’m regularly asked questions about the peer-to-peer (P2P) lending industry. An interesting one that was put to me recently is whether P2P lending attracts more investors – ie people with capital to lend – than borrowers. The short answer is no; I don’t think that there’s a fundamental problem with balancing supply and demand.

And, indeed, these platforms need to balance supply and demand. If you have £100m that people are willing to lend out and £50m of loan requests, how do you reconcile those two?

There are two avenues to authorisation by the FCA, applying for direct authorisation or working under an approved Principal firm as an Appointed Representative.

You may remember Joanne Davis stated last year that:

Paul Marston Managing director commercial finance RateSetter

In practice, there are, of course, complexities and platforms add value by addressing them.

For example, P2P platforms generally do the credit checking and process the repayments.

THE PRINCIPAL QUESTION?

?

Systems A Principal firm should have adequate oversight to ensure the firms working under it are acting in a compliant manner, again failure to do this could jeopardise all network members.

JOANNE DAVIS Partner and Head of Asset & Consumer Finance, Locke Lord (UK) LLP

Resource A Principal firm should have a full time compliance department with enough trained staff to oversee the activities of the network members. If they don’t you have to question how they can undertake their supervisory responsibilities.

Training and Competency Anyone working within the regulated market is required to undertake ongoing training to ensure they are up to date and competent to carry out the duties of an authorised party.

A Principal firm is required to have a formal training and competency plan in place.

than stocks and shares. You’re unlikely to shoot the lights out, but RateSetter investors have earned an average of 4.7% per annum since we launched in 2010.

A self-righting mechanism The attraction for businesses is a little more nuanced. Although we may often be cheaper than a bank, we’re not setting out to simply undercut the market. We’re competing on two other important aspects: speed and service. Naturally, it takes time to earn a positive reputation, and based on that, I think it’s fair to say that currently there’s more awareness of our proposition among investors than among business borrowers.

In practice, though, we have an edge here: our rates are set by our investors and borrowers, based on supply and demand in the market. So, if we have an increase in investors, we would expect the increased

supply of money to push rates down, making it cheaper to borrow and less attractive to invest. In a perfect market, this triggers a sort of self-righting mechanism, which is why we’re broadly comfortable with shifting levels of supply and demand.

Of course, no market is perfect and we occasionally have days or weeks where we have more borrowers than investors, for example, and the reverse is also true. But the general trend is that the market will find its own clearing rate, and the deeper and wider it becomes, the more responsive and balanced it will be.

On top of everything above you should also consider whether the Principal firm you are considering helps you with data security; encrypting data you hold, provides you with Professional Indemnity Insurance and membership of trade bodies?

Can your Principal firm answer YES to all the above questions? If not, then you have to consider whether they are the right long term partner for your business, as by not complying with their regulatory responsibilities they are potentially open to sanction by the FCA.

assetfinancesolutions.com

WE’VE GOT YOU COVERED

STRONGER TOGETHER

afscompliance.co.uk

synergy.finance

AFS COMPLIANCE HEAD OFFICE: Suite 4, First Floor, Challenge House, Challenge Way, Greenbank Business Park, Blackburn BB1 5QB tel: 0844 555 5116 I email: enquiries@afsuk.com I afscompliance.co.uk AFS Compliance Ltd is Authorised and Regulated by the Financial Conduct Authority. Company Number 05365369.

OPINION & COMMENTARY

Refocusing the buy-to-let model Scott Marshall Managing director Roma Finance 2016 was an annus horribilis for property landlords. However, many have been working on, and implementing, strategies for minimising their outgoings, including tax, but also maximising the income and yields on existing properties they own. Some have also started to diversify from purely residential portfolios to include commercial property too.

Recent government policy has put the spotlight on the buy-to-let (BTL) market and landlords have acted quickly to mitigate any negative effects on their income. Many want to retain their properties, but maximise income and profitability.

cities and towns with high populations of young professionals and students.

Despite the need for bridging finance to carry out the conversion and the cost of licencing, landlords are looking to the long term by retaining property, while at the same time increasing the income from it.

