‘As a non-bank. alternative lender, Asset Advantage is exposed less to the vagaries of the economy and more to the lending policies of other lenders’, writes Philip Knight, Credit & Risk Director of the Basingstoke based funder.
That said it is clear that there are definite trends appearing in the types of proposals that we are receiving.
The first one to focus on is that we are seeing more and more ‘story’ deals.
Asset Advantage’s niche in the market
Our niche in the market has always been that we pick up deals where the credit risk is low but that some element of the deal falls foul of the more formulaic approach that the main stream and data driven lenders have to apply.
This can be issues as simple as industry sector or more complicated in that the algorithms or policies can’t, or won’t, take into account a recent equity investment or take into account directors salaries as part of the profit calculation.
This isn’t to criticise the other lenders, managing credit policy in a large business demands blanket policy application in order to manage the risk, but it allows us to pick out those low risk deals that have slipped through the net of our larger peers.
Emerging negative trend
A more negative trend that is emerging is that it is apparent that a lot of businesses are struggling with cashflow.
And this is most definitely economy related.
Burdened with debt taken on before 2020 upon which they have added CBILS and BBL finance. Many businesses appear to have tried to plug the gap with a variety of short term cashflow lenders, but at very high rates this generally appears to have exacerbated the problem especially when it needs to be repaid.
With high interest rates and lack of appetite from lenders closing the door on refinance options I am of the view that there is trouble in store for many businesses, and potentially lenders.
The final, much more positive, trend that we are seeing is a broadening of our funding panel. Having worked almost exclusively with dedicated asset finance brokers, we are seeing more and more non-asset finance introducers joining us. Whether these be property lenders seeing the opportunities for non-property based funding or sector specific brokers looking to broaden their funding products beyond just niche assets.
With our asset and sector agnostic approach to lending – or as I like to call it ‘the old fashioned bank manager approach’ – we are helping more and more introducers add value to their customer and supplier relationships. Old fashioned was ever the new trendy.
If you would like to join the Asset Advantage Broker Panel, please visit our Broker page.