Changing face of finance in spotlight

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THE recession has revived interest in alternative lenders who can help fast-growing firms to create jobs, a major Yorkshire conference heard.

The event – Challenging Banking – held at the Tulip Inn in Burn Hall, Huby, North Yorkshire, attracted 60 lawyers, accountants and other professionals who wanted to hear about “non-traditional” lenders who could help entrepreneurs access finance.

It was organised by Acorn Commercial Finance, with the Yorkshire Post acting as the event’s media partner. Challenging Banking aimed to open a debate about the lack of capital in the markets since the financial crisis of 2008.

High street banks have tightened lending criteria, which has created opportunities for alternative lenders, who are becoming mainstream. Smaller “challenger” banks such as Shawbrook, Aldermore and Interbay are increasing their market share, and there has also been a growth in pension-led funding, retail cash funding and crowdfunding. Representatives from these alternative lenders made brief presentations to the audience.

Crowdfunding, a largely internet-based means of raising money from the mass market for a project or business, can take various forms, including debt, equity, donations or rewards – with the latter seeing investors receive an item or services in return for their funds

Paul Thompson, a partner in Acorn Commercial Finance, said: “There are a lot of lenders and funding providers that people don’t know about. We want to get the message out there that, through using a broker, like ourselves, businesses have much better access to finance than might be the case.

“In terms of funding, there are myriad options,’’ he added. “There have always been many smaller lenders other than the big high street banks. Many of them specialise in different sectors, such as invoice discounting or asset finance.

“Since 2008, a lot of new lenders have grown up into the market place. We’ve heard (Business Secretary) Vince Cable talking about challenger banks, but there’s also areas like crowdfunding.”

According to Mr Thompson, crowdfunding could enable investors to back local businesses that might not gain support from the banks.

“The internet has made it possible to get that (crowdfunding) message across. We’re talking to professionals about this because they come into contact with these businesses every day.”

York-based Acorn Commercial Finance hopes to attract hundreds of investors and businesses when it launches its own crowdfunding website – www.acorn4finance.co.uk – in around three weeks’ time.

The website is being produced in association with rebuildingsociety.com, a website which connects businesses seeking loans with lenders looking to make a better return on their capital than through savings.

Dave Jones, a partner with Leeds-based Reward Capital, who spent 20 years in banking before moving into the asset-based lending market, was a guest speaker.

He said: “Every day the media is full of stories about alternative sources for banking. The banks need to push authority back down the line again. Far too often, we hear about the local guys, who are happy to support businesses, but the guys sitting in the ‘ivory towers’ won’t do it.

“I remember the days when they said you had delegated authorities to lend money, but then there were so many caveats underneath it, that they never actually got to make a decision.

“Everything had to go up the line, it’s still very much that way now. There’s a desire from people to drive business forward.

“When we talk to the businesses we’re supporting, they’re keen to get on with things. Access to finance is the one key thing that’s stopping business growth.”

Speakers at the event included Greg Wright, the Yorkshire Post’s deputy business editor.