Our Head of Credit, Tim Harper provides an update on CBILS lending and the steps that we have taken in managing our existing loan book throughout the pandemic.
“In terms of the loan book, as soon as the pandemic showed
signs of taking a firm hold, we moved quickly (with lender support) to offer
all borrowers a three month forbearance extension to their current facilities.
This was taken up by 60% of our developer customer base, and 38% of the remaining
trading commercial/BTL/bridging customers. This proved prudent as it gave borrowers
time, even when lockdown arrived, to take stock, reassess, plan, and enrol for
various Government schemes and grants. We ourselves rapidly sought registration
as an accredited lender under the Government guaranteed Coronavirus Business
Interruption Loan Scheme (CBILS) alongside raising the significant
institutional investment required to fund the scheme. In May we achieved both,
being accredited by the British Business Bank for Commercial Mortgages and one
of very few Lenders accredited for Development Funding following our lobbying
for it to be included.
From March to August we paused new lending but continued to
fund the circa 150 developments that were underway, without a single missed
tranche payment to those borrowers, that in totality ran into tens of millions
of pounds. We closely monitored loan redemptions and plot sales continued to
trickle through in even in the peak of lockdown. Whilst some of the loan redemptions have been
a couple of weeks late here and there (mostly due to delays in Councils,
Lawyers and Agents) we are now seeing the Stamp Duty benefits take hold, and if
anything numbers are accelerating.
Refinancing by our borrowers to new lenders did pause, and
we were faced with extending some loans that we did not originally intend to do
that for, however refinancing by other lenders is sparking back to life through
secondary lenders, though the High Street banks remain reluctant.
CBILS lending now enables us to:
- Offer those Developers who are midway through their projects
a Government guaranteed CBILS loan for the remaining monies, providing they
have been adversely affected by site closures, slow supplies or have been
impacted by this new way of socially distanced working. This allows the
borrower to complete the site with the monetary benefits that CBILS brings,
even if a reassessment demands more funds and time, thus offering borrowers
reassurance and certainty.
- Consider CBILS loans for our existing borrowers in any
sector who may be struggling subject to eligibility and viability, which also
includes funding future tranche drawdowns.
- Reconsider loan applications that were in our new business
pipeline and also open up to the wider market for further new enquiries. The
first weeks have achieved in excess of £70M of ‘Agreements in Principle’ which
we hope to double before the current expiry of the scheme on 30th September 2020 and draw down the loans in the coming months.
So far, 85% of CBILS loan applications we have received are regional
housebuilders who have limited funders willing to support them, but are as
diverse as a hairdresser in Preston wishing to purchase present leasehold
premises, to a new build care facility for abused children from all over the UK
in Leamington Spa.
With regards to our existing book, most developments are pushing
through the present and past difficulties. In the trading book, principally
commercial mortgages, we are keeping a close eye on the care sector, office
accommodation and all aspects of Leisure. It would be naïve not to think we
will see further fallout in these sectors, but we are prudent property secured
lenders and that will hopefully cushion any blow.”