Backing established businesses, not just balance sheets

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Dena Thompson Image

A lot has changed since I became an underwriter in 1999. Westlife were number one. Who Wants To Be A Millionaire was the highlight of the week. And the first Euro note hadn’t even been printed.

It was also a time when most local business owners would have said their bank actually understood them.

Over the next two decades, though, that support has steadily eroded. Established businesses with between 5 and 250 employees – the backbone of the UK economy – have found it harder and harder to access the finance they need to grow.

This is a big problem. The established business segment generates around a third of UK GDP and employment. These are the pubs, hotels and restaurant operators creating places for people to come together; the landlords providing housing to people in our communities; the regional employers keeping local economies moving – including many of the clients served by our broker partners.

The bridging cases that cross my desk every week show the ambition for growth is still there. But the environment has changed. Costs are higher. Margins are tighter. Planning ahead feels more uncertain.

It makes that gap in support more critical than ever, both for business owners and the UK economy as a whole. Closing it will require progressive lenders working hand in hand with brokers who understand their clients’ businesses and are prepared to back them.

Bridging the lending gap

The shift away from giving established businesses the banking they deserve hasn’t happened overnight. Research by Allica last year revealed that a lending gap of £65 billion has emerged over the past two decades when you compare the current level of SME credit to the long-run trend. This has left the UK with the lowest business investment rate in the G7.

More importantly, it has left business owners who’ve given everything to their work and their communities struggling to get the support they need to invest and thrive.

Sitting at the heart of this, especially when it comes to bridging, has been a trend among lenders to focus purely on the P&L when assessing an application. But a business is more than a spreadsheet. What looks unviable at first glance can often be a case that simply hasn’t been fully understood.

Thankfully, there are banks like Allica that are doing things differently. One of the best parts of my job at Allica is that we really get under the skin of a business and what makes it tick before we make a decision. The numbers play a role, but the story and context around them is just as important, and often paint an entirely different picture of a business.

I worked on one refinance case recently that is a great example of this in action. The security was a former agricultural building converted into industrial units. However, it was clear that the original bridge had not been structured to fully support the build programme and exit in such a short term. There were also title and income issues still to work through, and the borrowers were both in their seventies.

On paper, many lenders would have turned away. Instead, we worked closely with the broker to understand the long-term plan and were able to structure a facility that converted into a sustainable term loan when certain conditions were met, while allowing the property to be kept in the family.

These types of ‘computer says no’ stories are all too common in bridging, squashing opportunity and investment. I’m grateful to work for a lender that looks beyond the numbers, and I will always encourage my underwriting team to get on the phone with a broker to get the full picture of an application if they think it would help. Often, a short conversation at the start saves a lot of back-and-forth later on, and when time is tight, that matters.

The need for speed

Technology is also going to be crucial for closing that £65 billion lending gap. This is especially the case when it comes to bridging, where speed is often the difference between a business taking an opportunity and missing one.

Used well, it removes friction from the process. It pulls information together faster, speeds up valuations and cuts down manual work. At Allica, we’re already using AI and automation to flag gaps in applications upfront and pull in real-time data, giving my team a clearer picture of what’s really going on in a business.

The real benefit is what it makes time for. When underwriters spend less of their day chasing paperwork or checking data, they have more time to speak to brokers, understand the wider context of a business and focus on what actually shapes a decision.

As the industry further adapts to these technologies, protecting that human side of underwriting will become even more important. When I think of how technology can carry our sector forward, I am excited at the prospects, but good bridging will always rely on human judgement, human experience and human conversation.

Good bridging relies on judgement, not just process

Bridging has always been about opportunity. The right facility, structured properly, can unlock growth, protect a legacy or give a business the breathing space it needs. But that only happens when lenders look beyond the surface and brokers are backed by people willing to listen.

If we are serious about closing the lending gap and supporting established businesses properly, bridging has to be built around judgement, speed and partnership – in that order.

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