An overview of the UK Funding Market - September 2020
The global pandemic has caused nationwide changes to the way in which we operate and has shifted our daily routines; introducing remote working, numerous video calls to replace physical meetings and less travelling which has seen us all learn to adapt in different ways. However, the question remains, how long will this last and what will be the long-term impact?
At the time of writing, the UK Government spending as a percentage of GDP is 55% - the highest since 1946, with the UK Debt to GDP ratio over 100% - a first to be seen in peacetime. National output shrank by 20% in the second quarter of the year and the Bank of England predict GDP will fall by 9.5% overall this year (Money Week Magazine, 2020).
As the UK entered lockdown, the Government introduced huge economic stimulus, by way of quantitative easing alongside initiatives to support businesses and individuals, including the furlough scheme, the Coronavirus Business Interruption Loan Scheme (CBILS), Bounce Back Loans (BBL), mortgage holidays, VAT and Rates changes and extra leniency from HMRC.
As the population of the UK contacted their banks to see what support was available to them, those lenders with the largest customer base found themselves overwhelmed with the volume of requests from their existing customers. Some lenders decided to pause new enquiries with high street banks reorganising themselves to protect employees from COVID-19 and to focus on their existing client base. We saw challenger banks, second tier and specialist lenders who were less burdened by their existing client base fill the gap left by high street lenders.
Our clients tell us it has never been more difficult to navigate the banking market.
Today, there are more lenders in the market than ever before, finance is available, however with an uncertain economic outlook, there is an air of caution being taken by lenders when assessing borrowing requests. They continue to focus on the experience of the borrower, quality of the business and assets, suitability of the business plan and profitability of the business. Each lender has their own criteria of what makes an ideal borrowing request and their best deals are reserved for the strongest business cases.
The key to accessing the best finance is to present the strongest possible case to the lenders most likely to be supportive of your request.
Q. How do you know which lender to approach and who is the most appropriate individual to contact at each bank?
A. There has never been a better time to engage with a professional broker to advise you and add some certainty to the process. They can clarify your concerns and guide you throughout the process and provide support even after the deal has completed.
Christie Finance has over 40 years’ experience and our excellent relationships with lenders enable us to add real value to the funding process, including having specific sector knowledge to make each discussion tailored to the sector you are looking to invest in. Whether you are making an acquisition, refinancing, raising working capital or buying new equipment, we can help.
In the final few months of 2020, we expect to see the news dominated by our progress in the fight against COVID-19, the US General Election and Brexit. It is hard to predict how the potential political and social changes will impact the UK economy. Thinking positively, we can rely on the fact that after each historic recession the economy has emerged stronger and the stock market reaching new heights. We hope to see lenders continue to support businesses going into 2021, just as we have witnessed throughout 2020.
