The changes to the lending landscape during Covid-19

Covid-19 has sent shockwaves across the globe. It continues to cause widespread economic hardship and concern for businesses and communities.

During these past couple of months both bank and non-bank lenders have faced unique challenges in responding to the virus. For the early years sector, it is a situation that they have never encountered before which can be nerve-wracking, especially for those who have expansion plans for 2020.

To get a better insight into the lending environment, NMT spoke to Stuart Blair, debt finance director and Stephanie Kendall, associate director, growth & communications at OakNorth Bank.

Despite the ongoing challenges, the bank has remained confident that there is appetite for growth and will continue to support clients as they weather this storm.

Asking about how the lending landscape has changed for OakNorth, Stuart stated:

‘Over the last few months the focus has primarily been on supporting existing clients through the crisis. It is something that none of them have ever faced before. Working with them in partnership during the closure period has been a priority.

‘While businesses have closed there has obviously been less revenue but there are still payments to be made and some of those payments can’t be deferred. Therefore, it’s really been about us working out how we can help our clients get back to a new normal.

‘There’s been a lot of proactive work with the existing portfolio and our ability to access and analysis the loans quickly has allowed us to support our clients but even during this period we have been keen to support new clients as well. We are all about finding good management teams and the nursery sector remains one of our key focuses and we are delighted to speak to new businesses.’

OakNorth Bank uses data to very quickly benchmark operators across the country and that helps the team with their decision making. True to the data it collects, the bank is also very relationship focused, aiming to help any business that has a secure plan and a strong management team.

Speaking about the next 12 months, Stuart added:

‘The sector still remains very attractive and I think there is going to be a lot more consolidation in the space. Also, there will be more opportunities for smaller operators with one or two settings. This could be a good time to look at expanding for a third or fourth setting. I think once the confidence returns there will be a lot more interest and growth.

‘Through talking with our client operators, we are seeing a good start back to trading and although there is still a long way to go that’s what we have witnessed in the first two weeks of re-opening. In terms of the debt side its still very much an attractive sector that we at OakNorth are interested in.’

Recently, Essex-based nursery, Little Explorers Day Nursery secured funding from OakNorth Bank to support its acquisition of a property in Epping Forest.

Despite the current climate, the acquisition is part of a wider long term growth strategy for Little Explorers Day Nursery, which plans to open five more nurseries in locations on the outskirts of London.

Commenting on the funding, Stephanie Kendall said:

‘Little Explorers have been an existing client and with everything that happened with Covid-19 they were looking to get some funding to expand and grow. That’s one of the reasons we were keen to work with them is that they are an existing client and they had a strong management team. It really all fell into place and we were excited to get it through for them.

‘Nurseries are an incredibly important sector to us and we think its going to be very resilient over the next couple of years and our support for Little Explorers shows that there is still appetite to grow.’

Looking ahead, there is still a lot of uncertainty but banks like OakNorth understand that this is a time to support the early years sector as much as possible.




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