The comment follows a recent joint event featuring the Financial Intermediary & Broker Association (FIBA) and the Association of Short Term Lenders (ASTL) where brokers explored some of the ways in which the lending process could be simplified.
Brokers set out their key pain points with the most important proving to be getting direct access to decision makers.
This was highlighted as the key to a smooth, simple and fast lending process, and it was agreed that too many barriers between brokers and underwriters could mean a loss of business for the lender.
Since, Bridging & Commercial has asked brokers how accessible lenders’ key decision makers are in the market.
Are lenders’ key decision makers made clear and accessible to brokers?
“It varies massively between lenders,” said Chris Oatway, director at LDNfinance.
“Those lenders with clear communication channels to the decision makers are certainly preferred as they enable brokers to provide confidence in the funder.”
Chris Fairfax, managing director at Positive Lending, felt that it depended on the size of the organisation.
“Larger lenders will give access to underwriters, senior underwriters and head of credit, but other members of credit committee, such as head of risk, are protected so that decisions are not influenced by advisers.
“Smaller lenders tend to offer direct access to credit committee.”
Chris Whitney, head of specialist lending at Enness Commercial, felt that this was one area where the specialist lending market excelled.
“Retail lenders and some of the larger challenger banks have very blurred lines of communication and brokers are often very distant from the key decision makers, sometimes having no direct communications at all.
“Many of our specialist lenders have an open-door policy to the decision makers or have very good business development managers with open and direct lines of communication to the key individuals or credit committees.”
When working on a deal, do brokers prefer to speak to one person from a lender from start to finish?
“I wouldn’t insist on one, however, a regular person or persons makes things so much easier – they know how we work and vice versa, plus personality plays a big part,” said Stephen Burns, director at Adapt Finance.
Earlier this year, bridging and development finance lender Avamore Capital scrapped its BDM model as it planned to change its approach to origination whereby its relationship managers would originate, underwrite, execute and asset manage each transaction from start to finish.
Jo Breeden, managing director at Crystal Specialist Finance, said it found that the key was consistency of information.
“Throughout an application it’s easier to deal with one person from start to finish, however, sometimes this isn’t possible, dependent upon the set-up of the lender.
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“That said, if contact records and reports are correctly updated and everyone in the lender’s chain completely understands their role, it should not necessarily be a problem.”
However, when asked what impact talking to several people from a lender had on the completion of a deal, Lucy Barrett, managing director at Vantage Finance, said: “Usually it slows the process down.
“Everyone has something to add and it creates layers which means the journey is not as smooth as when you have one or perhaps two dedicated people on a transaction.”
Last year, it was reported that the average bridging loan completion time was 39 days, which was described as “shocking” by one bridging lender.
Oatway also warned of the issues regarding talking to several people from a lender.
He added: “It increases the chance of internal communication errors and can mean the lenders become disjointed.
“This can result in poor service, time delays and reputational risk.”
However, Fairfax added: “Often it is not necessary, but occasionally larger or more complex transactions will need to be discussed with more senior members of credit team.”
Do brokers prefer to hear a quick yes or no from a lender?
Another pain point discussed at the FIBA/ASTL event was the need for fast, concise and clear communication.
Brokers felt straightforward discussions helped to enable swift decision making without time delays and said lenders must live up to their promises and avoid false advertising, especially on turnaround times and service standards.
Lucy felt a quick answer was always valuable, but felt sometimes you needed to make a judgement based on the complexity of a deal.
“It’s easy to say no quickly, but for me the importance of understanding a deal and finding something to hang your hat on can override a quick answer because it improves valuable conversion rates.
“It can be a balancing act because there is nothing worse than a long, drawn out no, therefore the key to me is to manage expectations based on an early view and then everyone makes the decision together as to whether to put more time and energy into the deal based on the facts.”
Meanwhile, Stephen added: “We present our proposals in a comprehensive manner, therefore, a decision is often achieved fairly quickly.
“What no one wants is for a deal to be agreed and then additional information leads to a rejection – lenders are not mind readers – they need the information to enable an accurate decision.”
Whitney added that brokers often say that a quick no is almost as good as a yes.
“The skill in broking is to target a specific lender who you feel is a suitable funder for a specific transaction and put an initial proposal to them that is clear and concise.
“The lender should then have the skill sets to assess the proposal and be able to respond quickly as to whether they are able to assist with the borrower’s requirements.
“Not all lenders have these abilities, and some are stronger than others.
“The worst thing for a broker is where a lender is slow at responding and says no or initially implies that they can assist and then [changes] their minds.
“Lenders that have a history of doing this are quite simply avoided by brokers, if at all possible.”