Mark Standley, national commercial director at Assetz Capital, explains how the government-backed loan scheme will benefit all types of investors on the platform…
Having successfully delivered more than £370m of funding to small- and medium-sized enterprises under the government’s coronavirus business interruption loan scheme (CBILS), Assetz Capital has now been approved for the recovery loan scheme (RLS) and is ready to help businesses reach their next stage of growth.
“We applied right away, though the accreditation is a lengthy process and we received our final approval in the second half of July,” says Mark Standley, national commercial director at Assetz Capital.
“As you can imagine, we weren’t sitting on our hands either – we were busy getting ready and so we were able to get going straight away once we received our approval.
“We enjoy strong demand for our services, and RLS has shown to be a good fit for property development and commercial mortgage lending. We have been reviewing eligible cases and already have a healthy pipeline building up.”
There are differences between CBILS and the government’s successor initiative, RLS. The former was introduced at the height of pandemic, a desperately worrying and uncertain time for business, and consequently provided significant financial assistance with borrowing costs. With a vaccination programme well underway and a generally more positive outlook, it makes sense that RLS as the successor scheme supports access to funding for business at a reduced cost to the taxpayer.
“The key fundamental difference is that there is no business interruption payment, whereas under CBILS the government was essentially paying the full loan finance costs for the first 12 months,” Standley explains.
“That’s no longer the case, so it’s a step back towards a more normal situation.
“RLS is a valued enabler by way of the government guarantee. It’s a great assist for lenders in helping them to support borrowers impacted by the pandemic without the huge cost of CBILS which of course could not go on indefinitely.”
Assetz takes the same disciplined and professional approach to assessing loan requests with RLS as it does with all of its lending.
“What’s very important to understand is that it’s not an opportunity to transfer risk unfairly across to the government,” Standley asserts.
“We approach our due diligence and credit review in a very similar way to how we would have conducted it prior to the pandemic, but of course with the ability to take a pragmatic view on the short-to medium-term impact of the pandemic.”
Like CBILS, RLS can only be funded by institutional investors. However, as well as RLS lending, Assetz has also fully restarted retail lending and is providing separate loan opportunities that investors can participate in.
Both parts of the business are complementary rather than competing, as Standley explains. RLS enables Assetz to fund loans of up to £10m in size, which it can then use to provide larger commercial mortgages and development facilities.
“We’re not inclined to lend at those levels on the retail platform so whilst there may be some areas of overlap, in many cases we’re providing a different type of loan under RLS,” he says.
“We are seeing very strong demand for both retail and RLS loans at present, so going forward I see both as incredibly important to Assetz.”
While the government schemes can help Assetz scale up its lending, retail investors are still at the very core of the business.
“The retail platform has been there since Assetz’ inception,” Standley affirms. “It’s a very precious thing to us, it’s something we want to maintain going forward and it’s central to what Assetz is all about.
“In terms of our ability to do other types of lending, the government schemes help us to be commercially successful which means we can invest in the business and ensure its growth and longevity, which is a great thing for retail investors.”