Allica Bank ramps up SME support with refreshed credit appetite
Allica Bank ramps up SME support with refreshed credit appetite
Allica Bank has made significant changes to its commercial mortgage credit appetite with cuts to its stress-testing and Debt Service Cover Ratio (DCSR) requirements across all products, and an increase in its maximum Loan to Values (LTV) for prime owner-occupied commercial mortgages. It has also reduced the DSCR requirement for its asset finance product.
The business bank – which is dedicated to the needs of established SMEs – believes the changes will help customers retain more cash in their businesses to support growth and investment, and deliver a welcome lending boost to the industry after the UK’s recent period of financial uncertainty.
With the outlook for Bank of England Base Rate seemingly becoming more stable, Allica has reduced its stress test on commercial mortgage variable rate loans from 3% to 1.5% above the Bank of England Base Rate. This means that the same level of profit generated by a business will now enable them to be considered for a higher loan with the bank.
Allica has similarly lowered its DCSR from 150% to 130% across all commercial mortgage products. By considering a lower level of income, Allica hopes to be able to increase the level of support it can provide to businesses.
For ‘prime’ businesses that achieve income levels that enable them to cover loan repayments by at least 200%, Allica has also increased its maximum Loan to Values (LTV) by 5% without any change to pricing on owner-occupied commercial mortgages. The result is that qualifying business can now borrow more at the same interest rate, while still benefiting from Allica’s award-winning dedicated relationship banking expertise, which is becoming more difficult to access with high street banks.
Allica’s asset finance customers will also benefit from reduced DSCR, lowering from 140% to 125%. This enables the bank to support more businesses looking to invest in their equipment, machinery, and vehicle assets.
Nick Baker, Chief Commercial Officer at Allica Bank, says:
Allica’s decision to expand its credit appetite signals the bank’s commitment to supporting an even greater number of established businesses as the UK looks to get back to growth: “In seeing a stabilising market, and following a period of uncertainty, we want to make sure that businesses have access to the lending that will enable them to invest in their futures. Ultimately, these changes mean businesses can do more with less, and that we can lend more to more businesses, building on Allica’s ambition to be the true alternative to high street banks.”
The news follows Allica’s recent extension of its owner-occupied mortgages proposition to include interest-only terms of up to five years for businesses qualifying for the Recovery Loan Scheme.
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About Allica Bank
Allica Bank is dedicated to serving and supporting small and medium businesses and empowering them to succeed. We combine modern, powerful technology with local relationships in the community to deliver expert banking for business Britain.
We offer businesses market-leading lending products including commercial mortgages and asset finance, as well as a range of business and retail savings products and services. We are working hard on developing a full suite of banking services to help Britain’s businesses flourish and grow.
Allica Bank was the winner of Commercial Mortgage Lender of the Year, BDM Team of the Year, and Patron of the Year at the prestigious 2020 National Association of Commercial Finance Brokers (NACFB) Awards. It was also named ‘Best New Savings Provider’ in the 2021 MoneyNet Awards.
Allica Financial Services Register number – 821851. Allica is backed by Warwick Capital Partners.
Allica Bank Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority (FRN: 821851). Registered office at First Floor, Eldon House, 2-3 Eldon Street, London EC2M 7LS. Incorporated under the laws of England and Wales with company number 7706156.
