Speaking on the podcast, Rory Joseph, Founding Director of JLM Mortgage Network, said:
“Our own accountancy introducers all advised their clients to apply for a CBILS loan before the banks became overwhelmed in order to secure the funding. Likewise, my most financially educated clients and often my wealthiest clients, all took mortgage payment holidays on the basis that they did not want to wait until things got too busy. Many of those clients have found that their incomes have not been too badly affected. From a broker perspective, we have clients who are saying what seems entirely rational – they took it because they thought it would be prudent to do so. Which from a lender’s perspective is surely a good characteristic in a future borrower? However, many are having mortgages denied to them through things that at the time they were encouraged to do.”
Rob Jupp, CEO at The Brightstar Group, added:
“Why penalise someone for taking a CBILS back in April or May, particularly when that business hasn’t used that facility? They’ve just got that facility there in the bank, just in case. For me, it shows prudence, caution and a sense of mental longevity that the owners and directors of the business wanted to have a government-backed piece of leverage, with very low interest rate that they don’t have to pay back for 12 months.
“If a CBILS or a Bounce Back Loan has been used to bankroll a business that is really in trouble and you see the money has gone on payroll and the £250,000 that was borrowed is now £20,000, it’s right to show caution and show concern as that’s a business that’s in trouble. But you ask most entrepreneurs and business owners what they are doing with their CBILS, they will show you a savings account.
Jupp concluded with a message to lenders: “Just use a bit of common sense and ask the question, you’ve taken a CBILS – what’s happened to it? Has it been used and, if not, can we have evidence of where it is?”
Alan Ferguson, Senior Corporate Account Manager at NatWest Intermediary Solutions pointed out that this approach is already taken by some lenders. He said:
“One of the things we have done at NatWest is we are looking at each case individually and therein lies the trade-off, because if we are looking at a lot of self-employed cases to apply that degree of logic and thinking, you’ve got to look at each case on its own merits and these things take time. You’ve got to pour under the skin of looking at the more recent performance of the business, the bank statements and what the turnover is looking like. If there are explanations there, then these are the things our underwriters can take into consideration.”
The full podcast is now available to download here.
