September 12, 2024 – A recent survey conducted by Asset Advantage has unveiled a notable increase in the demand for sophisticated loan solutions among commercial finance brokers. The survey highlights a shift towards more intricate financing requirements, reflecting broader changes in the commercial finance landscape.
According to the survey, nearly 33% of brokers have reported a rise in requests for funding related to unconventional or complex assets. Additionally, 29% of brokers have observed a surge in projects involving negative balance sheets, yet accompanied by compelling narratives. Just over one-third of brokers have encountered a growing need for funding solutions that combine asset finance with other tailored financial arrangements.
The survey also sheds light on a perceived gap in the approach of funders. Nearly 40% of commercial finance brokers noted that funders occasionally consider the broader context of a business deal. In contrast, almost 30% of brokers observed that funders often overlook the complete story behind complex transactions.
One respondent criticized the current funding landscape, describing a scarcity of “storybook” funders. They commented, “Many funders are focused on high-volume sectors like the automotive industry and are structured to handle such straightforward business models. They lack the resources or inclination to evaluate deals that require a more creative, nuanced approach.”
Philip Knight, Credit and Risk Director at Asset Advantage, remarked on the evolving client needs and the restrictive policies of mainstream lenders. “Client demands are undoubtedly becoming more sophisticated, while lending policies of larger institutions seem to be increasingly rigid. We frequently encounter ‘story’ deals where the inherent credit risk is minimal, yet certain aspects of the deal conflict with the rigid frameworks of these lenders.”
Knight emphasized the need for a more holistic view of business deals, stating, “While it may not always be feasible, especially for larger lenders, there is a growing market need to consider the full context of a deal rather than relying solely on headline figures.”
