Why good relationships are key to success in alternative finance

ThinCats reflects on a productive 18 months working with Edinburgh broker Neil Davidson of Alderburn Finance

A good relationship between lender and broker is crucial for business success in the alternative finance industry.
That’s according to alternative finance provider ThinCats, which has been working with Edinburgh-based broker Neil Davidson of Alderburn Finance Solutions for the last 18 months.
It’s important that partners understand the needs of your own clients, says the firm, of which the MD became a partner in 2016.
Neil Davidson of Alderburn Finance
ThinCats works with expert partners to introduce loans to the platform, harnessing local, industry-specific knowledge to pair ambitious SMEs with flexible, tailored funding opportunities.
And it seems that, in Davidson, ThinCats has found the perfect match. Like all ThinCats partners, he is a seasoned professional in the finance industry, with an impressive track record of matching SMEs across Scotland and the North East of England with exactly the right type of funding for their needs.
Davidson attributes their successful working relationship over the last 18 months to like-mindedness.
“They think the same way as I do,” he says. “I value ThinCats understanding of risk. While they are not lending themselves, they do ensure the loans presented to their investors are of good quality.
“This is time and effort well spent and it provides confidence and consistency to both borrower and lender. If the loan request is marginal, ThinCats try to work out how the deal could be done, rather than look for reasons why it shouldn’t be done.
“This is an important differentiation with some other lenders in the marketplace, and makes my job much easier.”
Describing the most important aspects of his role, Davidson says: “The first big question for me is, does my instinct tell me that I would invest my own money in the business?  I need to get the right feeling; this aspect is helped by the number of years that I have been in the industry, and the sheer number of businesses that I have spoken to over the years.
“The answer is nearly always there after my first meeting with the client.  Do I thoroughly understand the business and the opportunity?  Do the management team really impress me – are they inspirational?  Do they have an excellent understanding of their business and the market?
“If the answers to these questions are yes, then my job is simply to understand the detail, to help the client present their borrowing case to the lender in a concise, accurate and balanced presentation, and to ensure that lenders have the information necessary for them to make their own judgement on whether to lend.”
But it’s not always that straightforward. “Sometimes there are challenges that need to be worked through first before getting to the right point,” says Neil.
“When my initial reaction is ‘no’, I don’t immediately walk away –  I’m always up-front with my reasons and try to help the client as far as I can; it may be that the funding can be accessed further down the line, with some work and changes from the client’s point of view.”
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