The options facing a business owner when seeking finance, both for themselves as individuals, as well as for their business, are profoundly different than before the financial crisis.
While most of the familiar names survive on the High Street, many of them have changed their lending policies, pricing and delivery channels. Each bank will have a different threshold, at which point they will deal with clients proposals and ongoing account management via the telephone, which is a culture shock to many in the North who were used to dealing face to face.
The number of experienced bankers, both in the areas of private banking and commercial lending, has certainly reduced in the last ten years as the mainstream banks have cut back their numbers in the North.
While most banks have continued to be positive on sectors such as healthcare and manufacturing, there have been quite marked differences in the experience of business owners involved in leisure and property. The latter sector saw a huge change in appetite from lenders, with some banks selling off whole chunks of their book to so called 'vulture funds' who were tasked to dispose of the loans in an 'expedient' manner.
This affected a lot of North businesses who up to that point had felt well supported by their bank, and in many cases has led to people not wishing to have all their banking affairs in the hands of one sole lender.
able to make relatively quick decisions, through less complex organisational structures
While there have not been many new lending outlets appearing on the High Street or business parks in the Highlands and Islands, there is now a whole range of options both online, or delivered through lenders in the central belt or England, who will make occasional trips north.
In most cases, these lenders will not offer money at as low rates as mainstream lenders. Where they are gaining business however is that they tend to be able to make relatively quick decisions, through less complex organisational structures. None of them propose to be 'all things to all people' in that they will have specific sectors they focus on, however by engaging a specialist adviser, it is quite easy to identify their niches.
their lending is not dependent on a business transferring all of their day to day banking
Very few operate a clearing bank facility, which means that their lending is not dependent on a business transferring all of their day to day banking, including transfer of bacs and direct debits, which is seen as an obstacle to moving from one mainstream bank to another.
These new lenders can have limitations when it comes to geography, with not all options available yet in the Highlands, far less the islands. In time this will no doubt improve, but for the time being, it is important to confirm the post code the lending relates to, so as to avoid frustration!
In Part 2 of this article, Hamish explores other methods of alternative finance, and demostrates how they could apply to your situation.
Hamish joined Bank of Scotland in Inverness directly from school in 1986. Following completion of his banking exams in Gairloch, he went on to spend most of the 90s working for the bank in the Central Belt in a variety of Branch, Credit and Business Development roles. He returned home to Inverness in 1999 and went to hold senior positions with both Bank of Scotland and RBS before leaving banking in 2013.
From there, Hamish joined City Financial Aberdeen Ltd as Business Development Consultant during a period of their expansion, where he continued to build up his substantial network across the North of Scotland, whilst also arranging commercial lending and residential mortgages for clients.
Now, at Munro & Noble, Hamish uses his extensive contacts in the lending world - both in mainstream banking as well as many of the niche and alternative sources of finance, both for residential clients and business owners.