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Post by westcountryfunder on Feb 17, 2014 10:27:55 GMT
I would be interested to know just how closely loans are monitored as the months pass.
For example, I can immediately think of at least two loans based in rural locations where recent weather events may well lead to construction/improvement/marketing delays and/or extra development costs. This could result in loss of tourists/visitors and diminished market values due to significantly reduced demand.
In that event I presume there would be discussions with borrowers, but would lenders be kept informed?
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Post by andrewholgate on Feb 17, 2014 13:10:36 GMT
What an excellent question and I will try and answer in a full and open way.
In simple terms, yes we monitor the borrower through the course of the loan. Just because the loan looked good at the start of the term, doesn't mean it will always look good. Changes in the market place, such a new regulation, may destroy a business or may benefit it. Unforeseen event such as fires and floods can have a devastating impact on a business. I once managed an account where there was an explosion at the main factory which severely hampered production. Whilst they had business income loss insurance, it took time for it to come through and support was needed. Acting quickly is always the key.
We have our RMs based around the country and we also have a team at our head office looking at this information when it is available. We would always let lenders know if there is a material change in the business and the ability to repay. We can default a loan on this basis under "Material Adverse Change" but it is quite a loose clause and I would prefer to rely on a covenant breach. Which brings me nicely to covenants. We put these rules in place to forewarn us of any potential problems. The first thing telling you there is a problem shouldn't be a missed payment.
When it comes to default management, we have in-house expertise in insolvency and turnaround from banking, legal and accountancy angles.
I do not want to lose a single penny of the lenders' monies. I can't guarantee it, but I can do everything I can to ensure that never happens. On going monitoring is a key part of that.
I have to say, I was slightly shocked to see another platform list a loan for a business in a town that is currently under the Thames. I would have been loathe to list such a loan until I was certain that flood water wasn't a problem and wouldn't be going forwards.
I hope that helps.
A
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Post by westcountryfunder on Feb 17, 2014 14:44:45 GMT
Thank you Andrew; that's helpful and reassuring.
I just hope that you and your team's skills are not too heavily tested, especially in the light of current events which look as if they are not going away any time soon!
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Post by andrewholgate on Feb 17, 2014 15:12:59 GMT
All part of being a professional lender.
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