Despite the positive spin from some (chiefly political) quarters, there can be little doubt that the UK economy remains in a depressed state – the number of vacant shops and offices in the average high street tells its own story, as do the pubs and restaurants offering endless promotions just to attract survival-level custom.
Whilst there has been some easing of credit conditions in the residential mortgage market, commercial finance availability remains extremely tight and the major banks are only interested in lending where there is very little risk and plenty of reward on offer.
What I think we will see next year is the beginning of a slow economic recovery and a gradual improvement in the supply of commercial finance. But one thing is for sure – the days of “easy credit” are now just a distant memory and, in the tong run, that’s no bad thing.
Jayne Merriman, Operations Director, Ashley Commercial Finance Limited
The indicators are that the fragility in the economy will remain through early 2010, which will mean another demanding year for the commercial finance industry and the enterprises which it supports. A general election should add strength to the green shoots of recovery, but with banks cautious in their approach to lending demand for alternate sources of funding should grow.
Specifically for invoice financiers, innovation and customer service need to be buzz words of the industry if it’s to take full advantage of a recovering economy and especially if it’s to become a recognised and permanent viable alternative to more traditional types of business funding.
Malcolm Piper, Director, Tandem lnvoice Finance
D&D Leasing entered the UK market in January 2009 to operate in the “story” credit market, financing assets to SME’s. The reliance is not on the strength of the balance sheet or resale value of the equipment, but the viability of the business and underlying strength of its management and owners. From there they work on the basis of “is the equipment a revenue generator or cost reducer?” and “what will the asset do for the business?”
More time and consideration is now being given to better constructed, presented and reasoned proposals by the customer and broker offering a greater depth of perception and security to the Funder. This allows a greater equanimity over pricing is being achieved, reflecting the true cost of funding, risk, and the elongated operational costs being borne by the Funder. For these reasons, Funders and Brokers alike who embrace these principles should expect to see a return to cautious but steady growth through 2010.
Brian Jerome,.Senior Broker Manager, D&D Leasing UK Ltd
With enormous challenges over the last few months we are beginning to see the parting of the storm clouds and evidence of those illusive “green shoots”. A revised lending programme has been put into operation with increased scrutiny on sector and location. We have a panel of brokers working to provide a reduced level of business which sustains our limited underwriting appetite at this time. I understand brokers are seeing a reluctance from some borrowers to commit to loans due to the general economic uncertainty and the impact of base rate increases I suspect this trend will continue into the New Year. Striking a balance is the key for us, acknowledging the challenges we still face whilst moving forward.
Alan Bridgeman, Managing Director, Peninsula Finance Plc.
When the credit crunch started to take hold in late 2007 it was obvious that there would be severe pressure on the housing market from a restriction in mortgage funding. The Directors of Hampshire Trust decided that by revising the Bank’s criteria and concentrating on high quality projects introduced by knowledgeable brokers, the Bank could continue to support small developers rather than abandon the sector altogether. The Bank, its supporting brokers and their clients have already seen the benefits of this approach which will continue into 2010 when the slight easing of the mortgage market should improve exit routes and allow developers to take profit out of completed projects. The improving financial situation anticipated for 2010 coupled with increased activity may encourage more cautious developers to return to the market. Hampshire Trust believes that the market will continue to be volatile through 2010 and that projects must be well researched and properly managed if they are to be a success. Hampshire Trust will continue to support such projects throughout 2010.
Michelle Dean, Property Lending Manager, Hampshire Trust
The shape of the economy in the next 12 months is still uncertain, so it is more important than ever that businesses have access to the support and funding they require to overcome challenges and capitalise on any opportunities as and when they arise. We are seeing a growing appetite for innovative funding solutions, such as asset based lending and the Government-backed Enterprise Finance Guarantee scheme, alongside traditional loans and overdrafts.
The banking landscape will remain as competitive as ever as SMEs across the country keep a closer eye on service levels, the depth of experience and expertise on offer and the products that are available.
Paul Narramore, senior business development manager for Lloyds TSB Commercial
Autumn was relatively quiet in 2009 principally because of continued uncertainty communicated around the economy. Latest figures show that output of the economy (as measured by GDP) continued to fall in the third quarter. In 2010 we expect a more positive outlook – the Bank of England expects the economy to resume growth soon, although the economic outlook both domestically and internationally remains subject to considerable uncertainties, with activity gradually gaining momentum through 2010. At Santander we are keen to make the most of any increase in business activity, as well as where other bank’s customers are dissatisfied. We are totally committed to supporting SMEs, both start ups and more mature businesses. Providing a first class service and maintaining support from the broker network is key to our strategy.
Andrew Turzynski, Head of Abbey Commercial Mortgages