Not all peer-to-peer lenders are worried about the dreaded Brexit effect, as Huddle Capital’s marketing director Neil Scaife reveals…
BREXIT has loomed large over the peer-to-peer lending community over the past few years. But while many lenders have spoken out about the dreaded Brexit effect, Huddle Capital remains unconcerned.
“In the small local niches that we deal with – whether that’s small- and medium-sized enterprises (SMEs), or small local property developers – we don’t believe that Brexit or any of these other events will have a material impact on our ability to source these deals or our borrowers’ ability to pay them,” says Huddle Capital’s marketing director Neil Scaife.
“We very firmly believe that, for the amount of capital that we’re looking to deploy, we will always have a quality pipeline of businesses run by competent management teams with adequate security, with a sensible business model, that have got the ability to repay us.”
He points out that, as a smaller lender, Huddle Capital has the flexibility to deal with smaller SMEs. By contrast, larger platforms who have much more capital to deploy may feel more pressure to lend to international companies which are involved with currency exchange or the import/export market.
“Brexit matters for them,” he says. “But we believe that if you’re a smaller UK business and you’ve got a decent business model, and a strong management team, you’ll always be able to run a business and make a profit despite what’s going in the rest of the world.”
Huddle Capital was founded in 2017, during a turbulent time for UK-based businesses. In the aftermath of the EU referendum, economic growth was slowing and uncertainty prevailed among SME owners. But Huddle Capital’s founders had enough experience in business to know that – Brexit or no Brexit – SMEs will always need access to fairly-priced funding. And by hand-picking the most stable businesses, it can provide that service without exposing its lenders to undue risk.
All of Huddle Capital’s borrowers come to the company through its introducer network. Then, the platform’s in-house team will run their own credit searches and liquidity ratios on each potential borrower. After this, all deals are passed to the underwriting team for manual validation. If everything checks out, the team will arrange a personal conversation with the borrower, so that they can “get underneath the logic of the management team, understand what they need to do with the money and how they think they’re going to pay it back.”
As a result, Scaife describes Huddle Capital as being “sector agnostic” when it comes to choosing borrowers. “We’re prepared to look at each individual business on its merits,” he adds.
Huddle Capital’s own management team is made up of experienced business people from multiple business sectors, which gives it an advantage when it comes to business lending.
“We understand a lot of the pitfalls that our customers suffer,” says Scaife. “And we also understand where borrowers can attempt to pull the wool over our eyes. This makes us much better placed than some of our peers. Our business model isn’t just about the underwriting and the lending – it’s our understanding of how to collect.”
These core traits have allowed Huddle Capital to create a lending model which is effectively Brexit-proof. No matter what the year ahead brings, Huddle Capital is ready for it.