Big Interview: Andy Reid, Sales Director, TFG Capital
By David Craik
In an ever-complex world brokers and borrowers are seeking speedier lending solutions. It is a trend which is helping TFG Capital feel incredibly optimistic about the year ahead, following a great first 3 months of the year and having continued to increase their reputation for speed of delivery for bridging funding.
The pandemic was in many ways a time when life slowed down. People had space for contemplation and appreciation of things that had passed them by in their pre—Covid lives.
In the bridging world it was slightly different with speed becoming the buzz word for borrowers and brokers eager to take advantage of residential, commercial and development opportunities as the property market surged and demand for fast paced transactions increased.
This trend proved beneficial for Doncaster based TFG Capital which has prided itself over its 7-year existence of delivering ‘Flexible’, ‘Quick and Direct’ bridging finance tailored specifically to the clients’ requirements.
TFG, which stands for ‘The Funding Gap’, lends throughout the UK, including Scotland, and Ireland. By definition, TFG is a niche lender, whose primary focus when appraising an application is the value of the security offered and not credit history, financials or proof of exit. Loans are offered from £50,000 to £6,000,000.
TFG says this straightforward approach speeds up lending decisions.
“We are used to working with tight deadlines to produce funding and that came to the fore during the crisis. Despite the challenges of the pandemic and associated lockdowns we saw hugely increased demand for our services,” says sales director Andy Reid who joined TFG last Spring.
“Examples of this are the classic auction purchase where property investors walk away from their successfully accepted bid thinking that 28 days is sufficient time to complete the financial process.
Fast forward three weeks however and many find that they still haven’t made much progress at all, and the lender may now not be in a position to fund as the completion date rapidly approaches.
They then turn to TFG with a view to them finding the solution to their dilemma and be able to complete the funding and entire transaction in a matter of days. We saw more of a demand for this type of request during the pandemic.”
In addition, Reid says, the supply chain squeeze affecting the availability of building materials as global economies re-opened has also led to more interest in TFG’s fast-paced services.
“If developers were struggling with arrangements regarding the progress of the development finance of their project, TFG became an obvious choice to provide further bridging finance as the existing facility became closer to its ‘end of facility’ date.
This bought the applicants more time given the uncertainty of restrictions or building supplies affecting development plans during the pandemic,” Reid says.
TFG also saw more business from borrowers who found that their lending arrangements with traditional banks were being delayed and disrupted because of Covid restrictions, and whilst businesses were, in the main, reporting that there was no reduction in the service standards via remote working, the reality was, says Reid, that processes were affected, and delays were incurred.
“The High Street lenders were much more affected than we were by the Covid restrictions with more people working from home and processes slowing down.
I was encouraging brokers to liaise with their clients and discuss the loan term of the bridging facility, paying attention to the exit as a long-term product as some B2L lenders were suffering with delayed process times given the pandemic restrictions,” Reid states.
“I’d rather them consider that than taking out a six-month facility and at the end of the loan period advising us that the exit route process has been hampered as a result of delays incurred by the potential term loan provider.”
Reid says that looking at enquiries based on the asset and its merits means the loan can demonstrate flexibility in its format through a ‘does it make sense’ attitude and approach as opposed to creating new products.
Instead, it is about tweaking existing products and making more natural decisions based on each individual case.
“It is a tailored approach for every loan with no two loans ever looking the same. It’s very much down to us to how we structure each deal to satisfy our requirements at the same time as providing the client with the most appropriate solution” he explains.
“Sometimes, for example on a bridging loan incorporating a refurbishment element, we are willing to provide 100% of the cost of the works. This is not in every case, but when it is more beneficial to both parties.
We are also used to staggering stage payments on these types of loans – we are able to be flexible and innovate.”
TFG’s solid and loyal relationships with around five key nationwide solicitors and panel, as well as individual firms of valuers, also improves its speed of service.
“Our lawyers and valuers know how we work and know that we demand a speed element so we can make an instruction immediately and begin the process,” Reid states.
“It’s common for us during the weekends to see emails from the lawyers and valuers coming through because they understand what is required.
Speed is a necessity, rather than just a nice thing to have – we are often working to very tight timelines so addressing emails over a weekend is a massive time-save and gets us ahead of the game on a Monday morning.”
Marketing the benefits of its lending structures and relationships has also helped stoke interest.
“People have become more aware of us over the last 12 months,” explains Reid. “We’ve marketed our brand much more across the UK with PR messages and case studies, pro-active broker and intermediary meetings and a whole host of events and sponsorships highlighting and showcasing the TFG model.
We have built a much larger and broader database of brokers and introducers. They know that we can do straightforward, that we can do complex, that we can do unusual, and we can definitely do incredibly quick.”
The business has seen demand across the board from residential bridging to semi and full commercial as well as development finance.
“In the semi and commercial sector, we have seen an increased activity in enquiries relating to the proposed conversion or change of use of the upper parts of ground floor commercial units,” he says.
“As a long term project the conversion to resident above a trading owner occupied unit can prove to be a potentially good investment once the initial cost of the transition has taken place.”
Reid expects a further increase in business volumes and lending throughout 2022. “As a business we have grown year on year and from this January onwards we have seen enquiries and new business at a frantic level across all property styles,” he states.
“We are looking at a much further percentage increase in terms of volumes and loans funded in 2022. We are very pleased with how our business is progressing.”
The surge in demand for property does bring its own challenges however in terms of managing buyer and borrower expectations.
“Some buyers have bought into the idea that everyone is moving out of London to get more value for money elsewhere, particularly in the Home Counties and Southwest regions.
The belief that the property they’re selling is worth much more than it is, requires validation and it is really a case of managing those expectations,” Reid states.
“That means realistic valuations and communicating with clients well. But we are confident that even with higher interest rates and inflation people will still look for bargains and buy property.”
Reid expects that the TFG team will expand further this year growing from its 9 current team count and says it is currently looking for Business Development Managers or Regional Directors to increase external sales as well as internal staff “to manage the significant increase in business we are experiencing”.
TFG certainly expects to be back in the money this year. “2022 is about pushing the brand further and making our distribution channel much more aware of the range of completed cases that we have funded and can transact moving forward.
We are very confident about the year ahead as everything is looking incredibly positive, and we don’t see things changing,” Reid says.