CFI: Bridging


Still searching for the magic of Project Merlin


by Martin Kearns, head of strategic policy, Tiuta


Last month we had the latest attempt by the government and the major banks to air- brush the amount of real lending they are providing to small and medium-sized businesses. Figures from Project merlin


show that nine months into this lending experiment, only £25bn of gross lending has been placed into the hands of those businesses that so greatly need it. Lest we forget that the annual target is actually £76bn – to reach that in the last quarter of 2011 is going to need a massive push and, one suspects, a complete change of attitude by those banks involved. in a more horrifying figure,


the Bank of england says that net lending is just £0.4bn– a truly pathetic amount in anyone’s language. the attempt to fudge these figures and present them as some sort of major lending coup for all involved also leaves a somewhat sour taste in the mouth. Pop into businesses throughout the country and they will tell you the same story – there are still major obstacles to overcome in securing finance and Project merlin is nothing but a slight of hand sideshow.


Lifeline We have dealt with a number of firms who fall into the category of not being able to get the finance they need


from the big banks. it is certainly a truism that, for many firms, the short-term lending market has been a lifeline in allowing them to compete, fulfill orders and essentially allow them to take advantage of the opportunities that present themselves. now, ideally we would have


to admit that firms would probably like to secure their funds from the big banks because the rates would be lower. However, when this is a closed avenue the firms we have dealt with are happy to pay the higher rates in order to fill their business ambitions. the point is that, on the


banking frontline, little is being done to truly help those firms who need the finance most. criteria appears to be designed to throw out 99.99% of applicants – the ‘closed’ sign is up for the vast majority of businesses who attempt to open the lending door. this is sad and it appears to


be a significant mistake; the uK needs growth and most of that growth comes from Smes. if we want to improve our gdP figures we have to support those firms who are at the heart of the uK business


“The UK needs growth and most of that growth comes from SMEs. If we want to improve our GDP figures we have to support those firms who are at the heart of the UK busi- ness landscape”


thinking you’d turned up on another planet in which half of the intermediary market had been wiped out by some mysterious virus during the intervening years. in a way of course this was


landscape.


unfortunately, our lending will only go so far – others need to pull their weight or many more firms will simply have to tread water for the foreseeable future.


MBE 2011 Wandering around mortgage Business expo last month was certainly something of an eye-opener. if you’d jumped straight from 2007 to the 2011 event you’d be forgiven for


48 mortgage introducer DECEMBER 2011


exactly what happened; the virus was called the credit crunch and subsequent recession and it took a lot of people down. However, and i hesitate to use the analogy, there are a lot of individuals and businesses who have kicked back into life following a quick brush with the grim reaper. i wouldn’t say they are now the financial services equivalent of a reanimated zombie but they certainly talk and walk differently to how they did back then. However, the strength of


the characters and the entrepreneurial spirit of many of those networking at olympia 2 last month cannot be denied. as chumbawumba once bellowed: ‘i get knocked down but i get up again, you’re never gonna keep me down’. indeed, that would be a strong rallying cry for all financial intermediaries.


Bridging sector of course the other big change from expo’s past is the significant presence of bridging and commercial lenders,


distributors,


packagers, and so on. at tiuta we are long enough in the tooth to know that the market is not always likely to present such opportunities; indeed, with competition at an all-time high there is already much gossip about which lenders will be swallowed up quickly, and which might well decide that short-term lending was merely the first step towards medium and long-term ambitions. We hold great store by


responsible lending and having brokers


and


introducers at the heart of our business and service models; were we to move down a route where price became the be all and end all, then i feel we would essentially be walking down the road to nowhere. Bridging has clearly raised its profile considerably and this, in general, is a positive for the sector but with ‘great power comes responsibility’ and it is important that all stakeholders exercise this in their actions, words and deeds. expo showed the growing


influence of our sector and the major players within it, but we should try to hold onto our core values and cultures and not get caught up in a ‘war of words’ or ‘lowest


common


denominator’ practices. there is much to be


optimistic about however let’s ensure we all keep our feet on the ground.


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