When I first heard that Boost Capital was looking for a new director of business development, I’m ashamed to admit that someone had to explain the business to me. In some respects, that’s not surprising. Boost only started operating in the UK in 2012 and its model of short-term lending is a relatively new one to our shores. It’s growing in recognition and influence every day, and its US parent, Business Financial Services, has all the stature and gravitas across the Atlantic one would expect from a successful business of more than a decade’s standing. But, my background had largely been in asset finance, having spent more than 30 years working first for the Bank of Scotland and, then, most recently helping Dutch bank ING build its vendor finance team as part of its ING Lease (UK) arm. Like many of our SME customers, I needed educating in what Boost does and what makes it so different from the other forms of small business financing currently available.
What I learned about Boost’s innovative approach really impressed me. Well, obviously it did, because a few months later here I am facing the considerable challenge of spreading the word to Britain’s SMEs about how Boost can help them grow. And, believe me, British firms are desperate for growth, but they complain time and again that they lack the funding to make it happen. In particular, a major part of my job at Boost Capital is to build up our broker network to get the news to as many firms as possible that funding is available. But, it’s no small task.
First, there’s that issue of education that I mentioned earlier. We have to re-educate the SME marketplace that there is capital out there, despite their struggles with conventional lenders over the last five years. Bridging loans are nothing new – they’ve been around ever since people have been doing business. What we have to get across is how Boost’s loans differ from the norm. Ours is a four to 18-month proposition. We’re in and out of a business very quickly. The borrowing is intended to be repaid quickly and so it usually is. The Boost Capital financing product is cashflow-driven. A recent example would be a garden centre that wanted money for just four months in order to have enough cash to pay for its stock of Christmas trees. When those sales are made, the debt is repaid.
Once the penny drops and businesses understand our model, they rarely look back. The most striking statistic to demonstrate this, I think, is that about seven out of ten companies come back to us for a second or even third tranche of funding. Clearly, Boost Capital is doing something right.
But I want to emphasise the importance of our intermediary brokers. There’s only so much that I can do on my own to trumpet what Boost has to offer. We need good, strong relationships with brokers who can also educate SMEs about how we operate. In my various professional guises I’ve worked with brokers a lot and know how much that intermediary role matters. In my experience the broker market is two-fold: there’s what I call community brokers who’ve often lived in an area for years. Wherever they are, be it Taunton, the Midlands, or Dumfries, they know their local business community and are known and trusted by them in return. That trust is of vital importance when it comes to that advisory role. Then, there’s what one might call the specialist broker. These individuals have created niches for themselves in particular industries, know their sector back to front, and are the go-to experts for funding in a given area, say, transport and logistics, or engineering. Both broker types are very influential, vastly knowledgeable, and of great value to us here at Boost.
One of my key goals is to develop the Boost Capital brand through the UK intermediary market. There is enormous potential and opportunity for growth here that is currently not being sufficiently realised, I believe. Different customers find their way to us through various avenues, but I envisage our business being largely broker-driven in the future. The Boost product is not an everyday sale for a broker, but the more that know about it and understand it, the more will use it and promote it to SMEs. Again, it’s a question of education – both for the brokers and, then, their clients.
Which brings me neatly back to the SMEs themselves. It’s one of the most satisfying aspects of this job that we’re working with companies that want to grow and just need a little help to do so. I had to understand at the outset that we’re not lending money to fund an asset, as such, we’re lending money to assist a business. What really matters is what the company does with the money they borrow, and they need to be able to articulate that clearly. If I give you a bag of cocoa beans, you’ve just got a bag of cocoa beans. My question is: what are you going to make with it to turn a profit? We want to see that drive and ambition in our SME customers, and they rarely disappoint us.
And, like our clients, we have growth aspirations of our own. As they grow, we grow. Boost Capital is young in the UK market, but like many young upstarts, we brim with ambition and energy, and now we’ve established our platform here we’re keen to expand as much and as far as we can. Currently, we’re germinating the seed, but I want to see that plant in full bloom. We’re breaking traditional models of funding, but now is the time to do so. As the banks persist in refusing to lend, we will grow. Even if they start freeing up capital, I anticipate that we will still grow. SMEs want alternatives. Brokers want alternatives. And that is exactly what we have to offer.