September 2019

FIBA Advantage

What is it that really makes a difference to the assessment of the final lending decision?

By Don Pritchard, Commercial Finance Consultant, Pension Led Funding

If pushed for a really short answer to this question, it would be something like “quality of proposal”, but I appreciate that this is not only all-encompassing, but also fairly subjective!

Banks often used to assess against the CAMPARI acronym and I believe that some lenders still do: Character, Ability, Means, Purpose, Amount, Repayment and Insurance

Whether actively used by lender or not though, I am of the opinion that they cover the bases of most proposals and lending decisions, even where some of this assessment is now technology based.

Broadly then:  

Character - is probably going to be checked by a Credit Search e.g. defaults, late payments

Ability - to run the business and service the debt via financials,

Means - net asset base of individual or business?

Purpose - is it all clear and does it make sense?

Amount - correct against defined needs and contribution?

Repayment – or serviceability - will be assessed against past financials and credibility of forecasts whether manually or using technology

Insurance – what security is on offer and does it meet risk appetite of lender?

There is of course some overlap and room for interpretation in these, but the outline still works.

Whilst I wouldn’t expect to see too many proposals set out in this manner, I would expect the individual aspects to be covered within a “quality proposal”, whether this is prepared by the client or by the intermediary.

Beyond this, from previous experience as an underwriter, I would really want a “quality proposal” to be clear and comprehensive, to have easily understood and located information, so ‘nicely’ packaged.

I would not want to have to search for information and I would really not want proposer to try and ‘hide’ potential negative factors, rather I would want them to be dealt with head on, with appropriate mitigants wherever possible.

I would also want to be dealing with Applications that are broadly within my risk appetite, showing appropriate research by proposer and / or intermediary and I would also want to be able to pick up the’ phone to get any small questions dealt with easily and quickly.

So where do Alternative Business Funding fit in here?

As a technology based platform, our system is very much designed to ensure that the ‘right’ potential lender(s) are identified right at the outset.

Whilst a good number of our clients then use the platform to select and approach identified lenders, where options are more varied or choice of potential lender not so obvious, our team are always happy to speak with clients and help select the right lenders and we often do this proactively.

In many cases we will then collect appropriate information from client to package it and present it in an orderly way to the selected lender(s), sometimes ‘informally’ as a starting point, this to protect credit profile and also to ensure that potential lender does have a potential appetite.

This packaging will of course usually include a good summary of the proposal, and ensure that all of the information is available at the outset.

We will also be there to continue to act as a liaison point and / or to ‘hand over’ client to lender at the point that is most appropriate for all.

For more information visit https://www.pensionledfunding.com/