EVERYONE who works in finance should be forced to study the canons of lending.
David Reed knows them by heart, because he worked in commercial banking for 25 years.
He developed skills that no computer could ever hope to possess. Much of it is based around common sense and trusting your instincts instead of slavishly following data.
Mr Reed, who is the relationship director at Assetz Capital in Yorkshire, said: “ We are driven by old-fashioned principles. We are not doing it by a tick box or algorithms. In every sector you find good, bad and indifferent businesses. We provide a good return to people who trust us with their money.”
As a lender, Mr Reed believes you must always ask fundamental questions: “Who are the people you are dealing with? What are they looking to do? What is the risk associated with it?”
You should only consider lending after you’ve received robust responses. The firm he works for, Assetz Capital, has surpassed the £1bn mark for lending to SMEs (small and medium-sized enterprises) and house-builders across the UK, with more than £350m being deployed in the North since 2013.
Assetz Capital has funded a total of 4,846 new homes since it was founded in 2013. Last year, the firm funded the construction of one in every 100 new homes built in the UK. In the North alone, Assetz Capital has funded more than 340 SMEs, as well as the construction of 2,000 homes.
Assetz Capital funds its property secured loans through a network of retail and institutional investors, who have earned more than £109m of total gross interest on their investments to date.
Around half of the £1bn of lending to date has already been repaid on time by borrowers, allowing further lending on new loans to support economic growth, which could be in short supply over the next few months. Assetz has doubled its lending in the last 20 months.
The firm was founded by entrepreneur Stuart Law and colleagues during the fallout of the global financial crisis. Mr Law believed that the banks were no longer able to serve their original purpose. Interest rates were at all-time lows and business finance was often inaccessible. So the team from Assetz decided to step in.
In addition to development finance for house-builders, Assetz Capital also offers commercial mortgages and bridging loans and has funded most types of business including substantial support for the manufacturing, services, care home and student accommodation sectors.
Based in Manchester, with additional offices in London, Scotland and Northern Ireland, the firm now employs 110 staff and has 40 people in the field nationwide to meet with borrowers and assess their funding requirements.
Mr Reed said: “Yorkshire has seen record levels of property development in recent years, especially with the increased migration of people to major cities like Leeds and Sheffield. The appetite for both residential and commercial property seems set to remain strong in the coming months, and we have plenty of funds to deploy in order to satisfy this demand across Yorkshire.
“The region also plays host to some of the UK’s most innovative businesses, with particular strongholds in technology, life sciences and manufacturing, and we look forward to supporting more of these companies as we move towards our next milestone.”
“We were set up after the banks had closed their doors,” he told The Yorkshire Post. “Last year, Assetz lent £285m across the UK and Northern Ireland. We did 48 loans totalling £35m in Yorkshire – many of these are pubs, hotels and restaurants and also care homes.
“The UK is facing an acute shortage of housing in all sectors.
“We want to try and reach more businesses where they don’t have a funding solution because their bank has said no,’’ said Mr Reed.
“We are trying to increase awareness of the deals we have done. We have increased our footprint in the North East. A regional hub in Yorkshire is on the cards – we are trying to find the right place.”
Before the coronavirus pandemic caused chaos, Brexit uncertainty was regarded as the biggest drag on the economy.
Mr Reed said: “The people we deal with have been a bit insulated from Brexit to a degree. Our business flourishes with uncertainty. People still need to complete deals.
“We have still got 38,000 retail investors and we are getting more institutional investors to create opportunities with liquidity.
We have given back £107m in interest to our investors.”
Over the last three years, Leeds-born Mr Reed has been proud to see Yorkshire attract an impressive portfolio of corporate names.
The announcement that Channel 4 is heading to Leeds, combined with a raft of other big inward investments, means the city has a spring in its step.
“For a long time, Leeds was looking over its shoulder at Manchester,’’ said Mr Reed. “Leeds has now found its own identity.
“It has focused on the digital sector and health.
“If you look around there are more cranes in Leeds. That drags more people towards the city but you have got to make sure that everybody benefits from the good news that is happening. We need a proper integrated transport system.”
He continues to provide quiet, long-term support for family businesses across our region, including a firm from East Yorkshire which has raised its game with help from Assetz.
“There are also two other potential deals in the pipeline with other Yorkshire businesses,’’ he said.
A strict observance of the rules of prudent lending really can pay dividends.
David Reed is the relationship director at Assetz Capital in Yorkshire.
AssetzCapital provides flexible and fast finance for UK businesses and property professionals through a community of investors and institutional funding.
While it always takes asset security, Assetz lending criteria can be more flexible than traditional finance providers.
Mr Reed and his team regularly provide funding for loans that would otherwise have been hard to place. Assetz Capital is among the world’s fastest growing Peer-to-Peer (p2p) lenders. It is authorised and regulated by the Financial Conduct Authority.