The views from our MD, Ric Simmons reflecting on 2024 and his expectations for 2025.
Looking back at 2024
Last year for UK SMEs was a year of hesitations in many ways; a general election being called caused reasons to procrastinate, while people waited to see what the outcomes of a changing political landscape would be. This didn’t just affect our country, but elections across Europe and the United States played their part too.
Inflation issues kept the country in a higher interest rate predicament for longer than had been anticipated, which also put a strain on SMEs. Despite the Bank of England base rate gradually reducing, we know most funders lend against the swap market which forecasted an even more gradual reduction.
Resilience is key
The last few years have been turbulent, there’s no question about that. Yet the resilience of this country’s SMEs never fails to amaze me. Every year seems to bring new storms to weather; we came through the pandemic, yet some of the scars from that are still healing, then the Russian invasion of Ukraine caused fuel and supply chain issues, the costs of raw materials soared and then interest rates rocketed. And so we have to find new ways of working and new ways not just to cope, but to continue to help drive the businesses of this country forward.
Ambition to succeed
We need to have the ambition to succeed and I’m proud to say that in 2024 at Praetura Asset Finance and throughout the whole of Praetura Lending, we didn’t just meet our ambitions, we exceeded them.
At Praetura in 2024, we provided more funding to more businesses than we have ever done before, with both Praetura Asset Finance and Kingsway Finance achieving record annual funding levels for the fourth consecutive year. Praetura Lending’s combined loan book exceeded half a billion pounds towards the end of the year and Praetura Commercial Finance Group’s portfolio increased by more than 70 per cent.
I believe these successes were due to the ethos of Praetura being evident in everything that we do: we offer ‘more than money’. We have decades of expertise and experience between us on our teams, which we share with our valued broker network and their SME clients. Our brokers and the businesses of their clients need us to be swift, to be adaptable and most of all to listen.
We have seen some larger institutional funders move away from our market, which have caused short term impacts, but this is an opportunity for SME focussed relationship-led lenders, such as Praetura to move to the fore.
The Praetura Way
Without doubt, our successes from last year at Praetura are down to our people and the culture we have developed over the years, which enables our people to thrive. Every single member of our team has a willingness to go above and beyond and there are thousands of examples I could use to illustrate this. Whether it’s pulling together working extra hours at a busy month-end, our apprentices achieving distinctions and their careers progressing in other departments, our previous graduates moving to be line managers, or the amazing lengths everyone went to helping raise over £45,000 for our chosen charity of the year (the Bone Cancer Research Trust). Our mentality of hiring people that will fit the Praetura mould and promoting from within is an ongoing source of personal pride for me, and the reason behind our company’s growth.
Specific challenges – Commission Disclosure
One particular grenade that was thrown towards our industry came in the latter part of the year following the High Court ruling regarding Commission Disclosure. This is something that we knew was coming and something many of us were preparing for. The surprise came in the speed of everything needing to be changed as quickly as it did. But this is yet another instance where our industry should be proud, as it shows how quickly we can move and how adaptable we can be. The FLA’s stance and guidance ensured that all funders were moving in the same direction. I was once again impressed at the speed we can turn things round at Praetura, which meant that we didn’t need to pause our lending and new systems and procedures were quickly put into place.
Looking forward
When we look forward to what this year will bring, from a Praetura stand-point I’m expecting more of the same, we once again have ambitious growth plans and we have a highly motivated and exceptional team to help us put those plans into action.
Looking at the bigger picture, reports and surveys appear to be anticipating a stagnant year, with GDP remaining static. But the watch word from the Government is still ‘growth’.
Short-term growth predictions (from the IMF) for the UK have been lifted from 1.5 to 1.6%, which on the face of it is positive. Growth is good. But that could also have an adverse effect on inflation, which many commentators are now expecting to return to being above the Bank of England’s target of 2%.
This could keep borrowing costs higher, for longer, with businesses at the larger end of the SME scale also likely to feel the impact of the employer’s National Insurance contributions. This increases the importance of the role that business finance brokers and advisers can make to SMEs across the country. Yes, our funding can provide the means for a transport company to buy a truck, but it can also provide a route to funding to help businesses save money by reducing monthly outgoings, or means to enable a company to diversify into different markets. We all have a part to play in delivering that message to SMEs.
Using all the resources available
I have been saying for many years that we need to bang the drum for asset refinance louder. It’s an SME funding tool that in my opinion is an underused resource – you don’t need to consider selling your business assets to raise funds, instead you can unlock their value and use that funding for whatever your business needs – whether that’s consolidating debts, providing a cash flow buffer over quieter months, or an injection of capital to facilitate an expansion or diversification strategy. If your business has machinery, industrial equipment or vehicles, they could provide the funds you need, while you continue to use those assets to earn money too. It’s a win, win! It also happens to be an area where Praetura Asset Finance have a strong reputation because of our expertise on the subject.
Speed is of the essence
Another aspect I expect to see develop over the course of 2025, is people’s increasing need for immediacy. Due to advances in technology many things are now available to us at the touch of a button, and this trend is filtering through to our industry. Every year people expect things quicker, so we need to move smarter to provide an even more increasingly reactive customer experience. But this must not be to the detriment of our service levels, or negating that sometimes time is needed to be able to grasp the full picture of a situation and base decisions on that, not the snapshots.
At Praetura we have invested heavily in our technological resources, not so our computers can say yes or no, but to put the pertinent information in the hands of our underwriters quicker, so they have the scope to look around the issues and individually structure deals (along with our business development teams) to specifically suit each individual client’s business. We’re using the power of technology to enhance, not replace. We will continue to develop and evolve these resources throughout this year.
At the forefront of the way we move forward will always be our people. This is not a faceless industry and we are not a faceless funder, our people are the reason for our successes and our people matter.
Optimistic outlook
When thinking about what course 2025 might take, we know there are still many uncertainties out there. We have a new president in the White House and each week brings new soundbites for people to react to, but as yet we don’t know what will come into effect or how.
What we do know is that the SME community will face new challenges this year, but as I’ve already mentioned, we know that they are a resilient force. It’s our job as a funder to work collaboratively with our broker partners to ensure they’re getting the right funding at the right time and for the right reasons.
We want to see growth. We particularly want to see SMEs grow, they provide the backbone of our economy. So we need to work together so that funding that isn’t from a high street bank isn’t seen as an alternative, but is actually seen as the norm.
We’re ready for that in 2025!
