Commercial finance

More businesses are looking for funding. The unsecured loan market has dried up. Businesses are now having to use business assets to secure funding. These assets can be property, plant and machinery, their debtor book or stock. The demand for funding is driven by a lack of support from banks as credit policies tighten and also by cash flow requirements. Businesses need more working capital as customers are slower to pay, suppliers are tightening up on credit terms and stock levels are increased to cope with supply chain disruptions. My advice is to shop around. Use your business assets wisely to secure the right type of funding. Focus on the structure of funding as well as the cost. If lenders are demanding additional security or personal guarantees it is also worth shopping around to see what is out there.

I have received a general increase in enquiries recently, but it is hard to compare to previous periods due to the uncertainty of the last three years.

Are we back to 2019 levels? I would say yes but lender appetite is considerably reduced.

I expect enquiries to increase in 2023 as many business owners want to have a ‘war chest’ in the Bank due to the economic uncertainty, while more enterprising business owners borrow funds to grow as they see hesitation and uncertainty as growth opportunities.

I would always advise a business owner to borrow money for the right reasons (i.e. your business is profitable and has a bright future rather than propping up a lossmaking venture) and always ensure they can afford any repayments on a monthly basis. You would be surprised how many business owners don't consider this.

The majority of our transactions are in the commercial finance space. That being said in the last quarter we have seen a significant uptick in business. Everyone held their breath in October due to the wild swings in lender rates and many pulling out of the market. As things began to settle in November, clients hurried to refinance their portfolios ahead of further rate rises. We saw even more start to build cash reserves ready to enter the auction market - anticipating foreclosures to grow. For those with cash to spend, or free equity in their properties, 2023 and beyond will be an exciting time. An opportunity to pick up discounted property from those who unfortunately overgeared previously. I expect bridging whether to sell or refinance to increase dramatically this year, which will naturally also mean an increase in BTL financing.