This has several benefits, including providing a situation in the future where they need to raise further capital based on rental incomes.

HMOs are known to offer the potential of higher rental yields and landlords have clearly been doing their sums to make sure they are operating a profitable portfolio capable of securing future growth too. But tenant turnover can be higher and more labour-intensive than single BTLs.

HMOs on the rise One significant trend we are seeing is BTL landlords converting their single occupancy BTL residential properties into houses in multiple occupation (HMO) in order to increase rental income. We believe that this trend will continue apace after the tax increases are implemented.

Extending reach Another well-documented strategy is for residential investment landlords to put their portfolio into a limited company, with over 100,000 buying properties in this company structure last year. However, many are now concerned that the government will move to make these subject to tougher taxes too in the future and so many are looking for even more ways to safeguard their property investments.

Indeed, we’ve funded more conversion cases of this type in 2016 than any previous year. The main reasons for the demand for bridging finance to convert BTLs to HMOs are the potential increase in yield and the greater opportunity to rent more rooms in

Some of our regular customers are now considering buying and renting commercial units, which fall outside the tax changes.

We’re seeing them acquire retail units and small offices as they dip their toes in the commercial sector. But some of the slightly

more adventurous investors have dived in to buy garages, commercial buildings and industrial estates as well.

There are some positive benefits of commercial property, including longer tenancies and more reliable income, with fewer void periods.

The positives of refocusing The BTL landlords we’re talking to are looking at all of these strategies, but the overriding impression they give is that there are alternatives out there to continue investing in property, whether it’s residential or commercial.

WORKING TOGETHER TO BUILD YOUR BUSINESS

We’ll also see bridging lenders adapt their product criteria to cater for this changing market. It will still be vital to work closely with introducers and their customers to fully understand the transaction and make sure they have a viable project to lend on. However, pragmatic underwriting and efficient service will help deliver the solutions needed as the market in 2017 refocuses.

Asset Advantage is an award winning, privately owned, finance business specialising in providing asset finance and loans to SME businesses throughout the UK via a premium panel of introducers.

For bridging lenders and landlords, the market opportunities will widen as new investment opportunities open up.

Our finance products utilise a combination of experience, expertise and uncompromising business processes to deliver the perfect solution to our clients.

To find out more about joining our select panel of introducers and our award winning SME finance solutions please call Tracy Millsom on:

01256 316 200 or visit our website on:

www.assetadvantage.co.uk Efficient Finance is our Advantage Third Floor, Matrix House, Basing View, Basingstoke, Hampshire, RG21 4DZ

42 | NACFB Magazine

OPINION & COMMENTARY

Refocusing the buy-to-let model Scott Marshall Managing director Roma Finance 2016 was an annus horribilis for property landlords. However, many have been working on, and implementing, strategies for minimising their outgoings, including tax, but also maximising the income and yields on existing properties they own. Some have also started to diversify from purely residential portfolios to include commercial property too.

Recent government policy has put the spotlight on the buy-to-let (BTL) market and landlords have acted quickly to mitigate any negative effects on their income. Many want to retain their properties, but maximise income and profitability.

cities and towns with high populations of young professionals and students.

Despite the need for bridging finance to carry out the conversion and the cost of licencing, landlords are looking to the long term by retaining property, while at the same time increasing the income from it.

This has several benefits, including providing a situation in the future where they need to raise further capital based on rental incomes.

HMOs are known to offer the potential of higher rental yields and landlords have clearly been doing their sums to make sure they are operating a profitable portfolio capable of securing future growth too. But tenant turnover can be higher and more labour-intensive than single BTLs.

HMOs on the rise One significant trend we are seeing is BTL landlords converting their single occupancy BTL residential properties into houses in multiple occupation (HMO) in order to increase rental income. We believe that this trend will continue apace after the tax increases are implemented.

Extending reach Another well-documented strategy is for residential investment landlords to put their portfolio into a limited company, with over 100,000 buying properties in this company structure last year. However, many are now concerned that the government will move to make these subject to tougher taxes too in the future and so many are looking for even more ways to safeguard their property investments.

