Commercial Finance Brokers Seeing Increasing Demand For Complex Loan Solutions

Commercial finance brokers are seeing a significant rise in client requests to support more complex projects, latest survey data from Asset Advantage can reveal.

Nearly a third of brokers have seen an increase in funding requests for soft or tricky assets, while 29% of brokers report a rise in projects involving negative balance sheets, but a story behind the deal. Just over a third have seen demand for projects which require a mix of asset finance and other more bespoke funding needs.

In the same survey, nearly 40% of commercial finance brokers said that funders only sometimes look beyond the deal to consider the full picture of the business. Meanwhile, almost a third said that funders don’t consider the full story behind complex deals.

One respondent described it as a shortage of story book funders. They said: “A lot of funders are driven by the motor industry where volumes are key and they are geared up for this type of business. They do not seem to have the resources or the motivation to spend the time looking at deals that require a slightly outside the box approach.”

The findings are revealed in a new survey from Asset Advantage, one of the UK’s leading providers of business finance for SMEs. The survey questions commercial brokers on a range of topics to determine the state of play and changing demands of the commercial finance market. The aim is to uncover the key challenges facing commercial brokers when securing funding for clients as well as their thoughts on lender appetite and the lending landscape.

The survey comes as Asset Advantage celebrates 10 years of offering business loans, which are typically used for business acquisition, management buy-outs (MBOs) and buy-ins (MBIs), but also can be used for hard and soft assets, such as equipment, technology and refurbishment. It is part of a full offering from Asset Advantage, which has also been providing asset finance through finance lease and hire purchase for more than 17 years.

Philip Knight, credit and risk director at Asset Advantage, said: “It’s certainly true that client demands are getting more complex, all while the lending policies of larger, mainstream lenders arguably become more restrictive. We continue to see examples of ‘story’ deals where the credit risk is low, but some element of the deal falls foul of the more formulaic approach these lenders apply.

“While not always possible, particularly for larger funders, there is a need in the market to look beyond the headline figures to build a full picture of the deal and of the business. This has always been our niche in the market, understanding both the business and the story behind the proposal to overcome what may be barriers for more traditional funders. Not only are we not restricted by sector or by asset, we can be far more flexible in our approach.”