Traditional Lenders vs Alternative Specialist Challenger Capital Providers... 

16/05/2020 16:11 By Team GIC
Whether you are an established trading business (manufacturer, hospitality business, etc), property investor or house builder, why would you, or why are businesses turning to non-bank lenders for financing - and in many cases paying a premium on the cost of borrowing - even with high-quality assets and or have a solid established profitable businesses? 

There are many reasons why creditworthy borrowers with strong track records and desirable assets turn to non-bank lenders, for which we explore a few reasons below. This also applies to other not so creditworthy companies or investors across entire business sector spectrum. 

Within the Real Estate sector, although not exclusive to real estate, these broad trends driving borrowers toward non-bank lenders, creating high-yield credits that are senior in the capital structure and backed by strong assets and stable cash flows in the UK and around the world are:

We aim to deliver much needed capital for SME’s and Property Developers.

1. Regulation and Regulatory Constraints 

Rigorous and stringent underwriting criteria with banks demanding specific loan-to-value ratios, occupancy rates and average lease lengths etc are some real estate specific examples even when circumstances mean there are significant compensating de-risk factors.

2.  Timing & Simplicity 

Red tape and strict criteria that often doesn’t reflect the nature of SME business models means that the UK’s smallest businesses are often turned away empty handed when they approach mainstream lenders such as banks. 

Fewer questions, less paperwork and instant approval or decline decision with in some cases adverse credit not even negative factor nor none home owner status as is often the case with high street main banks is one big positive factor for alternative lending capital providers. An example of this being "Merchant Cash Advance" or "Bridging Loans".   

3. Business and or Investors' Need For Flexibility 

In the case of Merchant Cash Advance as an example 

This is cash flow finance or funding solution perfectly suited to businesses that have a high volume of customer card payment transactions, such as those firms operating in the retail and hospitality sector. 

Rather than having restrictive monthly payment obligations, you’ll pay a percentage of what you earn - improving cash flow - and loan can be paid off faster, or with time, and in either case not putting pressure on limited cash-flow.   

With Bridging Loans and or Development Finance, these often have options such as, 
    • Differed interest, allowing for lower monthly payments therefore more monthly cash flow 
    • Rolled up interest therefore no monthly payments during loan term 
    • Interest only options 
    • Conversion to longer term finance if for example unable to sell a property on the market etc

All having being said, it’s best to do your homework to find lenders to best suite your business or property funding requirements and will underwrite and structure a loan tailored to your specific needs. Look for those that can offer flexibility and move quickly as often market opportunities require investors and businesses that can conclude transactions within limited timeframes. 

At GIC Capital we understand that there’s no one size fits all policy when it comes to your business or your property finance requirements and circumstances. Your business model, sector, ambitions, and numerous other factors all play a role in deciding which finance option is the right one for you and is the reason why we are here to guide and facilitate your growth capital requirements so you can focus on your business and business growth... 

We are here to assist and facilitate growth capital for all UK Business sectors and some of those listed below 
  • Commercial Real Estate / Property Sector 
  • Product Wholesale 
  • Manufacturing 
  • Engineering / Fabrication 
  • Transport / Haulage 
  • Recruitment 
  • Marketing / Advertising 
  • Printing 
  • Security / Man Guarding 
  • Reactive Maintenance 
  • Cleaning 
  • Telecommunications 
  • Food/drink 
  • Breweries 
  • Computers / Technology 
  • Recycling / Waste management 
  • Clothing / Fashion 
  • Events management 

By CEO, GIC Capital 

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