"Too often, breakdowns in communication – between brokers and SMEs, or brokers and banks – hinders the delivery of support British businesses so desperately need right now."
We spoke to Nick Baker, head of intermediaries at Allica Bank, about the lender's recent surge in commercial mortgage applications and how commercial can best support their SME clients in the current environment.
CR: Tell us about Allica Bank and your role.
Established small businesses are the driving force of the British economy. But they’ve been left behind by the big banks, who have stripped away their local relationship managers and tailored SME support.
At Allica, we’re reimagining relationship banking by building a bank especially to serve established SMEs like these. We combine modern tools and technology with having feet on the ground in our local communities. This personal relationship allows us to truly understand each of our customer’s individual needs and provide support tailored to their business.
I have been head of intermediaries at the bank since October 2018, and in this role I am responsible for building and growing our relationships with SME finance brokers. This is currently the primary route to market for our products, with brokers and other intermediaries, such as accountants, facilitating our support for British businesses.
CR: Allica Bank has seen a 235% surge in commercial mortgage applications since June, why do you think that is?
Allica Bank has seen a surge in demand for new business lending since the national lockdown ended, and has just reached the joint milestone of issuing over £250m of approvals in principle in 2020, and over £100m in committed loan offers since June to established SMEs across the UK.
As the UK’s newest full-service SME challenger bank, we are building significant momentum in lending and deposits. Allica has secured over £100m in deposits over the last six months and is now averaging over £25m per month in committed loan offers to established SMEs.
The focus for Government and mainstream banks has understandably been on providing support to those businesses most at risk from the impact of Covid-19. Unfortunately, the unintended consequence is a sharp fall in available credit outside of the government schemes.
Our research confirms that many established businesses, including those less affected by the issues around Covid-19, are seeing lending supply decline sharply, with a sizeable funding gap opening up for established, mid-size SMEs. These companies make up a quarter of the economy and are the very businesses that will help shape the economic recovery of the UK – but only if they are not continued to be forgotten.
Thankfully, Allica Bank is in a uniquely strong position to provide that support – as is being borne out in the surge in demand.
CR: How can commercial brokers best support SME clients?
At Allica Bank, we believe the keys to successful relationships are clarity, collaboration and communication. Too often, breakdowns in communication – between brokers and SMEs, or brokers and banks – hinders the delivery of support British businesses so desperately need right now. Similarly, this communication can only be effective when it isn’t laden with indecipherable jargon. At Allica Bank, we ensure all of our communication with brokers is clear and straightforward. That’s why in our latest broker survey, 78% of brokers rated their overall experience of Allica Bank as ‘Very good’ or ‘Excellent’.
There must also be close collaboration between brokers and lenders if we are to deliver the best possible service for businesses – we all have the same end goal in these relationships: to support SMEs. But that can only be achieved by working together to understand each individual business’ wants and needs in order to deliver the right finance, at the right time.
CR: What’s the biggest challenge for SMEs right now?
The biggest challenge for SMEs will be building back from the impact of Covid – there’s uncertainty on the road ahead and that’s always unsettling. The pandemic has been especially turbulent for certain sectors, including hospitality and retail, but many businesses have proved their ability to adapt and innovate to continue doing business when the economy seemed to stall overnight.
Central to whether businesses will make a swift and successful recovery from the crisis, are banks. The banks have been come to the rescue with the government support loan schemes, but the longer picture shouldn’t be ignored, it’s important SMEs can continue to get the finance they need as these schemes draw to a close.
It is for this reason we at Allica Bank have doubled down our efforts, accelerating our fundraising plans, expanding our hiring efforts and fast-tracking our product development, all to ensure we have the capacity and the capability to deliver for British businesses now and in the long term.
CR: If you could see one headline about financial services in 2021, what would it be?
'Funding for SMEs hits record highs as UK economy completes recovery from Covid-19'.