Commercial Finance – CS Financial
We are going to take a look at what commercial finance is, the role of an industry specialist, the different products on offer and the type of advice we can give to our customers in order to receive the best deal.
What is a whole of market and independent whole of market commercial finance specialist?
Being independent and being whole of market means you’re not under any kind of pressure to promote one lender or another. Therefore, rather than going down the line that you might see if you went to the bank or someone directly, there is only you to worry about.
This is a more bespoke service. There is no sourcing and filtering down from a few hundred deals. We look at what’s out there, speak to some lenders and find out what your best options are.
You offer a number of products and services under Commercial Finance, what do these include?
We cover residential and commercial investment property, bridging finance, short term finance, development finance, asset finance, unsecured lending, expat buy to let and international investment (which covers many areas). It is a very bespoke offering. The products we offer can fit under any of those listed above or none of those as well, which is great.
Bridging finance is one of the products that you don’t see too much of on the residential market, but definitely in the commercial. It’s probably more present. Someone’s not necessarily agreed to purchase and the sale at the same time but they are looking at moving, or getting things into place. We can approach a lender and hopefully get that put in front of them.
The unsecured lending is also quite interesting because that’s quite new to the firm. This is quite unique and probably one of the main aspects that changes this from the traditional commercial mortgage, into more of a commercial finance aspect. It isn’t just necessarily limited to property.
The market is very wide open. The best step we can take is to try and present all this in a way that makes sense to someone, and hopefully secure them the right deal.
What is the expat Buy to Let offer?
We get a lot of inquiries about this. We get a lot of estate agents that work with clients who aren’t necessarily based in the UK that may have links to the UK, or they may have moved away or they may have family here still.
It doesn’t necessarily mean it has to be someone from the UK, who’s no longer here. It’s for anyone who’s looking at a Buy to Let, but it’s a solid investment. It’s a massive market and we have a lot of opportunity for international investment.
A big advantage is we’re not limited by the location of the client. Therefore it’s irrelevant whether you are in the US, in an EU country or in Dubai. We can offer something to you anywhere. This can be carried on as if you were in the UK essentially.
We do have a couple of limitations around it. For example, you have to employ a UK solicitor for the process. However, that is standard and to be expected anyway. It’s great to have that opportunity open to us as well.
Are there any other products on offer that we might have missed?
There’s a whole range of other specialist markets that we can tap into. One of the difficult markets that is often hard to get financing, or limited with your options is for example, charity or the non-profits.
We’re not just approaching this for profit. We’ve also got specialist options. A lot of people who are either in the leisure industry or the fitness industries, could traditionally struggle with some of the limitations. Especially in the past year with lockdowns and the restrictions.
We have access to all of these markets, as well as the agricultural markets too.
Do you have a typical client in terms of residential and commercial?
When we talk about commercial finance, you’re probably going to be thinking of big business. Most of the enquiries we get are from small businesses. We’re talking single figure employees or the low double digits.
It’s not necessarily a market that’s got a lot of barriers to entry and it’s not something that people are always going to get turned away from. Unless they’ve got for example, 50 million pounds in the bank.
With it being taken on a case by case basis, there’s usually something for everyone. Even looking at the expat buy to let market. If you’re a single worker abroad and you want to buy a place here and rent that out, there are options for you.
The way it works is, we approach the lenders and find out what the best options are for you at that current time and go from there. We have the facility to go to the mainstream lenders, at the cheapest rates for the massive deals. We’ve also got services for the smaller businesses and for sole traders too.
Another key aspect of being a whole of market, is that on the residential side of things, if there’s something that we haven’t got, we can go out and make it happen or find the equivalent. There’s also absolutely no restrictions on the commercial side of things either.
What is the process, in terms of commercial finance, that customers would follow from start to finish?
The process is always going to start with someone deciding that they’ve got a need to raise some kind of external finance. They’ve found a reason or they found something that they think is worth going for.
Most people tend to look at what the banks are offering. We can go to the banks for you too. We can go through your bank and negotiate on your behalf, similar to the way that we work things in the firm across the market. We’re always there for the client themselves, rather than representing one or another.
People are most likely to start with the first bank and then might do a quick Google search afterwards. We’ve got access to peer lending and options as diverse as that. Our first intention is always going to be to try and get you the most suitable rate.
The process broken down:
Step 1 – A basic overview and some information about what you’re after, what you have looked at so far, how you are planning on paying for it, what kind of product you would like and your expectations.
It’s not necessarily as in detail as you might think for commercial finance. We’re not asking at this stage, for four years of accounts. We’re not asking for proof of this and proof of that. It’s just an overview. We take that information and approach a few lenders we think are best suited.
Step 2 – We speak to one of the representatives of the bank and put the case before them, see what they come back with. We then put those options in front of you. If you think this is the right option for you, we move on to the next stage.
We genuinely know from the first discussion, whether we’re going to be in a position to help you and also with what kind of indicative rate you’re going to be getting.
Step 3 – When we’ve got the basic information in front of us in terms of price and what you’re going to be looking at. From here we look at the whole issue of the terms of business, “This is what we need from you. This is what you need from us. This is the fees that are going to be involved, and this is when they’ll be payable and so on.”
Step 4 – Submission time. It’s time to get the ball rolling. Since Covid19 hit, people have been restricted to working from home or there’s been reduced amounts of people in call centers and underwriting teams etc, and things are taking a bit longer to get done from here.
We were looking at the start of last year, an average turnaround time of around about four months. What we’ve actually seen now and at the end of last year, is more towards the six months to seven months mark.
That is the whole process, from inquiring to the money in your bank for some of the bigger purchases. That’s not to say that’s going to be the case for everyone. If we’ve got an expat who’s just after a buy to let and they’re putting down a 50 percent deposit. There’s no reason they can’t move just as fast as it would in the residential market.
We do, of course, have access to those short term products as well. So for any kind of short term unsecured lending or financing averaging, they are on offer as well. You do tend to find that with some of the larger cases, they can take a bit more of the underwriter’s time and lenders time too and that is reflected in our turnaround times.
A new way of communication or not?
On a positive note, we’re up there on an international scale and a country wide scale. We’re not restricted by the geographical limitations of just seeing people face to face.
There’s alway advantages and disadvantages, but it will be great to get out and about again and meet clients face to face. That’s not to say that things aren’t still in process currently. All in all, the best time to start the process is sooner rather than later.