Specialist lenders with industry knowledge are vital for small businesses, says Carl D’Ammassa, group managing director, business finance at Aldermore Bank
Something I realised early in my career, which has been highlighted many times, is that one size does not fit all when it comes to SME finance.
Different businesses have different needs and requirements and this is often dependent on the industry they operate within.
Of course, there are overarching factors that all companies, regardless of size or type, must take into account, like ensuring that they have good cash-flow, that they market themselves effectively, and that they do not fall victim to recruitment shortages.
All businesses are affected by macroeconomic and market factors. However, a recruitment firm in London is going to have a different business model to a construction company in Aberdeen, for example, and their approach towards dealing with issues can vary based on their needs and priorities. I think that this should be reflected in the way they approach their financing too.
Thankfully, gone are the days when the only option for SMEs was to apply for a business loan or overdraft.
I am sure traditional lending can provide some good deals but all too often incumbent lenders take a ‘cookie cutter’ approach to lending, regardless of the client’s size and industry.
That is where specialist lenders can offer a real benefit, providing bespoke lending to suit individual business needs.
What is also important, however, is that lenders have sector specific knowledge of the industries in which their clients operate, whether it is agriculture, transportation and delivery, or construction.
Like many specialist lenders, Aldermore employs Business Development Managers who are industry-specific within construction, agriculture, wholesale and block discounting, and materials handling.
They work with clients within each sector, which I think allows them to get a real understanding and insight into how best to advise customers.
We have also recently launched our new Dealer Services team, working with both dealers and our end customers to offer them tailored asset and invoice finance solutions specific to their industry.
I think this is really key to ensuring that we give our clients the best advice possible.
SME owners work incredibly hard to grow their companies, some even missing out on key family events.
A 2014 YouGov and First Data Merchant Solutions survey showed that nearly a fifth of small business decision-makers have missed picking up their children from school because of work, and that a third describe their working life as “exhausting”.
I do not think that trying to access finance should be a chore that adds to their stress, and that is why I think making sure we make things easy for them, working hard to really understand their businesses, and especially the industries in which they work.