An introduction to alternative finance on a grand scale at NACFB’s Commercial Finance Expo

Many of the movers and shakers from the alternative finance world were in Birmingham this week, taking the chance to meet hundreds of introducers – all under one roof.

Pensionledfunding.com’s Mark Johnson was among them at the NACFB’s sixth Commercial Finance Expo, making new contacts and catching up with old friends and introducers he has known for many years.

[image type=”thumbnail” float=”left” src=”/wp-content/uploads/sites/2/2015/06/blog_mark_jonson.jpg” alt=”Mark Johnson – Associate Director at Clifton Asset Management” info=”none” info_place=”top” info_trigger=”hover”]

“Potentially we can meet up to 500 introducers in one place which would take us months to do if we made individual appointments,” said Mark, who was joined on the PLF stand by colleagues from sister company Clifton Wealth Ltd.

“The fact that we are able to talk to the introducers when they have had the opportunity to see many other offerings allows us to position PLF against the other providers and ensure they see the benefits of what we offer.”

The enormous potential of the Expo is not restricted to individual businesses such as pensionledfunding.com but extends to sector partnerships.

“We have the opportunity to present how PLF can work in collaboration with other providers to give the SME an efficient basis for funding.

“This message tends to hit home much more while the introducer is talking to everyone else and is fully focused, which isn’t always the case when they are in their own office with many other things on their mind,” Mark points out.

Mark, who has worked with the NACFB on their compliance and education committees, has been attending the event in its different formats for around 15 years.

“Initially, they started off as half day events where providers had their own table with a few leaflets and since then has morphed into a very successful and well respected expo format. The numbers have consistently grown over the past five years.”

Now Mark has live links to the pension-led funding portal to give practical demonstrations of what PLF has to offer to introducers and potential clients.

“The Expo allows us to remind people of our brand and offering. We put faces to names and introducers and customers have time to ask questions about the complex nature of what we do.”

There is the opportunity to look at the bigger with guests including the British Business Bank and the chance to catch up with the board of the NACFB.

Mark said: “The Expo gives us the ability to discuss how we can work together, discuss market conditions, see what new innovations are working, and recommend introducers to each other’s stand when we identify an alternative need.”

Gold medal effort

Readers of my regular blog articles might recognise several themes that I tend to re-visit fairly regularly.

Transparency, choice and collaboration are the most important of these themes and all carry more importance as the SME finance market changes with the triple effects of attitudinal shifts, government intervention and technology advances.

As a result of our ground-breaking initiative to promote alternative business funding through the web portal, alternativebusinessfunding.co.uk, I have come to understand that the positive effects of collaboration cannot be ignored.

There are plenty of corny motivational slogans extolling the virtues of “pulling together” and informing us that we are “stronger together”, but the conversation needn’t be hi-jacked by the fluffy, feel-good connotations of collaboration.

No, this is really about sound business logic and good commercial outcomes.

Distributing risk and reward, sharing due-diligence and providing creative choices to clients are not promises for the future. This is happening now.

The hegemony of the late 20th century banking system is being dismantled by regulation and commercial necessity. Such has been the dominance of this model that an inevitable vacuum has been created.

Nature abhors a vacuum.

It is my opinion that this vacuum will be filled by an array of options, some not even developed yet, and initiatives such as the alternativebusinessfinding.co.uk portal will enable the transparency and choice I believe business owners crave.

UK businesses explore finance options

Business owners have had to deal with a lot of changes since the onset of the current financial meltdown in 2007. Not least being the fundamental way that lenders have had to respond to circumstances by changing, often drastically, their attitude to individual businesses.

I talk to a lot of business owners who are simply confused as to why good, long standing relationships appear to have been replaced by (as the borrower sees it) by a short-term view of the world, often revolving around their last set of accounts.

There is no doubt that we are all going through a re-evaluation of risk. From major High Street players to the quirkiest forms of corporate finance, lenders are looking at their books and planning to reduce their exposure to loss. This impacts businesses in a real way. Access to capital is a critical part of the equation for growth.

Without access to capital businesses will start to alter their own risk outlook. This means not taking on larger jobs, not hiring the extra person etc. There is no way to sugar-coat the fact that starving UK companies of finance will mean an extended period of extremely low (or no) growth.

The Government has recognised this and seems committed to rolling out ever more programmes to try to ease the flow of funds from the centre out. While we have to applaud any initiative that tackles the problem of financing SMEs, I think it is unrealistic to expect these to work in any dramatic way.

Business owners are quickly adjusting to the current climate with a real interest now being shown in financing options that provide long term access to capital while at the same time not requiring levels of security for that lending which, to be frank, a large majority of SMEs are either unwilling or unable to provide.

Hence we have seen an upsurge in interest in Invoice Finance and Pension-Led Funding, both of which leave considerably more control over the funding in the hands of the business owner and, in the case of Pension-Led Funding, can utilise assets in the business that most other lenders will ignore, such as Intellectual Property.

Being agile and quick to respond has always been a strength of business in the UK and we can already see that as the landscape of corporate finance changes rapidly, business owners are adapting to these changes and finding solutions that will allow them to prosper into the future, whatever that looks like.