Inside RateSetter: Asset Finance

Our ‘Inside RateSetter’ series has covered consumer finance and property finance. In our latest blog we speak to George Stancliffe who oversees RateSetter’s asset finance operations.

Please tell us about your background

I originally qualified as a finance lawyer in the City and joined RateSetter 5 years ago.  I’ve worked across all RateSetter’s borrowing lines but with a focus on lending to small and medium sized businesses.  In 2018, I took on the challenge of developing and delivering RateSetter’s secured SME finance strategy as the Head of Asset Finance.

When did RateSetter establish its asset finance operations?

RateSetter launched in the asset finance market in 2017.  We identified a lack of competitive funding supply in the motor market and initially our focus has been to deliver funding products that enable independent car dealerships to fund stock.  We have facilitated £36m to motor dealership SMEs across UK and built a strong track record in this sector, balancing healthy returns for RateSetter investors against well managed risk taking into account the strength of the security, which is the stock of cars.

What role does asset finance have in the RateSetter portfolio?

The asset finance portfolio accounts for 2% of the RateSetter portfolio and provides diversification, with asset-based business finance for SMEs alongside consumer finance and property finance.  Asset finance is secured against all the assets funded and this means that in the event that a customer cannot repay the loan, expected recovery rates are high.  As well as being secured against assets, in common with all loans originated by RateSetter, every asset-backed loan pays into the Provision Fund.

How do asset-based loans work?

The product offers SMEs access to a credit facility, up to an agreed credit limit, upon which the SME can draw down to purchase stock from wholesale suppliers (e.g. BCA Car Auctions) to sell to consumers. Assets are only be funded subject to certain strict criteria and following a valuation (obtained through a partnership with CAP HPI) and we have a team dedicated to auditing assets funded across the UK. All facilities are supported by director / shareholder guarantees and legal title over all assets is retained until they are sold.

Can you describe a typical customer?

Customers are typically SMEs with turnover of £1-10m and up to 10 employees largely focussed in the Midlands but we have customers across England, Scotland and Wales.  We offer credit facilities up to £500,000, with the average being £100,000-£200,000.  Customers are often longstanding family-run businesses with considerable expertise and experience in their market, and we do not lend to businesses that have been trading for 2 years or less.

What is the dealer finance sector like?

In 2019, 19,000 SMEs were registered to sell “cars and light vehicles” in the UK and a significant number require funds to purchase stock.  As such, there has historically been strong market demand for this type of finance.  Being an independent stock funder with bespoke technology and a customer focused product, we are well positioned to build this product to significant scale. 

How is asset finance performing during this downturn?

Like many other sectors, car dealerships suffered significant disruption in sales through March, April and May.  We have stood ready to support our customers, although on the whole our asset finance portfolio has performed very well since March, with fewer than expected defaults to date and payment rates close to 100%. Our customers have been supported by government initiatives during the lockdown and the initial signs are that, as restrictions are eased, the industry has made a good start towards recovery and demand for cars from our dealership customers is healthy.  As a result, we are receiving and are cautiously assessing applications for new facilities.  We are preparing for more challenging trading conditions for the sector over the medium term and are ready with appropriate measures to manage risk.

What are the future prospects for RateSetter asset finance?

We have a great asset finance product, underpinned by well-designed technology and processes, meaning that RateSetter is well placed to take advantage of the opportunities that the economic recovery presents in this area.

What do you enjoy most about your job?

Our product is competitive and is supported by a bespoke technology platform.  What I’ve really enjoyed generally at RateSetter and with this product is taking traditional forms of lending and bringing them into the 2020s.  It has been an exciting journey building the technology to enhance our operational efficiency and enforce robust processes and procedures. The next stage will be to enhance customer functionality and user experience.


The Provision Fund we offer does not give you a right to a payment so you may not receive a pay-out even if you suffer loss. The Fund has absolute discretion as to the amount that may be paid, including making no payment at all. Therefore, investors should not rely on possible pay-outs from the Provision Fund when considering whether or how much to invest.  Learn more