As an ex-banker, my sympathy goes out to the high street banks who have spent the last year inundated with CBILS and BBL applications, as well as existing clients requiring payment holidays and much more support than normal.
Just as they have finished all the hard work of handling a huge influx of government-backed loan applications, they now have the even harder work of making sure repayments are made in line with the loan agreement. And more poignantly, what to do when the repayments aren’t made on time.
And all at a time when staff numbers have been cut to the bone.
I am not sure where that will leave SMEs needing finance from the banks, but I would forgive the banks for not treating them as a priority. It may even result in them being turned down, after all arranging a new funding line will probably not be at the top of the list for a stressed-out relationship manager or underwriter.
Banks largely work on historic performance when assessing serviceability so it will interesting to see the view taken on what has been a very challenging 12 months for many businesses. Will they see it as a blip that can be recovered, or an opportunity to decline or even refuse to renew existing lending? It may even lead to a full sector withdrawal.
If I have called it right, and it makes mainstream lenders even more reluctant to lend, can I request the banks do not make the SMEs fill in all the credit forms, jump through all the hoops and the lengthy processes, before reaching the inevitable conclusion.
If it is going to be a ‘no’ then I hope they will make the decision quickly rather than giving false hope. It will enable the company to explore other options, especially as funds are often needed quickly.
There are certainly plenty of funders available in the aptly named ‘alternative finance’ market, a sector which will continue to grow its influence in the business world.
One of the things that sets the ‘alt-fi’ market apart from the banks is a keenness to lend. If there is a stumbling block or there have been some historic issues, they will look for solutions by being more pragmatic. After all, there are countless businesses which have gone on to enjoy huge success, despite a shaky period at some time in their life.
Instead of basing the lending decisions purely on historical issues, Reward goes out and meets clients face to face to hear their story. We look at the operation, discuss their plans, and add some flexibility regarding the assets they may be able to offer as security.
Reward’s operational and business development directors have an average of 30 years lending experience each. When you have been around as long as we have, you immediately get a feel for the business and the people running it, allowing you to make a decision quickly so the business can grab an opportunity, grow the business, or get through a difficult patch.
The feedback we continue to receive from our introducers is that this is exactly the type of decisiveness and speed they want.