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Commercial news
05
AEGON unlocks business
Banks refill the
protection opportunities
finance gap
With around 4.7 million private surrounding this market.
sector businesses in the UK, and a Small and medium sized Banks are supporting individuals future of banking regulation. She
potential market of around £500 enterprises (SMEs) account and businesses, according to British said that although the subject was
million, AEGON is running a for around 99.9 per cent of Bankers' Association chief executive regulation the key issue for everyone
series of workshops designed to all businesses in the UK, and it Angela Knight. today was getting the economy
unlock the opportunities for is these businesses which are She said the major high street moving.
advisers to generate new income more likely to be vulnerable in banks were currently providing The British Bankers' Association
streams through business the current market conditions. around two-thirds of all new home agrees. It said information released
protection. Rod McKie, head of individual loans and were stepping up to fill by Lord Mandelson, five weeks
Given the current economic protection at AEGON said: the lending gap created by overseas after the introduction of the
climate, AEGON believes it is "These interactive sessions have banks retrenching to their home Enterprise Finance Guarantee
more important than ever that proved extremely valuable in markets. scheme, show that £40 million
advisers help businesses protect helping advisers identify those Mrs Knight said UK banks were pounds of business loans have
themselves against the possibility clients who need to understand willing to lend and were acting to been offered by banks under the
of the unexpected happening to a the importance of protecting help the UK economy: "UK banks EFG, proving that banks are
key individual within the business their businesses and the demand are working to support individuals keen to lend to viable small busi-
or shareholder. has been very positive. and businesses and to fill the UK's nesses.
AEGON has carefully designed "In addition to the workshops, lending gap. But demand is weak BBA Director Paul Ross said:
the workshops to highlight the we have also developed an online with people being cautious and "[The] figures show that UK banks
advantages of businesses having toolkit to further help advisers repaying short term loans. are willing and able to provide
adequate protection and to over- recognise the potential of this "There is a limit to how much of credit to small businesses . The
come the perception amongst valuable market.” the burden banks can bear alone. Enterprise Finance Guarantee
advisers that business protection is For more information about They are being squeezed by calls to scheme is only in its infancy but is
over complicated, especially when business protection please visit lend more - while they being told already helping banks provide
it comes to the tax and trust issues businessprotection.aegonse.co.uk/ that they need to look for deposits small business finance to viable
before doing so. businesses which might otherwise
"And there are fewer lenders struggle to get credit . Banks are
Landlords urged to check tenants
active in the market. Banks are working closely with their cus-
already providing around two thirds tomers to help them in difficult
of new home loans as others are economic conditions and with the
Landlords are taking unnecessary quarter of landlords (26 per cent) currently unable to provide mort- government to find new and inno-
risks in the current economic envi- have experienced a tenant leaving a gages. Banks are still lending - even vative ways to support the UK
ronment by failing to adequately property without paying the rent, for cars and vans where, traditional- economy and to provide lending to
check the background of prospec- while 14 per cent have been forced ly, loans have come through finance firms."
tive tenants, according to Paragon to evict tenants for failing to pay the houses. They are being looked to to Mr Ross said banks were also
Mortgages. rent. fill the gap in large business finance working hard to ensure their
With unemployment and the John Heron, Paragon Mortgages' caused by overseas lenders retrench- staff were aware of the scheme
general cost of living rising, and managing director, said: “Tenants ing to their home markets." and able to provide the support
household budgets coming under leaving a property without paying Mrs Knight was addressing the required by small businesses in the
increasing pressure, landlords have rent is a more common occurrence Society of Conservative Lawyers on current climate.
to minimise the risk of exposure to than people think and a large num-
tenants who could run into arrears. ber of landlords will experience this
A comprehensive tenant assess- problem at some point.
Rent guarantees prevent repossession
ment allows the landlord to verify “We could see a spike in the
the tenant's identity, employment number of tenants bailing out from Keshav Thukaram, managing complacent in promoting rent
status, creditworthiness and finan- a property without paying rent in director of Smartlandlord.co.uk , guarantee products as a means of
cial history. Conducting a tenant the current economic environment has called for more awareness of fighting rental arrears, voids and
assessment reduces the risk of the as unemployment rises and increas- rent guarantee insurance among the threat of repossession.
tenant defaulting on payments or ing numbers of households struggle buy-to-let landlords. "A sustained campaign is need-
absconding from the property with- with their finances. "Mortgage arrears in the private ed to protect both tenant and
out paying rent. “Landlords wouldn't buy a prop- rented sector are rising, particular- landlord against the misery of
According to Paragon research, erty without making the necessary ly as a result of tenants failing to repossessions. We are determined
nearly a third of landlords (32 per checks, so why would they let some- pay their rent,” he said. “In uncer- to be at the forefront of this cam-
cent) never carry out a tenant body rent a property without carry- tain times, landlords need to pro- paign. It is vital that landlords take
assessment on a prospective tenant, ing out a comprehensive assessment tect themselves against this. a proactive approach to managing
with a further 22 per cent stating first? Carrying out a tenant assess- "Unfortunately, many landlords their portfolio by making the best
that they only check new tenants ment for prospective tenants should are not yet aware that rent guaran- possible use of the tools available
occasionally. be part of a landlord's everyday tee protection exists and letting to them to save money and
This is despite the fact that over a business plan.” agents are often dangerously increase stability."
www.mortgageintroducer.com March 2009 Commercial Finance Introducer
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