What relationship-led lending looks like in practice

There is a lot of talk about relationship-led lending at the moment, and it’s become a phrase that gets used quite widely across the market, often in a fairly broad way.

But when you actually stop and think about what it really means in practice — particularly when things are not going exactly to plan — it starts to look quite different.

That difference has become more noticeable recently, because while there is still an appetite to lend and deals continue to get done, there is clearly more scrutiny across the market. That’s not just in terms of how deals are structured, but how risk is being assessed and how comfortable people are with what sits behind a transaction.

The level of questioning is different now, and the tone is more considered than it might have been even just a couple of months ago. There is also more time being spent looking at existing positions, not just what is coming through the door, which in itself says quite a lot about where the market is.

Alongside this, you have a wider backdrop that is not especially stable, which is feeding through into how people think about lending. Pricing moves, funding costs adjust — and even if nothing has changed on a specific deal, the environment around it has, which inevitably influences day-to-day decision-making.

Deliberate decisions

For us at Inspired Lending, relationship-led lending does not start with how you describe yourself. It starts with how you make decisions. Often that can come down to how you are funded.

If you are in a position where you need to deploy capital regardless, that pressure will feed into your judgement, whether you intend it to or not.

Our approach is more deliberate. If a deal is right, we will do it, but if it is not, or if we are not fully comfortable, then we are prepared to step back or wait, because doing fewer deals properly is far more sustainable than building funding volume for the sake of it.

That position naturally feeds into how we behave once a deal is completed, because most lenders can get a deal done at the outset. Most can structure a deal that works on paper and move quickly when required, but that is not where the real difference sits.

Real life happens

We have had several situations at Inspired Lending where a borrower was due to draw funds on a certain date but they simply were not where they expected to be, or things had not quite gone to plan.

You can take a rigid view on that and say the structure is the structure, but that does not necessarily lead to the right outcome for everyone concerned.

So instead, we step back, look at where the deal actually is, and work with our borrowers as far as possible, whether that is an extension of funding or an extension of time.

That, for me, is where the relationship side of things really sits. It is not about being flexible for the sake of it, but understanding what is happening in real time and responding in a way that supports the end result.

The bigger picture

Ultimately, if the borrower completes the works, delivers on the asset and exits successfully then we are repaid and they make their profit, so there is a clear alignment in terms of outcome.

I have had borrowers say to me that it feels like we are invested in what they are doing, and while we are not taking an equity position, there is a sense in which that holds true. Their success works for us, so it makes sense for us to stay engaged and help them get there, rather than stepping back and relying purely on process.

That doesn’t mean ignoring risk, and we don’t take that approach lightly at Inspired Lending, but there is a difference between actively managing a position and reacting to it in a way that is purely process-driven.

That is often where lenders can come unstuck, particularly when circumstances begin to move away from the original plan.

Ultimately, one deal is not worth undermining a relationship that could last for years, and I do think that is something the market is being reminded of. We are in a period where confidence matters, and the consequences of getting things wrong are more visible.

So for us, relationship-led lending is not just a line you put on your website. It is how you have to operate if you want to build something that is sustainable. It comes through in how you make decisions, how you respond when things change, and how those decisions hold up over time — not just at the start of a deal, but all the way through to its conclusion.