The alternative finance industry is by nature a sophisticated one, embracing innovation, and often having technology at its heart. But I also strongly believe that good business requires a human touch, and what we do at Boost Capital is no different. We pride ourselves on the fact that we take a different approach to assessing loan applicants, not solely relying on data-gathering software and algorithms to determine whether an enterprise merits financial help.
Time and again, our clients say that it’s this attitude that sets us apart from most lenders. But while we do strive to get to know our customers properly, a large part of that direct contact and human interaction comes from the brokers with whom we work so closely and who know the small business community inside out. We see our relationships with commercial finance brokers as partnerships, with them acting as an extension of Boost’s operation and its philosophy. I like to think that it’s a natural marriage – we want to lend to successful small firms with great growth potential, and we’re prepared to read between the lines to see what’s really going on in an operation beyond its assets and cashflow. Brokers want to get the best deal for their clients, and they’re close to the action, knowing SMEs’ back stories, trading histories, and their aspirations. Their intimate knowledge of businesses is part of what makes us able to assess confidently when to lend.
We recognise that the influence of commercial finance brokers is enormous – and growing. Small firms trust them and realise that they can identify financing options that would otherwise elude many harassed and time-poor business owners. The banks aren’t lending after all, so SMEs must look elsewhere for funding. And brokers are ensuring that they get it – the broker community facilitated more than £1 billion worth of SME borrowing in May this year alone. The National Association of Commercial Finance Brokers points out that this was a first, but it was far from a one-off. Small companies’ awareness of alternative finance is on the increase, and much of that is thanks to the brokers who are hard at work on the ground around the UK. Britain’s network of commercial finance experts has a wealth of knowledge and experience that comes from working with the owners of small businesses every day, and they understand better than anyone what SMEs’ needs are now and how they’re evolving.
But small companies do need help in understanding how a lender like Boost Capital operates. Let’s be honest, some brokers also require a little guidance to get to grips with our short-term business loan model. Asset finance, invoice factoring, leasing arrangements are all familiar to brokers and their clients. What we do is different and new. That our loans are unsecured comes as a surprise to many when they first encounter us, as does the fact that lending is designed to be repaid so swiftly, over four to 12 months. I’ve admitted myself in the past that I struggled to grasp the Boost narrative at first. It’s such an unusual approach compared with what has been previously available in Britain. It’s understandable that some brokers and businesses take time to appreciate how it works in practice, and how short-term loans can work alongside and complement other types of finance.
It’s not so long ago that business owners would automatically turn to their bank manager for a loan, and that trusted figure would make capital available or not based on a long-standing knowledge of the company, its founders, and the local economy. One manager I used to know would say: “I like to see the colour of their socks”. There was no snobbery in this statement, but an understanding that intuition and judgement have an important part to play in business lending. I believe that they still have, even if they’ve largely disappeared from the way that the big banks currently operate. Thankfully, businesses looking to borrow today can also opt for alternative lenders, rather than just relying on their banking provider. Now, the personal function may be fulfilled by an intermediary such as a broker who, like the bank manager of old, has an established relationship with their small business clients, knows what makes them and their enterprises tick, and can interpret the nuances of a loan application.
Modern technology has made advances in loan processing that are little short of miraculous. But some things can’t be streamlined, and human relationships remain vitally important where the serious business of funding businesses is concerned. Bonds of trust that have been built up over years can’t be replaced by a computer programme. Businesses know it, brokers know it, and we know it. At Boost Capital we want to see the colour of our customers’ socks, understand their businesses, and look beyond the numbers on the page. The broking community can be our guide to reach that level of insight, so let’s work together to free up much-needed capital for Britain’s small businesses, and growth will be achieved all round.
Image courtesy of stockimages / FreeDigitalPhotos.net