Guest Q&A: Sean Brophy, Head of SME Debt Finance, Triple Point

There are some very experienced finance houses funding SME projects, we take a look at Triple Point’s Debt Finance capability that has evolved over the last 18 years

Can you tell me more about the SME Debt Finance team at Triple Point?

Triple Point provides SMEs in the UK with critical funding to navigate a variety of operational needs, including mergers & acquisitions, MBOs, working capital, and refinancing. We are sector agnostic and serve those businesses that fall into the missing middle between traditional bank funding and smaller financial institutions.

The type and size of business loans we provide have largely been neglected by traditional finance providers and banks for over a decade, due to a changing risk appetite following the financial crisis of 2008. As a result, direct lenders like Triple Point play a unique and vital role in supporting the many SMEs which form the bedrock of our economy.

Can you describe your role at Triple Point?

My role as Head of SME Debt Finance includes leading our team to expand our portfolio of borrowers, as well as ensuring current relationships are nurtured and developed. We have an ever-growing portfolio of SMEs, many of whom we have been partnering with for several years, while new opportunities to grow the loan book are always on the horizon, especially in the current environment.

It is my job to grow our loan portfolio in a balanced manner, ensuring that we add good quality businesses and support existing customers with additional financing and quick decisions when needed. We pride ourselves on our relationship-driven ethos and it is part of my role to ensure our tailored and nimble approach continues to attract new partners.

How are private lenders usually funded?

It depends on the lender. Many finance providers in the non-bank space utilise a single funding line -usually an investment bank or other credit partner. As a result, they typically offer loans at variable rates and have less freedom to service a wide variety of credit opportunities and may have tighter risk appetites.

At Triple Point, we are funded through multiple lines – both retail and institutional – which means we can provide a fixed rate for our loans. Our borrowers know exactly what their repayment terms look like, while our investors can expect fixed returns. It also results in us being more flexible in building our portfolio and originating new partnerships.

4. What does a typical borrower look like?

We are sector-agnostic and work with a large variety of SMEs across the UK. We ensure any potential borrowers have sound credit fundamentals and high-quality management teams who demonstrate strong leadership and communication traits.

Loan sizes usually range between £1-10m, which means we can cater to both businesses with a smaller turnover, as well as established medium-sized organisations. We also support both sponsor and non-sponsor backed opportunities. This is what makes the Direct Lending space such a fascinating arena, as we work with a vast variety of businesses in different stages of their development.

5. What does the current economic environment mean for direct lending?

We are certainly witnessing a growing demand from SMEs for business-critical funding, especially as interest rates increase, banks further reduce their credit appetite for SMEs and variable rate lenders become less competitive. Triple Point provides loans at fixed rates which means that conditions remain favourable for SMEs looking for funding, no matter the wider economic situation.

On the other hand, we must apply our own risk parameters to the partnerships we enter and ensure that each deal is carefully evaluated on its own terms. It is a busy time for Triple Point and our portfolio has grown rapidly in recent times, with the expectation and strong appetite for us to continue to grow and serve UK SMEs financing requirements.