Our main business and focus at R&BS is finding our clients the most appropriate finance through the high street banks, mainstream farming lenders and private banks.
If lending proposals are turned down, or we know from R&BS experience that the proposal just won’t cut the mustard with these lenders, we don’t like to see clients with a strong and viable proposition miss out on the opportunities to expand or strengthen their businesses.
Over the past eight years we have seen little alternative to the high street banks. But we are now talking to a number of alternative lenders who we are helping to enter the farming and rural market place. Rates are becoming more competitive and the appetite to lend to our market place is increasing.
There is, understandably, a resistance to alternative lenders and dipping your toe into something relatively unknown. But alternative lending can play its part in helping businesses grow or adapt if they have run out of other lending options.
Alternative lending – the positives
- They act quickly - we’ve just completed a deal within 30 days from start to finish with an alternative lender. The client, a substantial farming business, needed the funds quickly to settle a tax bill. But they had no proof of income and waiting to get this wasn’t an option. The alternative lender offered a rate of 7.5% on an interest-only basis for up to five years. The client is now working with us and their accountant to sort out their proof of income so we can move the lending to a high street bank soon.
- They base lending on asset values and less so on serviceability - alternative lenders do not require the same level of scrutiny as banks in regard to asking for three years of accounts and sensitivity analysis to ascertain suitability. Instead, they look to R&BS to provide viability checks, serviceability commentary and exit routes. We are currently looking at a deal for a loan to develop a range of farm buildings into rentable units. There needs to be ample security, but this might be the most suitable option for our client who owns a farmyard.
- Rates versus opportunity – with alternative lending rates at 6.5-7.5% on an interest-only basis, they have become more competitive. A mortgage with a high street lender at 3% on a capital and interest basis over 20 years equates to about the same monthly repayment for a loan at 6.5% on an interest-only basis (obviously with no capital repayment though). Even if the high street has declined the opportunity, the alternative lender will consider these deals.
Alternative lending – the negatives
Of course, with the positives come the negatives of higher fees, little jurisdiction for poor track records and still links to the quality of the security.
Rates, naturally, vary on a case-by-case basis but start from 6.5%. However, the various lenders we have at our disposal each have different criteria and price accordingly.
How R&BS can help
R&BS offer our clients the most suitable and competitive options for finance and if mainstream lenders aren’t an option and we can see that there is a viable case, we are putting business to alternative lenders and achieving successful outcomes for our clients.
If you are struggling to get an acceptance from your lender, then please don’t hesitate to contact us. We’ll be happy to look at the case, renegotiate with your lender or put your proposal to alternative lenders, if appropriate.