Independent Wirral finance firm Bathgate Business Finance scoops trio of awards for its work championing and supporting SMEs in the region and here offers an overview of the current funding landscape

 

Independent finance firm Bathgate Business Finance has scooped a trio of prestigious awards for its work championing and supporting SMEs in the region.

Now managing director, Gordon Andrews, has told LBN why SMEs will always be central to Bathgate’s business and what the current funding landscape looks like.

In September, Bathgate was named winner in two categories at the prestigious national NACFB Commercial Broker Awards 2023 – the SME Champion and Service Excellence Award.

A win at the Merseyside Independent Business Awards (MIBS) in the Professional Services Business of the Year category following a month later.

These accolades came following a busy year for Bathgate’s team of 11, which in 2022/23 helped SMEs secure a total of £20.8m in finance.

Working with an extensive network of professional introducers, from which 100% of its work originates, the firm offers solutions across all types of lending including property, asset, invoice and trade finance, and VAT/tax loans.

Gordon Andrews said: “Our reputation thrives on the fact that we will find solutions in even the most challenging situations, from brokering urgent cashflow solutions and finding flexible options, to providing own-book funding.

“We’re also a physical presence in both our clients’ and introducers’ worlds.

“We’re going out and seeing people; seeing our clients to understand their businesses and their needs, our introducers to understand their clients’ needs, and also seeing funders and banks so we get the whole-of-market view and understand the full spread of solutions. 

“Now, this might not seem revolutionary, but since the pandemic it still hasn’t really returned to being the norm.

“Some of our competitors are still doing business over email and through call centres and we know that so much can be missed when there isn’t that personal and physical connection.” 

An SME itself, placed ‘on the ground’ with clients, Bathgate believes it has frontline understanding of the challenges being faced by SMEs in Liverpool city region and across the UK.

Gordon continued: “SMEs are facing the same challenges as we are; the rising price of services like electricity, gas, increased cost for goods.

“They aren’t able to pass all of those costs on to their clients and customers, so they are absorbing more and more and making slow incremental increases where they can, in the hope that people will keep coming back. This is particularly true in hospitality, which is a vital sector in Liverpool.

“It’s also the ‘s’ in SME that are being hit hardest – those with below a £5m turnover. These are the businesses that may not have a direct relationship with their bank, dealing with them instead through an app or call centre.

“They also might have someone who does the books and tells them how much tax they owe at the end of the year, but not an accountant who properly advises them.

This is what we believe to be the biggest challenge for small SMEs – finding good guidance. Who are their trusted advisors? Who is looking at better ways of doing things that might help them navigate the economic challenges that we’re facing.

It isn’t that banks aren’t open for business with SMEs, they are. But what we see in our day-to-day work is that for some, the bank model has changed, and a business may no longer fit the current model.

“Their bank may have been ideal for them five years ago, but now it may have gone off their sector – something we certainly know to be the case with hospitality – as an example.

“In this case, banks may not know where to send them, SMEs do not know where to go to find better suited support and they don’t have the professional advice around them to help guide them.”

It is here that Bathgate sees its role as SME champion, filling that gap as a trusted advisor, for SMEs as clients of banks and other professional service providers such as accountants and solicitors.

Gordon explained: “We know the alternative funders and challengers in the marketplace who can provide solutions for specific sectors. We also know the strengths of the mainstream banks and what they can offer to SMEs.

“We’re introducing clients to the full range of what is out there, but also going to the banks and saying that, if you’re not keen on that sector, or you can’t tackle this particular challenge being faced by a client using your products, refer them to us because we have a comprehensive range of solutions that may help them.

Bathgate also finds that the answer isn’t always moving a client from a bank to an alternative funder. Sometimes the SME is simply with the wrong mainstream bank for their needs.

Gordon said: “In one instance we worked with a client who was simply unhappy with their banking relationship, so using our contacts with local bank commercial managers, we made an introduction to a bank we believed was better suited, due to the manufacturing sector expertise of the new bank’s commercial manager.

“We arranged a bank transfer that included both a commercial mortgage of £400k over 20 years and a £1 million revolving invoice finance facility and helped establish a more suitable relationship for the client’s needs.

“Sometimes it really is just a case of matching the right bank to the right client.”

As a sector-agnostic finance provider, Bathgate’s team has collective expertise in a wealth of areas and does not see one sector as being easier to secure funding in, than others.

“No sector is having a ‘good’ or easy time right now,” said Gordon. “There is no one sector where it is easier than others to secure funding. It all comes down to the business – good and great businesses in any sector will always be able to find funding.

“By ‘good’ businesses, I mean the ones that are delivering what people want, that have the best offer, are in some way unique or represent the best value.

“They are also the businesses that are willing to be flexible and adapt quickly to fit the current climate – that might mean closing on the quietest day of the week to reduce costs for hospitality or running fewer shifts in manufacturing – it’s responding to challenges and moving easily with change.”

Rising interest rates have been a consistent challenge and pressure on businesses, increasing the cost of borrowing, but Bathgate insists this shouldn’t be an immediate deterrent to seeking finance.

Gordon explained: “Interest rates have certainly been prohibitive to some, and we have seen people taking these into account when making decisions around business finance. It has put people off making purchases that they don’t think are absolutely necessary.

“For example, a manufacturing business may choose not to buy or upgrade a machine that they know will benefit them, because they know that the current costs are prohibitive, instead ‘making do and mending’ existing equipment.

“That might well be the correct choice, but only if the cost of the interest rate outweighs the rate of return on the finance. Not buying new or upgrading equipment might keep costs down.

“But what would the rate of return be if they did finance new equipment? Would they produce faster, better, more efficiently? Would they use less energy and therefore reduce costs?

 

 

“Again, the missing piece is good advice. Looking at businesses individually and looking to see how things might be done better, how costs can be spread out and how specific opportunities can be maximised. This is what we do for SMEs, we help answer those questions.

“Sometimes we have to be brutally honest and say ‘if you keep doing it this way, it’s not going to work, you won’t be here in six months’, but we always look to offer a solution as well.

“But more often than not, the picture is more positive than many of our clients or introducers expect. We can find solutions for those SMEs looking for ways to grow, expand or who are even just trying to navigate this very challenging environment.

“More than anything else right now I would urge businesses to remain calm and positive and seek out professional guidance on business finance options to help find a way through the storms.

“There really are a wealth of options out there and businesses like Bathgate are here to help SMEs find them so they cannot just survive but thrive. As our recent awards demonstrate, we exist to support SMEs and are proud to be their biggest champions in the region.”

For more information click bathgatebf.co.uk