What is Saffron Asset Finance? James Churchman, Head of Sales for Linear Investments, talked to David Craven, incoming CEO of Saffron Asset Finance to find out more
High street banks are known for preferring to fund larger business loans than to facilitate small business loans. This is mostly due to the fact that SME’s tend to accrue smaller profits in comparison to larger businesses, so the scope for business for the high street bank is limited and also less cost effective for the bank themselves. This in turn proves to be challenging for SMEs as they find themselves limited in the options open to them when they are looking for asset backed funding.
COVID-19 has accelerated change in the fintech space and James and David explained how both businesses are providing a solution to the challenges the SME’s face.
James: So David, you have been involved in SME lending finance for a large part of your career. You have come on board and helped us set up a company called Saffron Asset Finance. Can you give us an introduction as to exactly what that company does?
David: Saffron Asset Finance is a SME lender to address the funding gap which is running into the trillions. It is where traditional banks are unable to meet a global demand for SME lending, both for regulated and unregulated lending in the marketplace. Saffron has been set up to deliver on a number of strategic planks. The first is to address the gap. The second is to do so in a manner that provides technology, innovation and scalability and growth into the Saffron offering. Thirdly the goal is to allow SME lenders to get and receive money quickly and seamlessly in a manner that banks are unable to deliver, whereas an alternative provider like Saffron can through digital delivery and its own back office. The Saffron offer is a challenger and disrupter in the asset finance space, creating a service for small to medium enterprises that is not being met.
James: In terms of SME lending, you mention that banks are not serving this specific sector. I remember in 2008 and 2009, the banks were criticised for not serving SME at all. There was talk that they were coming back into this space. The global pandemic seems to have created a strange space for banks, lending and government backed schemes. Is now a good time to be lending?
David: Indeed it is. The difficulty with traditional high street landing is always centred around liability and capital ratios. This hasn’t really changed in the face of COVID-19 disruption. Small businesses are still finding it very difficult to get funding. We understand that at least 80% of the C-bills (coronavirus business interruption lending scheme) are declined by either party. This is largely due to the fact that the basis and the underwriting premise in which SME are seeking to bring in debt into the business is fundamentally unchanged. The challenges facing SME, small operators, owner/manager businesses have not changed dramatically at all. The situation that small businesses are presented with is what does the balance say they can borrow. How strong are the assets they are looking to borrow against? As you say, traditional banks have been inconsistent in how they approach small businesses. Depending on who you talk to, some of the traditional banks are keen to only allow small businesses to take overdrafts and current accounts with bundled services. The ability for a small business to really create innovation and growth and development in their business and bring scale to it post COVAI-19 is a major challenge. It is something Saffron can meet. We understand and are able to develop with an existing underwriting team with many years experience in asset finance. We have been able to develop a back office system that gives answers very rapidly and a quick decision. Businesses need a yes or a no quickly.
Saffron is an independent asset backed lender, able to work with individual businesses to help them achieve their unique goals with unique lending packages. Offering a more flexible solution than is available on the high street, Saffron will work with your business to help you get the investment you need to take your business forward. With a clean lending book in uncertain times, Saffron can offer a measured approach to your business risk and work with you to find the solution that works for you.
If you would like to know more, please visit www.saffronasset.com