"We have continued to write business over the past 12 months, structuring tailored ABL facilities for individual business needs."
CR: Can you tell us a bit about your role at Nucleus Commercial Finance?
I joined Nucleus Commercial Finance in the midst of the pandemic as regional sales director in the asset based lending (ABL) team, structuring facilities of up to £50 million. I’m based in Yorkshire, covering the North of England, and I am responsible for expanding Nucleus’ proposition in the region, with a focus on debt funding and the VC space. Having grown up in the area, I’m committed to supporting the local market and providing more flexible finance solutions to businesses in a traditionally underserved part of the country.
CR: What challenges are you seeing in the SME lending space?
The pandemic has clearly caused significant challenges in the SME lending space. In some quarters, the availability of funding has been limited to the Government’s Coronavirus Business Interruption Loan Scheme (CBILS), with high street lenders primarily focusing on existing customers. This is where fintech lenders have demonstrated their true value by serving both existing and new customers. We have played an important role in CBILS, providing over £180m of much needed funding to SMEs, but our ABL business has also remained active throughout the pandemic. We have continued to write business over the past 12 months, structuring tailored ABL facilities for individual business needs. I am particularly proud of originating and transacting a funding facility to support a management buyout.
Looking forward, with earnings for many businesses remaining volatile for some time, even after we move out of lockdown, we increasingly expect ABL to be seen as an attractive alternative compared to more traditional types of lending.
CR: What opportunities are you seeing in the SME lending space?
While the refinancing and restructuring market continues to be quiet, with businesses continuing to take advantage of other forms of liquidity such as CBILS, furlough, Time to Pay and creditor deferrals, we have seen a pick-up in M&A activity. This is in part driven by businesses looking to divest of non-core subsidiaries to improve focus and release cash, but also business owners who might have been considering exiting over the next few years are now accelerating this process. We have also seen businesses looking to secure their supply chain through acquisition in a post-Brexit world, with private equity firms being involved in a number of these transactions.
CR: What is your post-CBILS outlook?
With CBILS coming to an end at the end of the month, and repayments starting to kick in on some of the early loans, we are increasingly having conversations with businesses about planning for the future once the various government support schemes wind down. There are many factors for businesses to consider, including uncertainty around their own finances, but also traditional forms of lending likely to remain scarce. Taking this into account, we believe asset based lending, working either alone or alongside private equity, will play an important part in the recovery of the UK economy.
CR: If you could see one headline about the alternative finance industry this year, what would it be?
'Pandemic recovery led by asset based lending'!
