SMEs have always had to fight for lending.
Lending to SMEs only makes up around 2% of a bank’s balance sheet on average and bank lending has declined 3% since 2015.
While banks have always been cautious lending to SMEs other lenders are now following suit – in the face of falling demand and uncertain economic conditions Funding Circle has tightened its lending criteria.
Some smaller lenders seem to be following suit, tightening terms, reducing lending flexibility or pulling away from certain sectors entirely. Lenders that offer a suite of products are reducing their product options.
At Reparo, we’ve been speaking to a large number of brokers that are finding it increasingly difficult to place SME loans – creating a challenging environment for brokers and small businesses.
Reparo Finance is Open for Business
Our business is built with the small business loan in mind.
We have all spent long careers working for larger lenders and experiencing how these lenders often view the small business loan; there are a few distinct challenges that the Reparo business model was built to address.
It can be Hard to Assess Risk at SMEs
Because of the inherent difficulty in assessing the risk of a small business loan, many lenders decide not to deploy resources to that type of loan. We’re seeing this at the moment; lenders often only want to provide low risk loans to established companies.
Working with small businesses often requires more due diligence; the challenges around asset valuation, assessing performance and simply collecting enough information means that for small business loans that may be a little out of the ordinary, lenders may decide against making these loans.
If a lender does take the time to complete due diligence on the viability of a small business loan, it can be a long process with several hoops to jump through.
Reparo Is Open for Business
As many lenders pull back from small businesses we continue to help clients to access the right finding – when it comes to small business lending we have many distinct advantages compared to most lenders.
We Don’t Have Rigid Criteria: We look at every business case on its own merits, where instead of applying a pre-determined criteria we ask whether the loan makes sense from a commercial perspective, considering the business plan, experience of the founders, strength or security and specific circumstances.
We’re Solution-Focussed: There are many ways to find a solution, and our experienced team work with entrepreneurs and brokers to complete deals. Sometimes this means detailed asset valuations, working to a tight timeframe, accepting cross-company guarantees or working with unconventional security. We can’t complete every deal but we will look hard to find a solution.
Our Process is Quick and Simple: We know that in the real world capital requirements can emerge that must be resolved quickly. Our team work hard to complete deals to the required timescale; the credit committee at Reparo meet regularly and can sign off loans in days that may take weeks or months with a traditional lender.
To discuss a loan of between £10,000 and £1m, please get in touch with one of the team on either
firstname.lastname@example.org or 0161 451 5710. You can find out more about us on our website: www.reparofinance.co.uk.