Risk

dryhat

ukcarper wrote: »

Do you not believe all the news about small businesses being refused credit or credit being withdraw.

I'm making a nice 7% return on lending to small businesses.

Much better than BTL and much less hassle.

ukcarper

grizzly1911 wrote: »

The news isn't news.

Small businesses have always been refused credit and had it withdrawn. Small businesses often have ideas above their ability to service and repay with ill thought out propositions or inability to manage and control deteriorating positions.
Do you expect everyone who applies for a loan/overdraft to be granted one?

Customers do tend to be optimistic and a degree of realism from the Bank at the outset may prove more valuable than agreement to the requested advance.. More weight should be given to facts and evidence than to estimates and opinion...The Source of repayment must be clear from the outset and we must establish the degree of certainty that the promised funds will be received.

I leave it to you to decide where those pearls of wisdom originated from.

It is better to turn unsatisfactory requests aside for all parties concerned. Core bank lending is just that, lending to be repaid, it isn't equity risk funding.

All of that is true and plenty of money has been lent to non viable companies but the right balance has to be found which I believe isn't the case now.

grizzly1911

ukcarper wrote: »

All of that is true and plenty of money has been lent to non viable companies but the right balance has to be found which I believe isn't the case now.

It is a difficult balance but if the opportunity was there I am sure the Banks wouldn't turn good prospects aside. They have a living to make too and that can't be done just by squeezing the existing customer base.

if our initial assessment is that the risk is not tenable, consideration should be given to "re engineering" the proposition to put it in acceptable form

Another pearl of wisdom.

I do also accept that centrally set automated credit appraisal processes, these days, are blunt tools and central screw tightening may lead to some valid applications getteing turned aside for stupid reasons at the lower end of the scale.

ukcarper

grizzly1911 wrote: »

It is a difficult balance but if the opportunity was there I am sure the Banks wouldn't turn good prospects aside. They have a living to make too and that can't be done just by squeezing the existing customer base.

if our initial assessment is that the risk is not tenable, consideration should be given to "re engineering" the proposition to put it in acceptable form

Another pearl of wisdom.

I do also accept that centrally set automated credit appraisal processes, these days, are blunt tools and central screw tightening may lead to some valid applications getteing turned aside for stupid reasons at the lower end of the scale.

I think that is the main problem and I'm not sure the banks have the will or still have the ablity to perform a good risk assessment so it's easier to refuse loans.

ILW

HAMISH_MCTAVISH wrote: »

I have to say there are some positions taken by posters on this board regarding risk which border on cognitive dissonance.

Given that the big, safe, companies are all sitting on massive cash piles and don't want to borrow.

And given that the small number of low LTV borrowers with massive equity/savings are being fought over by the banks to take their money at low, low rates.

Who exactly is it you expect your banks to lend to at rates high enough that you can get risk free returns on your savings at 5%, 6% or 7% as many of you seem to want?

You don't want them to lend to FTB-s with smaller deposits as you think they're "high risk", you don't want them to lend to small businesses as you think they're "high risk", so who do you expect to borrow, and why?

Nothing wrong with lending to higher risk borrowers as long as it is priced in.

Trouble is people seem to jump up and down if anyone talks of offering an 8% rate.

Thrugelmir

Conrad wrote: »

not something I've found to be particularly the case with equities?

Foreign & Colonial Investment Trust have raised their dividend every year for over 40 years......;)

Thrugelmir

ukcarper wrote: »

Do you not believe all the news about small businesses being refused credit or credit being withdraw.

Listen to On the Money from last night on the IPlayer (Radio 5).

Guy from Barclays spoke really well in plain simple language about SME lending. You may understand the issues better.

pipkin71

james_toney wrote: »

i too have a BTL and to be honest it is the best thing i have done so far, if prices fall it really dont make much difference to me as i dont plan on selling for the next 10 years, and i can easily affrod the payments if it was not rented out for a period of time, so to me it is a reallygood long term investment

A friend of mine went into BTL a few years ago and, as far as he is concerned, it is the best thing he ever did too.

There is the worry that payments may be difficut if he was unable to let for a while but also looks on it as a long term investment rather than something to make a quick profit on.

Thrugelmir

pipkin71 wrote: »

A friend of mine went into BTL a few years ago and, as far as he is concerned, it is the best thing he ever did too.

There is the worry that payments may be difficut if he was unable to let for a while but also looks on it as a long term investment rather than something to make a quick profit on.

Property is the last business to be in for a quick profit. As the exit may well be more painful than the entry.

Any Landlord that works on 52 weeks of rental income a year is odds on to hit trouble at some point in time.

armour

dryhat wrote: »

I'm making a nice 7% return on lending to small businesses.

Much better than BTL and much less hassle.

Congratulations, you're making a nice fat profit and helping SMEs at the same time.
Could you give some more details as I'm looking for a "risk free" home for my BTL profits.