If an SME is turned away from a high street lender, other options are available.
A recent survey conducted by Bibby Financial Services found that 77% of British businesses that applied for funding in the past year were refused the amount they required. It’s no secret that traditional banks have cut back on lending as a result of the financial crisis. Yet despite the significant number of both government-issued warnings and incentives, the big high-street banks are still not getting the money to the small businesses which could, given the right credit-injection, continue to guide Britain out of the economic downturn. After all, SMEs employ 60% of the British workforce.
It hasn’t been smooth sailing for small businesses over the last few years. But those SMEs who have managed to weather the storm have proven their resilience and their competence, and as such they should not be arbitrarily discounted from receiving financial support. A ‘no’ from a high street bank really doesn’t have to signal the end of the road when seeking SME funding. Indeed from the perspective of lenders and intermediaries, these tried-and-tested small business owners represent a very good credit risk, as the reason for their survival is often demonstrated in a robust business model.
So how does Shawbrook’s commercial mortgages process help brokers with SME clients?
Thanks to working solely through our network of brokers rather than through branches, we have the agility and personal approach necessary to explore and understand each case presented to us on an individual basis. We manually underwrite every case, and our mandated lending managers can make a fast decision in house – normally within 72 hours. This means sound, experienced trading business clients won’t slip through the cracks and be unfairly refused their loan in the way that can occur when a computerised approach is employed. We have a genuine appetite to lend, and while that doesn’t mean every response to a loan request will be a ‘yes’, it does mean that with the help of our fantastic brokers we will be extremely thorough and speedy in our consideration of each case.
How important is the broker in this process then?
The brokers’ contribution cannot be overstated – they complete our picture. They carry out a really thorough initial assessment of an SME applying for funding, in order to fully understand the business and the likelihood of its achieving good returns. Brokers need to look at the applicant’s experience, their location, their marketing, and their business plan, as well as thoroughly assessing the commercial property in question. It is the brokers’ diligence and expertise in relation to these matters that differentiates specialist banks like Shawbrook from their high street counterparts.
This personal, thorough approach to SME lending is part of what gives us the flexibility to find a loan that works for your client. It is then the breadth of options available in trading business and commercial investment loans from Shawbrook that enables us to really work with each broker and business to provide the right loan and terms. We offer trading businesses up to 75% LTV with the options of three year, five year, or between 10 and 30 year terms. We also offer a number of part or full capital repayment options. This is also true of our commercial loans for small property investment firms.
Vince Cable has said that there is a ‘disconnect’ between banks and small companies. We believe that with the help of dedicated brokers, and through the provision of a breadth of options and a truly personal approach, specialist banks are proving that no longer has to be the case.
Karen Bennett is sales and marketing director, commercial mortgages, Shawbrook Bank.