Behind the Doors of Cheval

Behind the Doors of Cheval



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Once again B&C took to the road to discover in more detail how bridging companies operate. This time, we were invited for a sneak peek into the inner workings of lender Cheval Bridging Finance, where Gavin Diamond and Neil Molyneux explained the company’s set-up, why they place so much emphasis on education and how Cheval’s experience helps differentiate it from other lenders in the market.

Chatting over coffee in one of the company’s meeting rooms, Gavin Diamond, the company’s Finance Director, explained that, despite the majority of their business being unregulated, Cheval does occupy a space in both the unregulated and the regulated sectors of bridging.

Relationships with brokers

The key, according to Neil Molyneux, Business Development Manager, is that through their relationship with brokers they actually try and help them improve their business.

Neil operates in a dual role – both business development and sales and marketing. He told us, “I focus heavily on the existing marketing introducers are doing – most are very good at putting deals together but not equipped to make phone ring. I help them find one area that they can use to compete and differentiate themselves from the others in the market. It’s about helping them to be memorable and coming up with a message that stands out.”

By offering this kind of education, Neil finds Cheval manages to build proper, lasting relationships.

Another thing that helps strengthen relationships with introducers is problem solving. Sometimes, Gavin explained, it is not always the simple transactions which have the most impact. He said, “Bridging is never vanilla, so if you solve a huge problem in a case, it can definitely make a relationship stronger.”

Because bridging is so complex, the company emphasises trying to work around problems – Gavin told us that on average around 25 per cent of all enquiries will complete, with the key to success laying within making packagers’ and brokers’ lives as easy as possible. With this in mind, Cheval has gone some lengths to ensuring that as much information is presented to them at the outset, and have redesigned the Agreement in Principle to ensure that it best displays everything that a broker would find most useful.

Funding

Gavin explained that Cheval is funded both by private shareholders and a line of lower cost funding from Clydesdale Bank. Although some banks are known to restrict what their funds are used for, the Clydesdale line is not overly narrow, and 90 per cent of the company’s deals are funded by the bank. However, a bank will never fund the full amount of a loan and expects some of the funding to come from the shareholders to mitigate its own risk.

The thing banks are most concerned with is the type of security on offer and whether or not this will be suitable for a bank loan. However, if Cheval sees a worthwhile deal which the bank is not happy to fund the company has the resources (shareholders’ funding) to go ahead with a deal anyway.

Experience

Cheval is known for being well-established, having been around since 1995. Gavin joined the operation in 2007 and Neil came onboard back in May last year.

So how does this experience give them an edge in such a competitive market?

Gavin said: “A lot of people are chasing similar deals and the market is very competitive. At Cheval we know what we do well, and we want to build lasting relationships with brokers.

“A lot of people try to attract business by claiming to be cheaper or by claiming to pay the most. What we focus on is the relationships we have with brokers and the service we offer. There are no smokescreens or mirrors that we trade on.”

Set-up

We wanted to know what a typical day might look like for this veteran lender. Gavin explained that enquiries come in one of three ways – either via the website, email or phone. Ultimately however, in order for an enquiry to progress it must be submitted through the online enquiry form.

At this stage, a member of the team will discuss the potential deal with the introducer in an effort to gain a high-level picture outline of the deal. This is also when the Agreement in Principle is offered.

The only way to make a deal work is to take everything into account, Cheval emphasised to us. As a result, there is no set time-frame, particularly when dealing with a broker for the first time – who may not fully understand why certain information is necessary for a deal.

Gavin said, “Bridging is one of the few areas in consumer lending where an underwriter actually underwrites. The underwriter needs to be able to explain to the introducer what they need and why they need it – in our company they have a considerable amount of interaction with the introducer.

“There are always things that come up in a deal though, and this is when our underwriters need to work with the rest of the company to find the best solution.”

With communication so key at Cheval, Neil explained that he comes into the office once a week to go through deals. Primarily, he is the individual in the company most likely to have to explain to an introducer why a deal has been rejected so he needs to be familiar and confident about the reason why.

Visiting Cheval’s offices, it is evident that this is a company which focuses heavily on not only building but also maintaining relationships. With so much experience in the market, and (despite downsizing) having managed to weather the storm of the economic crisis and continue to lend, it appears that Cheval has long identified its strengths – relationships and service – and now focuses on operating in a way that best promotes this.

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