Loan Acceptance Rates are Declining…We May be Able to Help

Has your client been refused a loan by a bank? Do you feel like you’re turning away good businesses and losing money in the process? Don’t worry, you’re not alone, Reparo Finance are here to help.

It’s currently a bleak outlook from traditional lenders when it comes to SMEs. A report published by the National Federation of Self Employed & Small Businesses Limited showed that in Q2 2019 the number of small businesses being declined credit had risen by nearly 10%. It blamed the decline on lenders playing it safe and avoiding lending to smaller businesses who could default on their loans.

Further research published by Oxford Economics showed that overall since 2015, lending to SMEs had fallen by 3%. This might seem like a small change; however, when you compare this to the credit provision to larger companies, which has grown by 43%, the difference is staggering. It highlights the imbalance in the market, especially when you consider that even those smaller businesses that are accepted are given much less favourable terms than larger organisations.

Oxford Economics MD, Sam Moore, highlights how despite SMEs contributing 50%-60% of GDP the findings demonstrate “the uphill challenges [small businesses] face when dealing with the traditional banking sector”, warning that “this could act as a serious curb to future growth”.

Why have traditional lenders stopped lending?

A turbulent economic landscape, particularly surrounding the outcome of Brexit, has been cited by many as being a key factor in the decline in loan acceptance rates. International banking regulations have also been considered to be a factor, as the way they force banks to categorise the risk parameters for SME loans means that many are left out in the cold.

Many SMEs have poor record keeping, limited trading history and few assets – banks also simply don’t have the time to individually assess each case.

How Reparo Finance Can Help

Major banks and financial platforms may be reducing lending to SMEs, but at Reparo we’re here to help. We work differently when it comes to making lending decisions: we look at a business’s specific circumstances, rather than work to a rigid criteria. We work hard to understand your client’s business and the commercial rationale behind the loan.

The basis of our decision is whether the loan is affordable and the way we operate offers a new approach to lending:

We’re Fast – We work to your timeframe, not ours. We never want you to miss an opportunity and always want to find a way to help businesses through unexpected difficulties. This is why we aim to get funding in place as quickly as possible, with decisions made in hours and completed within days.

We’re Efficient – Our lending decisions are made by a small credit committee. We meet and discuss deals every day. This same committee is involved in a deal from start to finish, which avoids any last minute problems delaying deal completion.

We’re Flexible – Rather than work to a rigid criteria, we look at each deal individually, considering a range of factors, including the business case, affordability and security.

We’re Experts – We all have at least ten years’ experience and will happily share our knowledge if you have any questions.

We Keep it Simple – Our lending process and the associated documentation is transparent and easy to understand. We make the legal side simple so your client can focus on growing their business.

We Work Collaboratively – We have a great team of solicitors and surveyors who we work with regularly. They work to short timescales and understand our clients’ requirements.

We Offer Exceptional Service – We’re a really friendly and approachable team who are focused on building long term partnerships with clients. We pride ourselves on offering the tailored service you no longer get from the major banks.

How Reparo Works – Case Studies

Case Study 1: Property Development

Reparo worked with a property developer that needed a £375k cash injection to complete a redevelopment project. The client turned to Reparo as traditional mortgage lenders couldn’t work as quickly as they needed.

With our surveying partner, we were able to value the property (which had some specific challenges) and produce loan terms in a matter of days. We could process the loan quickly by obtaining the first legal charge over the property being developed. The loan was funded at 70% LTV based on the existing value of the property.

The Reparo loan facility is for six months, and the property developer will then refinance to a long-term commercial mortgage.

Case Study 2: Residential Property Development

Reparo stepped up when a highly experienced property developer needed a loan to fund the time-sensitive development of nine apartments. The developer had an excellent track record and could provide a charge over a property to support the loan.

As our process is so fast, we started working on the deal the same day and completed the loan within ten days. The funding enabled the client to take advantage of a fantastic development opportunity, while the sale of his other properties completed.

Case Study 3: Golf Course

Golf professional Fame Tate needed funding to purchase a local golf club that was being put up for sale. Working with a broker, she looked for financial backing. However traditional bank financing was – for several reasons, namely the underlying asset (i.e. the golf course) and the newness of the venture – unsuccessful.

Fame’s broker approached Reparo Finance, and we went down to visit the course and learn more about the business. We could immediately see the passion for the project and a strong business plan. Reparo provided Fame with the loan, and she was able to purchase the golf club.

If you’re looking for lending options for your client, then choose Reparo. To discuss a loan between £10,000 and £1m, please get in touch with one of the team on sales@reparofinance.co.uk or 0161 451 5710

You can find out more about us on our website: www.reparofinance.co.uk