As a broker with more years’ experience than I sometimes like to count, I still believe that in business, ‘people buy people’. This was true when I founded Goodman Corporate Finance in 2006 and it’s still true today.
The rise of aggregated online lending platforms and the use of artificial intelligence for automated decision-making may seemingly have brought increased convenience to the commercial finance market, but I would question whether they have yet really added value. For me, doing successful business isn’t about the numbers, it’s about relationships, understanding and consideration.
Working together for successful relationships
In both my roles as a broker and current Chair of the NACFB I can see the importance of the relationships between lenders, brokers and their clients. Brokers who know both their client and potential lenders well can match requirements to solutions to ensure a deal is done to the benefit of everyone.
We had a good example here recently, when a client needed to secure a large multimillion pound deal that required a very specific, bespoke product – one that I knew hadn’t really been used for around 10 years but definitely existed. I spoke to a few potential funders who hadn’t heard of the product, but I then discussed it with the business development director whose MD was one of the part-creators of the product back in the day. While they hadn’t heard of the product themselves, they took my request to the MD, who confirmed the product was available, and the deal was approved straight away. Without corporate memory, experience in how to structure a deal, good working relationships and a willingness to work together, this deal would never have happened.
Online isn’t necessarily better
I also got involved in a discussion recently on LinkedIn about online lending platforms and the use of artificial intelligence – now that’s certainly a topic that gets a lot of people going, including me! I picked up the theme again at a meeting with some of the lenders involved in the government designated, aggregated online lending platforms. It seems that the conversion rate on these platforms is low and I think they will fall by the wayside over time unless they get it right. Automation and ease of access don’t necessarily equal success, especially compared to working with a broker who can spend time with you to really understand your needs and offer the sort of market intelligence that allows deals to be created outside the box.
Dealing with the current market conditions
Numbers released by various sources this month are showing that lending rates are up, but that the rises in lending are being matched by increases in loan defaults. This reflects what we are currently seeing on the insolvencies part of the business, and the fact that it seems there’s still a race to the floor with interest rates for lending makes the atmosphere feel a bit like it did just before the last crash. There’s more choice now in lending in the marketplace, and while there has been stress testing of the bigger banks, many of the new lenders won’t have been through the experience of a recession before. Now is a good time to ensure we continue to take our responsibilities seriously, supporting business by ensuring any lending is responsible and affordable and is the right deal for them – something I believe brokers with a range of options to work with can do the best.