Indeed, we’ve funded more conversion cases of this type in 2016 than any previous year. The main reasons for the demand for bridging finance to convert BTLs to HMOs are the potential increase in yield and the greater opportunity to rent more rooms in

Some of our regular customers are now considering buying and renting commercial units, which fall outside the tax changes.

We’re seeing them acquire retail units and small offices as they dip their toes in the commercial sector. But some of the slightly

more adventurous investors have dived in to buy garages, commercial buildings and industrial estates as well.

There are some positive benefits of commercial property, including longer tenancies and more reliable income, with fewer void periods.

The positives of refocusing The BTL landlords we’re talking to are looking at all of these strategies, but the overriding impression they give is that there are alternatives out there to continue investing in property, whether it’s residential or commercial.

WORKING TOGETHER TO BUILD YOUR BUSINESS

We’ll also see bridging lenders adapt their product criteria to cater for this changing market. It will still be vital to work closely with introducers and their customers to fully understand the transaction and make sure they have a viable project to lend on. However, pragmatic underwriting and efficient service will help deliver the solutions needed as the market in 2017 refocuses.

Asset Advantage is an award winning, privately owned, finance business specialising in providing asset finance and loans to SME businesses throughout the UK via a premium panel of introducers.

For bridging lenders and landlords, the market opportunities will widen as new investment opportunities open up.

Our finance products utilise a combination of experience, expertise and uncompromising business processes to deliver the perfect solution to our clients.

To find out more about joining our select panel of introducers and our award winning SME finance solutions please call Tracy Millsom on:

01256 316 200 or visit our website on:

www.assetadvantage.co.uk Efficient Finance is our Advantage Third Floor, Matrix House, Basing View, Basingstoke, Hampshire, RG21 4DZ

42 | NACFB Magazine

OPINION & COMMENTARY

Providing the right advice in 2017 innovative solutions are required as there are not, and indeed should not be, one-size-fitsall products that suit all circumstances.

Darrell Walker Head of sales InterBay Commercial

Choosing the right providers Brokers, on the other hand, need to ensure that they partner with providers with whom they can build strong working relationships founded on clear communication. Having access to providers is essential. To that end, we have deliberately grown our distribution model over the past year in order to engage and support our brokers by placing faceto-face relationships at the heart of our business model.

Last year we witnessed great changes in the market with new stamp duty rules for buy-to-let (BTL), and there is more to come in April with a new framework for landlord mortgage interest tax relief.

Your BTL clients may or may not be informed about the implications of these changes – recent Council of Mortgage Lenders (CML) research suggested that nearly a quarter of landlords were aware of, but did not understand, the details – so providing the right advice has more value than ever in these uncertain times.

In 2016, landlords looking to mitigate the effect of new tax rules turned to incorporation in their droves, with an estimate of over 100,000 limited company loans issued in the first nine months of 2016. It was certainly a big shift and, based on CML statistics, there is more growth to come in this market, with an implication that what was historically labelled as specialist lending might be on its way to becoming mainstream.

Moving towards commercial It has been speculated that the tax changes are likely to herald the demise of the ‘dinner party landlord’. While such speculation has been circulating the market for some time, and we have seen a drive toward incorporation, we could also see landlords moving from residential to commercial or semi-commercial properties for the first time. The yields are usually higher with commercial property where tenants take on many of the costs that a residential landlord would expect to pay. However, brokers advising on commercial property need to be aware, and ensure their clients are aware, of the different risks associated with commercial investment.

At InterBay, we lend across both residential and commercial investment property. Where a property includes both, for example where a house in multiple occupation (HMO) or BTL is above a retail premises, we believe it’s important that a broker can provide products that can address the myriad of challenges of doing so.

A complete proposition OneSavings Bank plc, which trades as Kent Reliance, together with InterBay, utilises its specialist lending expertise to provide a complete proposition for HMOs, with Kent Reliance providing lending for HMOs with up to eight bedrooms. InterBay then provides finance for borrowers into the next level of HMO specialism, dealing with larger and more specialist securities. For example, we recently completed a loan on a freehold block of flats that consisted of 34 units, and on a large student-let security that had in excess of 28 rooms.

