Speaking to Specialist Lending Solutions, Rudge said SME funding choice had improved notably in the last four or five years, as new lenders entered the market and providers innovated.
Rudge said specialist lenders were primarily behind this change, not big banks.
“That’s good because it’s a segment that is often overlooked within a big organisation. It can be seen as easier to grow business in other markets. With specialist lenders, such as banks like ours and other firms, it means much more – therefore, we work harder to find the opportunities,” he said.
Brokers providing all-encompassing service
Even so, Rudge said the difficulty of making businesses aware of the growing availability of funding should be a focus. He noted that many providers had a limited range, meaning the solutions a business might need could not always be found with a single lender.
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Rudge said this had “fragmented who businesses turn to for advice and guidance”.
He added: “Some might go to a solicitor, others to an accountant, or a broker. It’s a bit behind where retail and consumer markets are, the product choice has caught up, but the way in which that information is shared with businesses… there’s no Martin Lewis for SME lending.”
Rudge said artificial intelligence (AI) was helping, as the information returned by search tools was phrased well and of good quality.
He suggested people would continue to use technology for lending information, but brokers could offer additional services as a “value add”.
Rudge said brokers should “develop a wider range of supportive services for SMEs”.
“To some degree, it is basic, you can have a business that wants a loan, an adviser scours the market, then finds a suitable choice,” he added.
He said the help businesses needed went further than this, as recent research conducted by Shawbrook found that many firms felt isolated, “because [running a business] can be very overwhelming”.
Rudge added: “One of the things I noticed is if a small company or business gets into trouble, their ability to get a good grasp or control on their finances and therefore come up with a plan, it’s not as strong as it could be.”
He said some firms’ relationships with accounts were probably “more administrative”, and the best brokerages would evolve into “advisory-type practices”, connecting businesses with a range of services beyond financial products.
Rudge said there was a lot of uncertainty, as confidence among businesses was falling and the number of companies in critical financial distress had risen.
He said high inflation and low GDP impacted customer spending, resulting in a “tough environment”, but entrepreneurs tended to be resilient with a “can-do” attitude, which could counter this.
“Good businesses will continue to find a way to grow,” he added, but said there could be more tailored, structured support available.
Meeting the various needs of businesses
To help address this, Rudge said Shawbrook had built a range of products to meet the various needs of firms of all sizes, and its acquisitions of Thincats and Playter would support this strategy.
Rudge said Thincats gave Shawbrook more coverage in the UK, including additional skilled, experienced relationship managers across multiple products, particularly in the Northern regions.
It also has good credentials in the owner-managed business space and an innovative product, called transitional capital or transcap, which supports businesses with less capital to embark on buy-and-build strategies.
Playter provides shorter-term, working capital and has built its company using modern technologies.
“It gives us a real tech-versed team of people we can use across the business,” Rudge said.
He said these were the first few acquisitions Shawbrook had made in a while, and it was “nice” to build on its organic growth.
Rudge said as much as Shawbrook wanted to continue lending to businesses, they needed to be creditworthy and able to repay loans.
“Our approach is to continue to take the proposition and philosophy that larger businesses, more established businesses, are able to deploy into the SME market and give them the choice,” he noted.
He said this would be done by providing acquisition financing for businesses that are too small to meet high street lending criteria and an offering that was tailored to individual company needs.
“When we develop product propositions, organically or by acquisition, one of Shawbrook’s strengths is being able to acquire lenders with great propositions that struggle to scale. When we think more broadly, we’ve achieved that with The Mortgage Lender, Bluestone Mortgages, JBR Capital and, more recently, Thincats and Playter.
“That will continue to be a focus of ours, to find companies that have strong technology and good market reputations,” Rudge added.
He said there were many products Shawbrook did not do, and while it did not want to “bite off more than it could chew”, it was always seeking new opportunities.
The SME business is really important to Shawbrook, and it is a big part of the business going forward, Rudge said.
