Spotcap partners with accountants and financial advisers across the UK, helping them to find the right funding for their clients. Here, Chris Evans, editor of FS Focus, sits down with Niels Turfboer, Spotcap’s managing director.
FS Focus: Can you tell me about your career background?
Niels: I’m originally from the Netherlands and started my career working for ABN AMRO for more than ten years, with a short stint at ING after that. However, I was keen to move on and completed an MBA at IE in Madrid, with a specialisation in strategy and finance from New York University. This led to establishing my own educational business, before joining MarketInvoice as Head of Investor Development.
I joined Spotcap because I liked their proposition of targeting small and medium-sized enterprises, who have had trouble accessing finance, in particular since the financial crisis. Having started and run my own business for three years, I knew that finding the right funding can be challenging.
FS Focus: What is the general state of the business loans market post crisis? Would you say it is ‘volatile’?
Niels: The market for business loans is a healthy one. With banks’ increasingly risk averse attitude, it’s vital that lenders like ourselves offer small businesses a genuine solution to their funding troubles. There have been a lot of new entries in the lending space, giving more choice to businesses. However, they should be aware that some lenders don’t necessarily have clients’ best interest at heart.
FS Focus: What impact has Brexit had?
Niels: Despite it’s prohibitive nature we recognise Brexit as an opportunity. Launching in the UK in November 2016–shortly after the June Brexit vote–is testament to this. We can’t be sure of the true impact of Brexit, but the underlying dynamics of the economy are unchanged and capital will be needed to make the most of opportunities in turbulent times.
FS Focus: What about the effects of the recent (and likely forthcoming) interest rate rises?
Niels: The recent interest rate rise was long overdue. The alternative of quantitative easing has its limits and I think it’s safe to say we explored its potential to the fullest. We can expect consumers to spend more cautious the need for business loans will always remain. If interest rates rise some businesses won’t be able to borrow but that isn’t necessarily a bad thing. The price of capital fluctuates throughout an economic cycle and it’s up to any business owner to find solutions for sustainable growth given existing conditions. UK businesses are resilient and flexible and they will continue to find funding and opportunities that are a good fit regardless of whether interest rates rise.
FS Focus: Do you think the increase in regulation in financial services has been necessary or over burdensome?
Regulation is a necessary part of financial services, to ensure fairness, but also to aid in its success.
FS Focus: What are the major reasons for businesses taking out loans at the moment?
Niels: Spotcap provides business loans of up to £350k for up to 24 months; we find that small businesses are using our loans for a range of reasons, most commonly to manage their cash flow. Perhaps a retailer is looking to refurbish their premises or a manufacturer wishes to purchase equipment that will improve their efficiency. Working together with accountants and financial advisers, we can provide the funds needed to quickly capitalise on these opportunities.
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FS Focus: What are the main problems and issues businesses face and why?
Niels: When it comes to their financing needs, established businesses sometimes struggle to raise capital to keep their companies running smoothly. They often worry about the commitment and costs involved in taking on a business loan. And with the abundance of lenders and loan products out there, it can be difficult for them to find the funding that fits their needs. Accountants and financial advisers can play a crucial part and help educate their clients about the various routes to funding.
FS Focus: Where do you see the loan market heading in the coming months/years?
Niels: The UK loan market is highly fragmented and we expect a certain degree of consolidation over the next years. Lenders will have to continuously look for ways to develop their loan products further to remain competitive. At the same time, we will see increased collaboration among lenders, creating a richer and more competitive loan market. Businesses will ultimately reap the benefits of this evolution.
This article was originally published in FS Focus, the magazine of the Financial Services Faculty.
Originally published October 15 2018 , updated February 24 2020