A launch that makes commercial sense

Historically, Credit Strategy has been seen by many as a title largely focused around consumer lending - and there is some degree of truth in this.

While commercial finance providers have been recognised at the Credit Awards and in our Turnaround, Restructuring and Insolvency (TRI) Awards scheme, and have been represented at our Credit Summit and F5 events in particular, they have not had a space of their own in our product portfolio.

All that changes this year, as we will be holding our very first Commercial Finance Conference and Awards event on October 31.

The event will focus on the two largest branches of UK commercial finance - asset finance and invoice finance - although it will also take in a range of alternative lending types, as well as speaking to the broader world of business banking.

Personally, I have been following the UK commercial finance sector since the financial crash of 2007/2008 - it was my beat as a journalist from 2008 through to 2013, and I’ve kept up links with lenders ever since. In that time, I’ve seen the industry serve as a vital lifeline to countless thousands of UK SMEs; in 2009, when bank liquidity was scarce and unsecured lending was constricted, it was asset and invoice finance providers that stepped forward with the funding businesses needed to stay on their feet, and they haven’t look backed since.

Invoice finance saw a remarkable boom as we moved into this decade, while the world of asset finance and leasing has grown steadily over the years to become a powerhouse. Asset finance companies currently fund one third of the UK’s machinery, equipment and software purchases, while first-quarter figures from the Finance & Leasing Association (FLA) showed their lending is still increasing above projections - for deals up to £20m (which is most of the market). New business in March was also 14 percent up year-on-year, and this rate of success is expected to continue.

The National Association of Commercial Finance Brokers has grown too, going from a backroom operation to a huge and respected body of intermediaries under the 11-year stewardship of Adam Tyler. From a position of near extinction in 2009, brokers have held on by their fingernails and become a thriving, vital part of the UK’s SME funding machine.

Feeding frenzy

Of course, things aren’t all perfect. One look at the NACFB’s own commercial finance expo will show even the casual observer, especially one who has been around a few years, just how much money is looking to get out into the market. New lenders seem to be springing up every month, in both the traditional arenas of asset finance, invoice finance and property lending, and a host of more exotic, tech-enabled funding brackets.

This is great news on the surface, but talk to the veterans present and you’ll find it makes them nervous. There hasn’t been such a frenzy for lending in more than a decade, and many feel there are some worrying parallels with the way the market overheated in 2006.

Of course, it’s at times like this that lenders need to work together, assess the prudence of their lending strategies, and find a balance between volume growth and sustainability. At Credit Strategy, with our long heritage in credit, risk and financial technology, we humbly think that’s something we’re in a good position to facilitate.

If you’re reading this from a position working at, or with, a commercial lender, I look forward to seeing you at our Commericial Finance Conference and Awards in October.