NatWest could increase liquidity in the auctions market by implementing plans to provide a lending decision within 24 hours of application.
The bank is piloting a streamlined approach for loans of up to £2m for SMEs as part of a drive to improve its service and reduce the costs associated with issuing thousands of loans each year.
Clients will be able to apply in a range of ways, including online, by phone or direct with their relationship manager. A verbal indication of the funding available would be given after an initial 45-minute screening process and a facility letter e-mailed to successful applicants within 24 hours. The bank aims to release funds within a month, down from the 80 days it typically takes today.
Paul Coates, head of real estate finance for NatWest and Royal Bank of Scotland, briefed 13 of the UK’s top auctioneers on the plans at a private lunch last month.
Coates said: “We are always looking for ways to provide our customers with a better, quicker and more transparent service that gives them a greater level of certainty.
“We are piloting a programme for customers who are looking to borrow up to £2m that allows them to apply and receive a decision the same day. This new model should see most approved loans available for drawdown within a month of application.”
The standardised process would be available only to clients with a proven track record.
Auctioneers questioned whether the hammer price could be accepted as a valuation, but Coates said the bank would still require a valuer to be instructed.
David Sandeman, managing director of Essential Information Group, said the move would empower purchasers. “It would not take the place of bridging finance, but it would fill a niche in the market for higher-value lots,” he said.
Auctioneer Clive Emson welcomed the news but cautioned: “The stumbling blocks to these objectives are often the lawyer and valuer.”
Acuitus chairman Richard Auterac said: “A process that follows through online would be a big step forward. That does not exist at the moment for commercial. This will benefit those who buy every year or couple of years – and they could be tomorrow’s portfolio holders.”
NatWest’s standardised lending process
- Decisions to be made by the relationship manager – not the credit committee
- During an initial 45-minute screening process a verbal indication will be given and further information, such as a rental schedule or development appraisal, requested
- If all further information is e-mailed back and is in line with the initial screening process, the relationship manager will commit the funding within 24 hours, including e-mailing the facility letter
- The commitment is then subject to completion of legals and valuation, which are instructed in the usual way.
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