For portfolio-based loans, we can offer a cross-charged facility, allowing flexibility within a client’s portfolio when certain securities wouldn’t fit debt service rules on an individual basis.

As ever, providers need to support brokers to in turn help their clients thrive in a changing marketplace, whether they are well-seasoned landlords or new entrants.

The commercial lending space can present some extremely complex demands and

In 2016, landlords looking to mitigate the effect of new tax rules turned to incorporation in their droves

Our relationships with brokers are crucial to our success, which is why we use our conversations with them to build our specialist commercial propositions. By finding out what the market needs, and what their clients want, we can develop offerings that provide a genuine solution.

For us, that means offering direct access to underwriters, and a transactional credit committee that gives our business development managers the chance to present the most challenging cases to our executive committee twice a week.

Meeting broker demand In January, we took a fresh approach to the pricing of commercial and semi-commercial loans by rewarding a quality asset with pricing based on yield, even if the property is vacant. The adoption of this new pricing model, and its simplicity, reflects broker demand for more appropriate finance for better quality commercial and semicommercial properties.

Whatever happens during the rest of the year, I think we can expect to see further change in the market with brokers under pressure to find bespoke solutions to increasingly complex cases. In such an environment, it’s critical that we all work together to create the best outcomes for the borrower and our relationships, as ever, will be key.

Finance for the Future If you are active in the market, you’ll know that the financial needs of your clients has changed in line with market forces. Everything is much faster and decision making has become equally as fast to keep pace with the opportunities that ambitious businesses are faced with every day.

The legacy systems of the traditional banks often mean that they cannot be as responsive and deals are lost through inertia or red tape. That’s why clients turn to brokers to help them navigate the ever increasing array of alternative funding sources. Today we look at Just Cashflow as one of those.

Set up to provide growing UK businesses with fast flexible funding, Just Cashflow offers what they call a “Revolving Cash Fund” (RCF). Ranging from £10,000 up to £500,000, you only pay for your fund if you draw it down and only for as long as you need it. This means brokers can pre-arrange the level of funding required to complete a deal, without interest charges to the client until they actually need the funds.

This can make all the difference, if an unexpected cost comes in, say for example a property deal, where the valuation changes or there are surprise cost such as reparation fees, extra VAT, stamp duties or legal and agency fees. Rather than lose the deal, brokers can now arrange a top up fund through Just Cashflow.

There are a number of ways clients can access their funds, either by having it paid directly into their existing bank account or made available on a pre-paid Just Cashflow Business Plus Mastercard® Card for all those day to day expenses.

The speed and flexibility of the Just Cashflow Revolving Cash Fund really does set them apart and gives us all confidence about finance for the future.

Get your clients across the finishing line As a professional broker or intermediary you’ll be used to see ing ast and e i le nding or yo r clients. st as o no s t at e ery siness is di erent and e are a le to o er yo tailored financial sol tions to meet t e re irements o yo r clients.

Our Revolving Cash Fund gi es yo access to nds rom 1 , to 5 , , or am itio s sinesses, to s pport t eir contin ed gro t . o ill find t e application process really simple and straig t or ard and o r nder riting team ill s pport yo , to elp ens re yo get e en more clients across t e finis ing line.

Just call us now

0121 418 5037 Alternatively, find out more

www.just-cashflow.com/partner-relations 44 | NACFB Magazine

John Davies, Director at Just Cashflow says “Our approach means that on average funds can be released to a client in around 3 days and this can make all the difference when closing a deal, especially when an unaccounted cost suddenly appears at the close. With our personalised support we can help brokers get more business, which in turn can only help their clients do the same.”

Trade Finance Excellence Awards

2017

TradeFinance.Global

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

OPINION & COMMENTARY

Providing the right advice in 2017 innovative solutions are required as there are not, and indeed should not be, one-size-fitsall products that suit all circumstances.

