By Josh Levy, CEO Ultimate Finance
As we return to a national lockdown in England, and with other tight restrictions in Wales and Scotland, Ultimate Finance will continue to lend to keep business moving, supporting our clients, brokers and prospects, as we did through the first lockdown. Even with this year’s market disruptions, we have provided over £75m of new funding facilities and over £1bn of advances to existing clients so far this year.
Indeed, there are many reasons to remain more confident today than in the Spring – the commitment to these measures being time limited, the education systems remaining open, COVID-secure working environments allowing manufacturing and construction to continue, and a higher level of preparedness this time. Whilst the old adage of ‘for every winner there is a loser’ doesn’t quite hold, there are still plenty of sectors and businesses benefitting from trading conditions, although we recognise that for the tourism, passenger transport, hospitality and events industries in particular there is not yet a clear light at the end of the tunnel.
With a view to the next few months ahead, I share my thoughts on funding in our three core product markets including our CBILS offering, given the latest extension in the application deadline until the end of January 2021.
The Invoice Finance market has been particularly impacted by the distortive effect of CBILS, with the flood of ‘free’ money in a simple term loan structure. Our CBILS accreditation enables us to provide term loans alongside an Invoice Finance facility which has been a good tool and we’re continuing to write these facilities to help both clients and new businesses seeking funding.
As with the first lockdown, we are lending with the same appetite and criteria as we had pre-COVID, continuing to look at each deal on its merits. The key to this is ensuring that the information provided includes a clear financial plan based on realistic and logical assumptions, particularly around expected recovery in turnover levels. Where appropriate, depending on the sector and supply chain exposure, we might want to see a level of sensitivity analysis provided on this.
The current market distortion will unwind quickly as the Government schemes expire and with many businesses in a weaker liquidity position than at the start of the pandemic, we are ready to provide the funding solutions that businesses need to recover and grow again. There is undoubtedly a significant working capital need in the economy, and with the need to refinance CBILS with permanent funding structures along with the continued decline of conventional bank loan structures, Invoice Finance is an excellent source of long-term working capital.
As a truly relationship-based funding partner, we look forward to welcoming many new clients seeking a Working Capital facility – whether a business using Invoice Finance for the first time or a business looking to work with a nimbler, more flexible and supportive lender.
Asset Finance has a key role to play in facilitating both growth and recovery, and that is why we’re excited about the contribution we can make through a flexible and quick provision of capital to assist with investment or refinance. Through this second period of lockdown, we will continue to lend with the same appetite, criteria and pricing as we had pre-COVID.
Even with a dip in volumes during the early stages of the pandemic as business investment in assets ground to a halt, we are well on course to provide more funding this year than we did last year. Indeed, in three of the last four months we have set new records for monthly deal volumes and values.
We have recently secured an increased CBILS allocation for Asset Finance from the British Business Bank, but CBILS only makes up a small portion of the record months we’ve recorded recently.
The Government has recognised the importance of keeping property transactions flowing with house moves still able to happen, removal firms and estate agents continuing to operate and construction sites remaining open.
Bridging Finance has a critical role to play in the property market and we have paid out more Bridging Finance in the last three months than we did in the whole of 2019. This has been partly CBILS related – we received over £150m of applications in the first week we were accredited and quickly hit our given CBILS allocation from the British Business Bank – and we have never stopped writing ‘normal’ deals throughout this year.
With the CBILS extension, we are seeking additional allocation but there is no guarantee we will get it. At the same time, we are putting the finishing touches to a relaunch of our residential offering with lower rates and a return to previous LTV levels and I look forward to sharing details soon.
The property financing market remains constrained and we’re committed to using our Bridging Finance to fill the gap and make up for reduced lending appetite elsewhere.
My commitment is that we will keep delivering for our clients and brokers as a long-term relationship-based funding partner, always striving for improvements in the areas of most value – speed, clarity of approach, the best technology tools and the quality of our personal service. We have the range of products, whether on a standalone basis or as a Structured Finance multi-product facility, to demonstrate our appetite and desire to do our part in keeping business moving.