Responsible lending can shape stronger future in challenging economic times - UKSE

23 Aug 2023

Published in: Member News

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Responsible lenders are ready to lead the way for business growth during the current economic headwinds faced by companies, writes Steve Grice, area manager for UKSE’s West Midlands arm.

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The rapid recent increase in inflation, the rise in interest rates and the leap in energy bill prices have placed pressures on small to medium sized enterprises which have made leaders contemplate uncertain futures.

With many firms looking at options for investment or financial support to weather the storm, there is a window of opportunity for responsible lenders to show their worth.

Responsible lending is where the lender acts in a customer’s best interests throughout the process, ensuring affordability, transparency of terms and conditions and support for the borrower if they face repayment difficulties.

Lenders like us have a responsibility to make sure borrowers understand the details of a loan and carry out thorough checks on any borrowers, to be confident that customers receive support suitable for their circumstances.

We also recognise that we exist in a well-developed lender ecosystem locally and the right funding for the business might involve bringing in one of our counterparts.

We are driven by a desire to ‘do the right thing’ rather than hitting arbitrary targets. There is growing demand for these services.

National membership body Responsible Finance reported that lending by the sector increased by 20% to £248m in 2022, reaching 94,744 customers who would otherwise have been excluded from affordable finance.

Whilst UKSE has a responsibility to the borrower to ensure investment is right for them, we also have a responsibility to wider society that we meet sustainable development goals.

UKSE has selected nine United Nations Sustainable Development Goals which we have embedded into our working practises.

All nine are vital but we place particular focus on the goals of providing decent work and economic growth, reducing inequalities in society and playing our part in climate action.

High Street banks have their own goals around lending processes but they are typically bound by the need to deliver shareholder value and hit targets. UKSE operate to a different set of values. Responsible lenders consider a far broader canvas.

We not only ask whether a loan is in the interest of the lender but consider whether it is in the interest of the borrower, employees, local community and wider society. It is an approach that goes beyond simply providing ‘dumb money’.

We act as a critical friend, questioning the company leaders’ plans around their future use of the money rather than just checking they can make the repayment terms.

Based on a constructive conversation with all involved, we make a judgement call on the management team and their use of the money against that broader canvas.

With so much uncertainty around the economy, working with a responsible lender with clear goals which benefit society may feel the most sensible way forward for firms new to the sector.

UKSE is a Tata Steel subsidiary offering strategic loan and equity packages of up to £1m to generate growth, create local job opportunities and bolster the economy across Birmingham, the Black Country, Coventry, Staffordshire and Shropshire.

Based at our new office in Cannock, UKSE’s new local team have begun engaging with firms wanting tohttps://www.linkedin.com/in/stephengrice/ grow, innovate and bring employment opportunities to the West Midlands.

To date, since 1975 UKSE has invested over £110m, supporting 7,650 businesses, stimulating the creation of an estimated 81,000 new jobs.

As a social impact lender with a focus upon job creation, sustainable growth and innovation we look forward to helping companies and communities draw upon the rich industrial heritage of the West Midlands to build new futures.

• To find out more visit: www.ukse.co.uk