Darrell Walker Head of sales InterBay Commercial

Choosing the right providers Brokers, on the other hand, need to ensure that they partner with providers with whom they can build strong working relationships founded on clear communication. Having access to providers is essential. To that end, we have deliberately grown our distribution model over the past year in order to engage and support our brokers by placing faceto-face relationships at the heart of our business model.

Last year we witnessed great changes in the market with new stamp duty rules for buy-to-let (BTL), and there is more to come in April with a new framework for landlord mortgage interest tax relief.

Your BTL clients may or may not be informed about the implications of these changes – recent Council of Mortgage Lenders (CML) research suggested that nearly a quarter of landlords were aware of, but did not understand, the details – so providing the right advice has more value than ever in these uncertain times.

In 2016, landlords looking to mitigate the effect of new tax rules turned to incorporation in their droves, with an estimate of over 100,000 limited company loans issued in the first nine months of 2016. It was certainly a big shift and, based on CML statistics, there is more growth to come in this market, with an implication that what was historically labelled as specialist lending might be on its way to becoming mainstream.

Moving towards commercial It has been speculated that the tax changes are likely to herald the demise of the ‘dinner party landlord’. While such speculation has been circulating the market for some time, and we have seen a drive toward incorporation, we could also see landlords moving from residential to commercial or semi-commercial properties for the first time. The yields are usually higher with commercial property where tenants take on many of the costs that a residential landlord would expect to pay. However, brokers advising on commercial property need to be aware, and ensure their clients are aware, of the different risks associated with commercial investment.

At InterBay, we lend across both residential and commercial investment property. Where a property includes both, for example where a house in multiple occupation (HMO) or BTL is above a retail premises, we believe it’s important that a broker can provide products that can address the myriad of challenges of doing so.

A complete proposition OneSavings Bank plc, which trades as Kent Reliance, together with InterBay, utilises its specialist lending expertise to provide a complete proposition for HMOs, with Kent Reliance providing lending for HMOs with up to eight bedrooms. InterBay then provides finance for borrowers into the next level of HMO specialism, dealing with larger and more specialist securities. For example, we recently completed a loan on a freehold block of flats that consisted of 34 units, and on a large student-let security that had in excess of 28 rooms.

For portfolio-based loans, we can offer a cross-charged facility, allowing flexibility within a client’s portfolio when certain securities wouldn’t fit debt service rules on an individual basis.

As ever, providers need to support brokers to in turn help their clients thrive in a changing marketplace, whether they are well-seasoned landlords or new entrants.

The commercial lending space can present some extremely complex demands and

In 2016, landlords looking to mitigate the effect of new tax rules turned to incorporation in their droves

Our relationships with brokers are crucial to our success, which is why we use our conversations with them to build our specialist commercial propositions. By finding out what the market needs, and what their clients want, we can develop offerings that provide a genuine solution.

For us, that means offering direct access to underwriters, and a transactional credit committee that gives our business development managers the chance to present the most challenging cases to our executive committee twice a week.

Meeting broker demand In January, we took a fresh approach to the pricing of commercial and semi-commercial loans by rewarding a quality asset with pricing based on yield, even if the property is vacant. The adoption of this new pricing model, and its simplicity, reflects broker demand for more appropriate finance for better quality commercial and semicommercial properties.

Whatever happens during the rest of the year, I think we can expect to see further change in the market with brokers under pressure to find bespoke solutions to increasingly complex cases. In such an environment, it’s critical that we all work together to create the best outcomes for the borrower and our relationships, as ever, will be key.

Finance for the Future If you are active in the market, you’ll know that the financial needs of your clients has changed in line with market forces. Everything is much faster and decision making has become equally as fast to keep pace with the opportunities that ambitious businesses are faced with every day.

The legacy systems of the traditional banks often mean that they cannot be as responsive and deals are lost through inertia or red tape. That’s why clients turn to brokers to help them navigate the ever increasing array of alternative funding sources. Today we look at Just Cashflow as one of those.

