For me it’s all
theatre as despite all of the bickering and fighting Stormont approved a budget
for next year, all be it, not one we should celebrate too quickly.
In the last few
months I have listened to some elements of the media, politicians and
economists tell how the economy is improving. Apparently more people are
working; the private sector is picking up and the property market is moving
again! It is going that well that Stormont is preparing asset sales of their
crown jewels to pay for the £100m so called Wonga loan note that Westminster
has lent to us.
In short and from
a statistical point of view, yes the economy in Northern Ireland has certainly
picked up. However I would suggest that the man on the street is not
feeling this and furthermore won’t be feeling the benefits of an upturn anytime
soon.
Recently I have
seen evidence of the huge household debt overhang facing many people and with
the insolvency cases hitting record numbers this year it is forecast that this
trend will continue. It is accepted that Northern Ireland has a greater
problem dealing with debt than the rest of the UK, with 27% of the population
over indebted, compared to the UK average of 18%, that’s according to the Money
Advice Service.
However there is
another problem facing the economy that has gone largely unnoticed which is
causing me concern and it has the potential to put the Northern Ireland economy
back into a nosedive.
By 2014’s year
end, billions of pounds worth of property loans will have been sold by NAMA and
Ulster Bank which relate to our small to medium sized business community.
These loans have been and will be bought by American Vulture Funds for the most
part. These Funds will now own the loans and will be responsible for the
out-workings of these loans.
The challenge for
the SMEs through no fault of their own is how they remain in control of their
assets and their business. If we look at what happened in Cork of late
whereby an American Vulture fund tried to take control of a very lucrative
family business by calling in a personal guarantee at very short notice – this
is alarming!
In the last few
weeks our practice has been contacted by dozens of companies from all over
Northern Ireland. Their bank has advised, Ulster bank in most cases, that their
loans are being sold. The businesses have no say in the matter and the
bottom line is they will soon have to deal with a new bank or to be more
accurate private equity companies that want their money back.
Having worked in
this space for the past eighteen months I advise that for the SMEs in this
position it will prove extremely tricky to keep everything on track. The
private equity companies which are buying these loans aim to get 15/20 %
internal rate of return on their monies per annum, and this type of business
model is not conducive to supporting a local business which maybe working to a
longer term business plan.
It would appear
that one exit strategy for the SME is to find a finance partner or a bank that
will support them. The challenge in Northern Ireland is that our banks
are not open for business for the most part and those that are, their terms are
such that they cannot or will not assist.
SMEs that find
themselves in one of these loan trades need to be proactive in terms of putting
together their own proposals and ultimately trying to stay in control of their
businesses. It’s certainly not for the faint hearted however a solution is
possible.
For me the
austerity program is now starting to unravel and with its lifespan due to run to
2020 it is very hard to be optimistic. Maybe I need to run more marathons to
have any chance of experiencing euphoria in the near future as any sense of
optimism or business optimism in Northern Ireland is someway off giving the
current sorry state of affairs.
Conor Devine MRICS
Hello everyone, My name is Courtney Bieneman and i am talking as the happiest person in the whole wide world today and i told my self that any lender that rescue my family from our poor situation, i will tell the name to the whole wild world and i am so happy to say that my family is back for good because i was in need of $186,000.00 USD loan to start my life all over as i am a single mum with 3 kids and the whole world seemed like it was hanging on me until i met this GOD sent loan lender that changed my life and that of my family, a GOD fearing lender, Mr Mason Diego, he was the Savior GOD sent to rescue my family and at first i thought it was not going to be possible until i received my loan of $186,000.00 USD on the 5th/Mar/2015 and i will advise anyone who is in genuine need of a loan to contact Mr. Mason Diego via email at: { diegoloancompany@yahoo.com } because he is the most understanding and kind hearten lender. thanks..
ReplyDelete