There’s been much comment in the media over the past few years about bank lending and the rise of ‘alternative lenders’. But what exactly are these organisations and what can they offer businesses over and above conventional banks? Quite a lot, according to Marc Goldberg, board director at specialist lender Together.
Alternative lending is simply a term used to describe a broad range of loan options available to businesses and individuals beyond the traditional bank loan route.
Although it’s nothing new, its recent rise in popularity is a direct result of the economic crisis which saw high street banks tighten their belts, often resulting in restricted lending for customers that didn’t fit a rigid criteria.
This is still continuing, with some banks reducing overdraft facilities for small businesses, and many companies, and individuals, finding themselves unable to borrow.
It’s here that the alternative finance market has stepped into the breach. Established businesses like Together, which has been providing finance solutions to customers for more than 40 years, take a common sense approach to lending, rather than making assessments based on credit scores.
Our philososphy allows a level of flexibility that a mainstream lender may not be able to offer and we view each case on its own merits, underwriting cases individually when required.
We’re also fast. Often a bank may, in fact, refer a case to us where they’re unable to assist within the timeframe. The auction market is a great example of this, as buyers only have a 28-day completion period and mainstream lenders sometimes struggle to meet such tight deadlines.
We work closely with our surveyors and solicitors to ensure we can react very quickly. In one recent example, we assisted a property investor who needed £150K to complete an auction purchase, or face losing £22k. We were able to provide the funds within 48 hours.
As well as acting promptly, we excel when finance is needed for a non-typical reason. Perhaps a business needs capital to purchase a ‘too good to miss’ stock opportunity or address a short-term cash flow crisis; we are able to provide an efficient short-term solution that could yield real long-term gains. We often ride to the rescue of companies struggling with tax bills that need prompt payment, yet find they can’t increase their overdraft or get a typical loan to pay it.
Similarly, the self-employed often have difficulty obtaining finance and increasingly turn to specialists like us that will take the wider picture into account.
We don’t base our decisions on prescriptive formulas, but view each lending decision individually using our team of experts, which includes some 400 staff at our head office at Cheadle Royal Business Park.
As well as having a commercial appetite that doesn’t depend on a ‘computer says no’ approach, alternative lenders generally consider less conventional forms of security. When, for instance, did you hear of a traditional bank that was prepared to consider a piece of land as collateral? We would. In the past, we’ve accepted insurance policies, stocks, bonds and other assets as collateral, too. All of our loans are secured, whether it’s a residential mortgage or a major commercial development.
That’s why specialist lenders are becoming the first port of call for business owners looking for common sense, fast and flexible lending solutions.
Latest figures from one of our trade bodies, the Association of Short Term Lenders, showed that the value of loans written in the year ended June 2015 increased by 32 per cent compared to the previous year.
Our own experience supports these market trends and last year we saw new lending double to more than £724 million, as at 30 June 2015.
Providing common sense solutions and making finance available when traditional lenders may not be able to assist has been central in establishing confidence in the specialist finance market. The increased acceptance of alternative lending by the wider business community has manifested itself in unprecedented demand.
The sea change that has taken place in the traditional lenders’ approach over the last eight years means that alternative finance providers, like Together, are now often seen as the natural first step when a business owner or individual needs money.
We have a huge network of partners that work with us, including financial advisers, brokers, professional introducers and banks, and working together, we find solutions. Specialist lending might be the name it’s been given, but for us it’s simply common sense.
Find out more at www.togethermoney.com
Marc Goldberg has been with Together for 26 years. He was appointed to the Board in 2001 and is responsible for new business and commercial sales. His vast knowledge and his continued passion for both the company and the industry are a powerful asset and he is a driving force behind much of Together’s ongoing activity.