Over a quarter – 27% – of commercial finance brokers say they have had challenges when trying to obtain finance for their clients because of changes in funder policies, a survey found.
Research conducted by specialist lender Asset Advantage revealed that 27% of respondents came across challenges either frequently or very frequently, while 57% said they faced difficulties occasionally.
Stricter underwriting practices were the main problem for commercial finance brokers, as cited by 34% of respondents. A fifth of brokers said changing interest rates and restrictions were a challenge for them.
Other obstacles included changes in the terms offered by funders, limited funding options and asset restrictions.
Commercial finance brokers coming up against hurdles
One respondent said to Asset Advantage: “It does appear to be becoming more frequent where there are more challenges being faced with a lender’s underwriting, where it has become more stringent rather than taking a more commercial view of the overall deal. Some of these problems are being faced on just standard flow deals as opposed to more complex transactions. It does sometimes make you question whether the lender wants to write any business.”
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Another said: “Following the Liz Truss premiership, it made the market even tougher with rates bouncing all over and lenders anticipating recession and difficult trading. Hardening of appetite was frequent and deals that had previously been done by a lender were now getting declined and this was acknowledged by different lenders. On top of this, clients’ expectations lagged behind where the market was in terms of rate, deal structure and security.”
Philip Knight, credit and risk director at Asset Advantage, said: “Our survey confirms that many brokers continue to face real hurdles as they navigate the market and the changing appetite and policies of funders. This restrictive and changeable approach not only makes it much harder for brokers to get deals over the line, but blocks good-quality deals that perhaps just need an extra eye or that fall out of the typical scope of a mainstream lender.
“We work super hard to maintain a consistent approach to our underwriting and present commercially viable conditions of sanction to our introducers. Whilst acknowledging that customers are often rate-sensitive, we like to think that our ability to simply get to deals with, where necessary, credible security packages makes us an attractive lender on any broker’s panel.”
A previous survey from Asset Advantage found that brokers felt lenders were less willing to lend on soft assets such as software, telecoms equipment, office furniture and soft furnishings.
