More on Urica

Unlike too many in the established finance industry, I am an enthusiast for the peer to peer lenders who have greatly shaken up the market to the borrowers advantage. Many tired “old school” brokers and acount managers simply cannot accept the changes and long for the days when they could bully borrowers into dreadful contracts with hefty hidden fees and unfoeseen restrictions.

The other side of the coin is that breaking into the market is difficult unless you have the right approach, the necessary backing as well as good relationships. Urica ultimately failed and whilst they had a very good product, I felt there were some siginicant mistakes

Firstly they had some very good staff and my main contact was excellent with whom I am remaining in touch. I found them very positive to deal with but whilst the business was brought down by a fraud which adversely affected the parent company, the numbers were simply not stacking up.

During 2016 their turnover was £93k but admin costs over £2m. 2017 brought a turnover of around £250k but costs of over £3m. The problem here was clearly that an extraordinary degree of growth was required before simply breaking even and whlst the increase in turover was a clear decent multiple over the previous year, it was hard to see how they could achieve the requisite numbers any time soon. A pity

The other difficulty was that I believe they made a false step when entering the market. Brokers may be seen as a necessary evil by some lenders but necessary we are to both ethe client and the lender. An early meeting with Urica gave me the strong impression that they felt they had little appeitie for dealing with brokers. In fact I am pretty sure that  explictly told that “we dont need brokers”. Given that the turnover was all of £93k I would have begged to differ.

Brokers work for commission and right across the market the rates are near enough identical from one lender to the next. Urica’s scheme was paying a pittance and whilst i am far from being driven by commission rates, it was so low that it generated no enthusiasm. I know this was acknowledged at a later date but I suspect that right across the market, the damage had been done.

 

 

Underneath the Arches

Having attacked the frightening struggle of the shadow business secretart’s understanding of actual business, it fair to balance this off with a perfect example of the governments total inability to think beyond the immediate bottom line

Network Rails  railway arches are up for sale en bloc to a single property developer. There are 4555 units and they are nearly all inhabited by small businesses or every type imaginable. Rents have been increasing dramatically and you could most certainly question why the government wishes to make life more testing for the small business community. These premises are the incubators of many many successful enterprises which are the basis of our economy. Isnt that the constituency that the governing party is supposed to represent?

Sale to a private landlord is surely going to make matters worse. There will be no consideration other than the bottom line and any sense of benign assistance to the small business community will disappear. This has been tackled in an excellent piece by one of our very best political commentators, Rachel Sylvester, in the Times. Its a political issue

Some may argue that the market should always prevail but to my mind that is frequently a shockingly short term view.

When the Tories have no consideration for small businesses and Labour are actively hostile then our community has nowhere to turn except perhaps the Libdems or (hopefully) a new centrist party.

Another thought that springs to mind is that the much maligned Gordon Brown set up the Businesslink network which I would credit for inspiring me to set up my own enterprise. There was a lot of energy behind enterprise under that administration and whilst some of that may have been misplaced at times, you could not imagine that the needs of the business community would be met with the familiar tin ear of Teresa May and her second rate cabinet

Why lenders need to clear out lazy underwriters

There are over fifty invoice finance providers in the market.  Its very competitive and that should be good for borrowers. In fact many lenders complain that there are “too many” players in the market That doesnt doesnt make their job easier but on the other hand, its no concern of mine.

In a crowded market lenders have to think a little harder about what they will and wont do and try to at least stand out in the market on one or other criteria. Unfortunately too few do

A perfect example is the case in relation to this case that I sent to one lender. Unfairly singled out maybe,  because the problem is prevalent

The problem with this is that when underwriters will simply reject because of sector and without looking at the actual transaction, debtors and company strength let alone trading history then that lender does not become first port of call going forward

i always explore full market off course but lenders who employ lazy old school underwriters are at a disadvantage when narrowing things down

In fact no lender is a “first port of call” for me but the message is clear

Too many lazy underwriters are being employed who just simply shout “no” at certain sectors. In fairness I can appreciate a lack of flexibility with one sector if that is counter balanced by appetite in another sector deemed as “tricky” but this frequently is not the case

For lenders to make an impact they need to look at what is holding them back and invariably this will be old school underwriters who are simply too lazy too look at businesses with the correct degree of attention

A clearout is required and the sooner the better

House of Fraser. A baffling comment

I generally refrain from commenting on poilitics on this blog but occasionally there are worrying comments from those who are supposed to be aiming to be in positions of power. In this case we are refering to the Shadow Business Secretary who would appear to know nothing about business. Nothing at all

Labour’s shadow business secretary Rebecca Long-Bailey said Conservative “inaction” had “prepared the ground for the likes of Mike Ashley to hoover up businesses,” Sky News reported.

Michael Mulligan, insolvency specialist at law firm Shakespeare Martineau, said: “Now that Sports Direct has acquired the House of Fraser brand – including all of the stock in the business – it will allow continued operation with a likely focus on the flagship stores.

“This will be welcome news not only for suppliers who rely on House of Fraser for their livelihoods, but also for all employees involved.”

What on earth is she talking about?

Do we have the worst banks in Europe?

Quite possibly. I have worked with a few european business people who say this is the best country to do business in but with the worst banks. I can  believe it

Today an important client of mine has experienced a level of service that is about as horrifying as I have ever come across. The people involved should be fired of course but we know they wont be.

His £6m turnover business has ground to a halt because the bank have stopped him having access to his accounts because they havent processed a simple form that he has completed and sent in twice. Now there is no one at the bank ready to take responsibility or even answer calls. Hes been hanging on lines for two hours at a time

Lazy time servers sitting there waiting for their pension whilst someone with genuine talent brains and drive tries to run a business.

 

 

Urica and a broker who should be shunned

First postscript to the Urica collapse was behaviour by a “broker” who to all intents and purposes should be shunned by every lender in the game.

His tactic was to tell lenders that he was the “appointed broker for Urica’s clients” and that if any lender took on a Urica client then he was entitled to the commission.

This was a fraudulent claim and should be treated as such

Urica were rightly unhappy and he has apparently written to various lenders apologising. Thats not enough.

His identity should be splashed right across Linkedin and every available platform. It goes without saying that hes not someone who would be trusted to work in the clients best interest and all the same we need to rid the sector of this scum.

 

Collapse of Urica

You may or may not be aware that another PTP lender collapsed a couple of weeks back. I was certainly sorry to hear the news given that I have a valued contact there and they were also creative in looking at gaps in the market.

Urica were brought down by a fraud which greatly affected their French parent business. I do not knw the full details but by all accounts the fraud was committed against a number of lenders including major banks. Its a familiar tale and one that elicits  a number of responses from established competitors, the most usual of which is that “the new lenders do not know what they are doing”

This brought me back to an unpleasant encounter with an arrogant ageing and somewhat drink sodden “broker” at a lenders dinner last year. He railed against the “new lenders” and predicted they were “all going to go to the wall”. Arrogant and stupid of course and even more so when without any hint of irony, he proudly told us he worked for Lloyds and HBOS

The dinner was half way up the Shard and sadly the windows were too reinforced to push him through, but it was tempting