Smaller lenders often 'more agile' than larger lenders

Smaller lenders are often “more agile” than their larger counterparts, one financial provider has claimed.

Last week, brokers told Bridging & Commercial that clear and accessible key decision makers varied “massively” between lenders.

As a result, B&C has asked a wide range of lenders from across the specialist finance market whether they agree, and what lenders can do to improve their own decision-making processes.

Do lenders provide good access to key decision makers?

Colin Sanders, CEO at recently launched bridging lender Tuscan Capital, said he was determined that a central part of its broker offering would be guaranteed and direct access to decision makers.

"Having seen first-hand the growth of bridging over the past seven or eight years, I was conscious that certain practices within the sector had taken on a more institutionalised form.

"I think this is particularly true of how loans are underwritten, and credit decisions communicated to introducers.”

Paul Riddell, head of marketing and communications at Lendy, added: “Financial intermediaries need to act fast, and a good lender will understand the importance of deadlines and helping brokers meet their goals.”

Brokers not having access to key decision makers can slow down completion times.

Earlier this year, it was reported that the average bridging loan completion time in 2017 was 43 days.

Jack Coombs, director at Aspen Bridging, said it was taking steps to continually improve its speed, adding: “To make this possible, a single decision maker handles each case from initial quote to completion and is directly available by mobile anytime to the broker.”

James Mortimore, managing director at TFG Capital, added: “Brokers need quick and appropriate decisions, whether a yes or a no, and thus today’s lenders need to be willing to provide a streamlined decision process and a direct route to the decision makers.

“This is, effectively, achieved by lenders having a flat structure with empowered employees which enables all parties within the loan application to be up to speed with the applications progress and results in the limiting of communication errors and correct lending decisions being made.”

Are smaller lenders faster to react?

“Smaller lenders are often more agile and quicker than their larger counterparts,” said Paul McFadyen, managing director at Glenhawk.

“These lenders can utilise smaller yet experienced credit committees who can convene at short notice and review proposals swiftly.”

Christopher Adamou, director at Lendhub, added: “Naturally within a smaller organisation there is a more direct route to the key decision makers/credit committee given the short lines of communication.

“This often avoids unnecessary delay, meaning that complex transactions can be dealt with swiftly and proficiently.”

Alan Smith, director at VATBRIDGE, said as a smaller lender, it strived to be super responsive to its borrowers’ needs.

“Borrowers and brokers can, and do, regularly contact us both in and out of office hours.

“Like most smaller lenders, the VATBRIDGE principals are involved in handling enquiries and the credit decision, meaning enquiries are turned around very quickly. 

“The 39-day figure in your previous article is completely alien to us, at VATBRIDGE we target to produce and send illustrations and offer letters within four hours of first contact and are typically able to go from accepted offer to advance in five to 10 workings days.

“Larger lenders with bigger teams will inevitably be slower.”

Vishal Dixit, head of business development at Pivot, added: “It is inevitable that the smaller, more agile lenders offer a more direct route to those making the credit decisions ‘the credit committee’.

“However, this does not necessarily mean quicker decisions, as often this comes down to who is the ultimate funder and whether they require sign-off on individual transactions.

“Those lenders with the ability to make all of their credit decisions in-house – whether that be through the use of their own funds or through the agreement of strict lending guidelines – will be the ones that can act fastest.”

What can lenders do to improve their decision-making processes?

“I would imagine that all lenders are in constant review of any efficiencies that they can build into their processes to get the best results for brokers and their customers,” explained Richard Tugwell, group intermediary relationship director at Together.

“However, the key to making fast funding decisions is about more than just streamlining processes; it takes experienced staff, who have the knowledge to come to the right decision.”

Paresh Raja, CEO at Market Financial Solutions, added: “I believe the streamlining of decision making depends on the type and nature of the loan; however, for bridging, I feel that larger lenders will streamline the process, as conversion is dependent on speed and competency.

“To put it another way, the quicker it is to get to the decision maker with the facts and figures, the faster the queries can be ironed out to close the deal.”

Avamore Capital is one lender which recently streamlined its origination process, whereby its relationship managers will originate, underwrite, execute and asset manage each transaction from start to finish.

“…At Avamore, we are not just streamlining our processes internally, but we are looking to further improve communication and knowledge between all stakeholders by trying to provide useful educational content and by bringing more transparency into our day-to-day work,” said Nikolay Petkov, principal at Avamore Capital.

When asked how lenders that use several decision makers could speed up their completion process, Nikolay added: “Perhaps by taking a different approach, ie train their staff to be able to analyse deals in a rigorous way and be able to highlight potential problems with a transaction at an early stage – only then [can] the decision makers make informative decisions very quickly.”

Paul Munford, CEO at Century Capital, added: “As lenders grow, internal infrastructure grows, and [as] the amount of funding sources grows, it will become much more difficult for large lenders to keep streamlining their administration and decision-making process.

“The difficulty with several decision makers is that all have to be available for a deal to transact; holidays/weather/illnesses and other reasons means that getting approval can take longer than when a streamlined approach is in place.”

Jon Salisbury, managing director at Ortus Secured Finance, explained how it maintained being accessible to brokers.

“We’ve been able to achieve this so far by delegating non-frontline tasks and staying heavily involved with deal-sourcing and management. 

“We have every intention of maintaining this strategy because our growth has been on the back of close broker relationships, so there is nothing more important to us.”

Meanwhile, James Bloom, managing director of short-term lending at Masthaven, added: “When using several decision makers on a case, it is important that several key individuals are involved with any progress to ensure there is always someone at the right level available to speak and offer help should any questions arise.”

How can lenders limit internal communication errors?

“Every lender needs clear internal communication procedures and transparency regarding what loans have been introduced to the lender, where they are in the underwriting process and whether they have been accepted or rejected and why,” said Jonathan Sealey, CEO at Hope Capital.

“The most transparent measure, if each underwriter is autonomous, is a clear database.

“It is also helpful to have frequent internal meetings to discuss what underwriting decisions are being made and why as this helps ensure consistency.”

Adam Tyler, executive chairman of the Financial Intermediary & Broker Association (FIBA), added: “The need for clear and concise communication is of paramount importance, however, it must be remembered that while every case is important, sometimes it’s value to the introducing broker can be underappreciated by a busy lender.

“Transparency would be enhanced by giving greater broker access to ongoing files through online communication and making sure that decision making is clear cut with a firm yes or no.”

Vishal concluded: “Of course, clarity of communication between sales and underwriting is key to limiting internal errors, but posing the right questions to the intermediaries and borrowers is more important.

“Having full transparency of the mechanics of the deal in question and then communicating this effectively between all relevant parties is key.  

“Use of clear templates, tools and technology can mitigate the risk of communication errors.”


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