Set up to provide growing UK businesses with fast flexible funding, Just Cashflow offers what they call a “Revolving Cash Fund” (RCF). Ranging from £10,000 up to £500,000, you only pay for your fund if you draw it down and only for as long as you need it. This means brokers can pre-arrange the level of funding required to complete a deal, without interest charges to the client until they actually need the funds.

This can make all the difference, if an unexpected cost comes in, say for example a property deal, where the valuation changes or there are surprise cost such as reparation fees, extra VAT, stamp duties or legal and agency fees. Rather than lose the deal, brokers can now arrange a top up fund through Just Cashflow.

There are a number of ways clients can access their funds, either by having it paid directly into their existing bank account or made available on a pre-paid Just Cashflow Business Plus Mastercard® Card for all those day to day expenses.

The speed and flexibility of the Just Cashflow Revolving Cash Fund really does set them apart and gives us all confidence about finance for the future.

Get your clients across the finishing line As a professional broker or intermediary you’ll be used to see ing ast and e i le nding or yo r clients. st as o no s t at e ery siness is di erent and e are a le to o er yo tailored financial sol tions to meet t e re irements o yo r clients.

Our Revolving Cash Fund gi es yo access to nds rom 1 , to 5 , , or am itio s sinesses, to s pport t eir contin ed gro t . o ill find t e application process really simple and straig t or ard and o r nder riting team ill s pport yo , to elp ens re yo get e en more clients across t e finis ing line.

Just call us now

0121 418 5037 Alternatively, find out more

www.just-cashflow.com/partner-relations 44 | NACFB Magazine

John Davies, Director at Just Cashflow says “Our approach means that on average funds can be released to a client in around 3 days and this can make all the difference when closing a deal, especially when an unaccounted cost suddenly appears at the close. With our personalised support we can help brokers get more business, which in turn can only help their clients do the same.”

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BRIDGING FINANCE OPINION & COMMENTARY

Dealing with slow repayments for SMEs

Short term financing to bridge the gap

Paul Stokes Director Gener8 Finance

Research carried out in January showed that more than six out of 10 (61%) invoices issued by UK SMEs remain unpaid within the debtor day period.

We have a product for that

As an invoice finance lender, we see firsthand the stress caused to business owners by the late settlement of invoices through the inability to pay their own suppliers, which in turn impacts their ability to trade, HMRC arrears or increasing debt (sometimes supported by personal guarantees)… the list goes on.

Considering invoice finance Raising cash against unpaid receivables via an invoice finance facility is one solution.

However, slow payers mean that headroom in the facility can be rapidly eaten up, with the business finding itself back to square one. Once all finance sources are utilised, the impact of slow cash collection sometimes manifests itself in HMRC arrears, and the existential threat that this can pose to a business. How can a business owner truly focus on growing the company when he is worried about a knock on the door from the tax man?

Putting customers ‘on stop’ for late payment is sometimes seen as a last resort – on the basis that a business does not want to lose a customer – but the energy and resource spent in chasing poor payers, not to mention the cost of financing them, eats into margins.

46 | NACFB Magazine

Alternatively, offering a discount for prompt/ early settlement of invoices works for many business owners, assuming, of course, that there is sufficient margin in the underlying transaction to justify this.

When cash is tight, investment in a good credit controller can more than pay for itself The proactive approach In many cases, business owners can be more proactive when deciding whether to trade with new customers by checking them out with credit reference agencies such as Creditsafe or Experian. A low credit score, CCJs or other adverse information can indicate poor creditworthiness and can be a good guide as to what credit terms, if any, are given.

However, in my experience, business owners can sometimes cause problems for themselves – a laissez-faire attitude to credit control and poor internal admin processes can give their customers an excuse not to pay. When cash is tight, some businesses really will only pay those who shout the loudest, and investment in a good credit controller can more than pay for itself.

To cover the worst cases, bad debt protection is available when customers simply can’t pay. However, I firmly believe that prevention is better than cure.

So, in summary, of course I will fly the flag for invoice finance. An appropriate facility can allow a business to offer sensible commercial credit terms and retain the ability to grow. But business owners can help themselves by being more proactive in selecting who they trade with, and also by making sure that they have robust credit control processes in place.

