What’s business appetite been like since the start of the year?
Extremely robust. The period after Brexit has been a bit like a phoney war. People have been waiting for something to happen but, aside from the slight slowdown in activity in July while people assessed what the vote meant for their firm, it really has been business as usual. January is usually the busiest time of the year for us, so we were a little concerned about the effect of Brexit. But there’s been no material slowdown. A lot of our clients aren’t exporters, but many are part of a supply chain. And in our industry, there is more competition than ever, with new entrants on a daily basis, and more finance options for SMEs than ever before.
Do you expect a delayed reaction?
We might see some “Brexit effect” coming through at the back end of this year. People are just getting on with it, but they’ll have to take a view once negotiations begin on whether they’ll be affected during that period. But 40 per cent of our clients are professional firms – accountants, solicitors. If anything, the effect for them will simply be that they’re much busier!
Have you seen a pick-up in demand for certain kinds of products?
Yes. We offer something called a Business Development Loan, which is all about giving businesses the opportunity to finance new initiatives. These are softer things, marketing, product placing… we’ve had an awful lot more new requests for that than this time last year. The signs are incredibly good. Our typical clients are sub-50 employee organisations, and they seem pretty buoyant about the future.
LDF has been working on lendinghive, an online lending platform for SMEs. Who’s the target market for the service?
Some businesses want to see salespeople, so we have them out on the road, spending time with clients. Then there are firms that want regular contact on a personal level, but a phone is fine. Lendinghive targets smaller businesses who are often too busy during office hours to arrange finance. It allows them to arrange the finance they need, when they need it.
Many firms already have relationships with brokers who arrange their financing; this is aimed at those who haven’t developed those relationships. We’ll be putting a lot of spend behind it over the next couple of months, including a big digital campaign.
Would you like to see government doing more for SMEs after Article 50 is triggered?
It is already doing quite a bit. The British Business Bank has been incredibly supportive in creating more access to finance for SMEs. It’s addressing the market and has created a lot of liquidity. There is a limit to what government can do, however, and that’s because you have to think about this in two ways: finance and access to it is something government can do – and is doing pretty well. If banks get concerned and start reducing lending, the government has already created a platform and significant supply to furnish SMEs.
But improving confidence, although it is something it’ll try to do, particularly if we do see new concerns arising, isn’t something it can actually do much about. The level of confidence a business has always depends on what kind of business it is. As Brexit is negotiated, many will put a big fat tick next to “what it means for my business”, but there will be sufferers. I’m incredibly optimistic about the future, but there are things you can’t predict. That’s why our clients are just cracking on with business as usual.
Source: Peter Alderson - LDF