There are various things that people might call to mind when they look back on 2014. Germany beating the host nation Brazil in the World Cup, for example. Or Scotland opting to vote against independence.
For us here at Boost Capital the economy remained the major focus over the last 12 months, and maintaining the health of Britain’s SMEs, in particular. We’ve worked hard to try to fill the funding gap that is still blighting so many firms. For, make no mistake, in 2014 the UK’s small business community continued to suffer due to a persistent lack of bank lending. And more of these enterprises began to look for alternative options away from the traditional lenders, with many of them arriving at our door as a result.
We’ve funded a great deal more companies this past year than in 2013, and the expansion of our own business is a reflection of the clear need of business owners to find capital to achieve their growth ambitions. The calibre of SME coming to us – either direct or through broker intermediaries – is striking. These are no basketcase businesses that have been turned down for loans by the bank because they’re undeserving or on the brink of failure. Their struggles often come about precisely because they lack necessary funding either through bank loans or overdrafts. Much of this bank lending must be securitised, and many is the perfectly credible company that falls short of this rigid requirement. At Boost, we understand that not all companies are in a position to provide security against borrowing, so we look at other indicators of a business’s wellbeing. The firms we encounter often have impressive operations with enormous potential, plus concrete plans in place to make their dreams become a commercial reality.
These are the companies we’ve been working with in 2014 in ever greater numbers, and they’re spread right across the British Isles. The retail and leisure sectors have been particularly active on our books, since these areas remain among the least popular with the major clearing banks. We disagree, obviously. We’ve always had a strong background working with industries that mainstream banking providers dismiss as being too risky. Instead, we look at cashflow, business in progress, and take the temperature of a firm in the here and now. And that has helped us to do more deals this year with companies that want to grow, and build on their existing achievements.
The main body of our work is with SMEs, and Britain’s smaller enterprises remain an important focus for Boost. But it has also been notable over this past year that we’ve arranged several major deals for larger players in a range of sectors. This development doesn’t alter our priority of helping small firms with short-term business loans, but it is an endorsement of what we do, and a reflection of the fact that our company has reached a level of maturity in the UK, as well as achieving recognition within the business community.
Alternative finance in general has forced its way into the consciousness of the public over the last year, with more business owners realising there are innovative paths to funding that make regular banks look like dinosaurs in comparison. There have been a lot of new entrants into the alternative funding space; record levels of borrowing are being organised for SMEs through these novel avenues; and there’s evidence this new way of doing business is even registering on the radar of more traditional institutions. When the Royal Bank of Scotland and Santander start investing in peer-to-peer platforms, as they have in the last few months, you know that alternative finance is firmly on the map. We’ve got the conventional operators worried – and with good reason. What started out on the fringes of business financing is moving increasingly towards the mainstream.
One of the reasons alternative funders have the regular banking providers on the run is that we listen to what our customers say. When I ask Boost’s clients what they think is different about the way we work, they tell me it’s the simplicity of our processes, and the ease and speed of getting their hands on the money they need. Of course, for the first deal we do with a company there are certain hoops to jump through, but these are minor in comparison with the form-filling involved in conventional loan applications. We take days to fund a deal, whereas the high street banks can take months.
And this has been another striking aspect of Boost’s business in 2014 – the fact that we continue to see ever more customers coming back for a second or third tranche of borrowing. About seven out of ten firms that Boost finances will take out a further loan with us. One of the reasons we’re seeing more repeat business is because our portfolio is maturing, and more customers are coming on board. Another is quite simply that SMEs like what we do once they experience how it works. Satisfied, repeat customers are the greatest evidence possible that we’re providing something smaller businesses really want.
The last year has seen our good reputation spreading, both by word of mouth from business owners, and via the commercial broker network. I’ve made it a particular priority to cultivate and nurture this latter group of finance experts who are plugged into the small business community, and understand their needs so well. And, in 2015, I anticipate that we shall expand this relationship side of our business quite aggressively, growing our team, and increasing the coverage of our offering to SMEs.
All in all, there are many reasons to go into 2015 with a feeling of optimism. There’s still a lot of work to be done educating SMEs – and brokers – about what Boost has to offer. But we’re making important progress – as are the companies with which we come into contact. And that gives me great hope for the year ahead.