Our bridging finance could help your customer get a quick solution to their short term borrowing needs.

Regulated and Property Investor bridging products available AVMs (Automated Valuation Model) save time and money 0% facility fee products Joint legal representation

Call us

0800 116 4385

Visit us

precisemortgages.co.uk

Follow us

FOR INTERMEDIARY USE ONLY.

Precise Mortgages is a trading name of Charter Court Financial Services Limited which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority (Financial Services Register Firm Reference Number 494549).

Registered in England and Wales (company number 06749498). Registered office: 2 Charter Court, Broadlands, Wolverhampton WV10 6TD.

01738 (2)

The only thing that surprises me about the figure stated in the research is that it’s only 61% of invoices that are paid late. Financing the working capital cycle is a fact of life for many businesses, but this can be made much more difficult by the protracted settlement of invoices by slow-paying customers.

BRIDGING FINANCE OPINION & COMMENTARY

Dealing with slow repayments for SMEs

Short term financing to bridge the gap

Paul Stokes Director Gener8 Finance

Research carried out in January showed that more than six out of 10 (61%) invoices issued by UK SMEs remain unpaid within the debtor day period.

We have a product for that

As an invoice finance lender, we see firsthand the stress caused to business owners by the late settlement of invoices through the inability to pay their own suppliers, which in turn impacts their ability to trade, HMRC arrears or increasing debt (sometimes supported by personal guarantees)… the list goes on.

Considering invoice finance Raising cash against unpaid receivables via an invoice finance facility is one solution.

However, slow payers mean that headroom in the facility can be rapidly eaten up, with the business finding itself back to square one. Once all finance sources are utilised, the impact of slow cash collection sometimes manifests itself in HMRC arrears, and the existential threat that this can pose to a business. How can a business owner truly focus on growing the company when he is worried about a knock on the door from the tax man?

Putting customers ‘on stop’ for late payment is sometimes seen as a last resort – on the basis that a business does not want to lose a customer – but the energy and resource spent in chasing poor payers, not to mention the cost of financing them, eats into margins.

46 | NACFB Magazine

Alternatively, offering a discount for prompt/ early settlement of invoices works for many business owners, assuming, of course, that there is sufficient margin in the underlying transaction to justify this.

When cash is tight, investment in a good credit controller can more than pay for itself The proactive approach In many cases, business owners can be more proactive when deciding whether to trade with new customers by checking them out with credit reference agencies such as Creditsafe or Experian. A low credit score, CCJs or other adverse information can indicate poor creditworthiness and can be a good guide as to what credit terms, if any, are given.

However, in my experience, business owners can sometimes cause problems for themselves – a laissez-faire attitude to credit control and poor internal admin processes can give their customers an excuse not to pay. When cash is tight, some businesses really will only pay those who shout the loudest, and investment in a good credit controller can more than pay for itself.

To cover the worst cases, bad debt protection is available when customers simply can’t pay. However, I firmly believe that prevention is better than cure.

So, in summary, of course I will fly the flag for invoice finance. An appropriate facility can allow a business to offer sensible commercial credit terms and retain the ability to grow. But business owners can help themselves by being more proactive in selecting who they trade with, and also by making sure that they have robust credit control processes in place.

Our bridging finance could help your customer get a quick solution to their short term borrowing needs.

Regulated and Property Investor bridging products available AVMs (Automated Valuation Model) save time and money 0% facility fee products Joint legal representation

Call us

0800 116 4385

Visit us

precisemortgages.co.uk

Follow us

FOR INTERMEDIARY USE ONLY.

Precise Mortgages is a trading name of Charter Court Financial Services Limited which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority (Financial Services Register Firm Reference Number 494549).

Registered in England and Wales (company number 06749498). Registered office: 2 Charter Court, Broadlands, Wolverhampton WV10 6TD.

01738 (2)

The only thing that surprises me about the figure stated in the research is that it’s only 61% of invoices that are paid late. Financing the working capital cycle is a fact of life for many businesses, but this can be made much more difficult by the protracted settlement of invoices by slow-paying customers.

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