BestAdvice fires the questions at Conor McDermott, director of SME Lending at LHV Bank.
BestAdvice (BA): What does your role at LHV Bank entail?
Conor McDermott (CM): As the director of SME Lending at LHV Bank, my role encompasses overseeing the strategic direction and growth of our lending services, particularly focused on small and medium-sized enterprises (SMEs). I lead a team that is responsible for delivering tailored financial solutions for SMEs across England, Wales, and Scotland.
Our operations are based in two key locations: Manchester and London. The Manchester team, which I initially inherited, is composed of highly experienced professionals who have a deep understanding of the local market. In London, I have built up a team of lending professionals from the ground up. This expansion is vital as it allows us to cover a broader geographical area, ensuring that we can meet the needs of our clients efficiently and effectively.
Together, these teams are the driving force behind our ambitious growth targets, and they play a critical role in our ability to deliver bespoke financial solutions to SMEs.
BA: What’s your proposition for SMEs?
CM: Our proposition for SMEs is anchored in our ambition to become a leading provider of commercial real estate investment loans and trading loans within the UK. We understand that SMEs often face unique challenges that require tailored financial products, and that’s where we excel. LHV Bank offers two primary lending products for SMEs: commercial term loans and commercial investment loans.
The commercial term loan is designed to support businesses with their operational needs, providing the necessary capital for growth, expansion, or simply to ensure smooth day-to-day operations. On the other hand, our commercial investment loan caters to businesses looking to invest in property, whether for their use or as an investment. These loans are crucial for SMEs aiming to acquire commercial real estate, which is often a significant step towards long-term growth and stability.
We pride ourselves on our flexibility and understanding of the SME sector, which allows us to offer products that are not just financial solutions but also strategic tools that enable businesses to reach their full potential, bolstered by the many years of collective experience in our teams.
BA: What’s your distribution strategy? Is it solely through intermediaries or do you do direct business?
CM: Our distribution strategy is primarily intermediary-focused, reflecting our strong relationships with key industry bodies and brokers. Of course, if a great case comes to us directly, we’re not going to automatically reject it and let the applicant down, but we’re certainly not marketing to attract direct business. Instead, we believe that intermediaries play a critical role in the lending process, particularly when it comes to understanding the specific needs and challenges of SMEs.
Our primary aim is to be the preferred lender for brokers who are looking for reliable, flexible, and swift financial solutions for their SME clients. To that end, we work closely with the National Association of Commercial Finance Brokers (NACFB), the Financial Intermediary & Broker Association (FIBA), and Pro-Manchester. In fact, we recently became a Patron of the NACFB, further strengthening our relationship.
These partnerships enable us to maintain a selective distribution model, ensuring that we work with brokers who share our commitment to providing exceptional service.
BA: How is business? Do you have any targets you can share with us?
CM: Business at LHV Bank has been exceptionally strong. We’ve seen significant growth since we secured our banking licence from the PRA in May 2023. Just recently, in July 2024, we announced that our UK lending portfolio had doubled in size in just over six months, reaching a total of £140 million. At the end of 2023, our loan book stood at £69 million, so this rapid growth is a testament to the effectiveness of our strategy and the hard work of our teams.
Looking ahead, we have set an ambitious target of reaching £250 million in lending by the end of the year. Given our current run-rate and the strong demand we’re seeing from SMEs, we are confident that we will achieve, and indeed exceed this goal. This growth is not just about numbers; it reflects our commitment to supporting the SME sector with tailored lending solutions that address their specific needs. Our success so far underscores the excellence of our people, our cutting-edge lending platform, and our streamlined processes, all of which are designed to deliver swift and reliable financial services.
Despite this success, we’re certainly not standing still: we’ve been adding to our team over the summer and will announce some key new personnel shortly.
BA: You’ve worked for a series of challenger banks in the UK. What sets LHV apart from the others?
CM: While I really enjoyed my time at the other lenders and think they all have some really great people, LHV Bank is distinct in several key ways. First and foremost, our backing by a profitable international group provides us with consistent and reliable financial support. This robust backing ensures that we have the resources needed to make substantial and long-term commitments to the SME sector, which is crucial in a market where stability and reliability are often in short supply.
Another significant differentiator is our ability to make swift decisions and handle complex lending situations with ease, using an advanced lending platform, which isn’t hamstrung by any legacy technological issues. This, combined with the extensive experience of our teams, allows us to create bespoke lending solutions for clients who may have found other lenders lacking due to their complex needs. This level of customisation is rare in the industry and positions us uniquely as a lender that truly understands and adapts to the challenges faced by SMEs.
Furthermore, our platform and rigorous decision-making framework mean that we can evaluate and approve cases quickly, providing clients with the financial support they need without unnecessary delays. We find that this is music to brokers’ ears at a time when, across the sector, cases appear to be taking longer to get approval and be paid out.
