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Per Amundsen, Head of Research, Thinktank
When Thinktank opened for business in 2006, little did we know that the Global Financial Crisis (GFC), which brought the world’s financial system to the brink and pushed most developed countries into deep recessions, was just two years away.
For a fledgeling business trying to establish a presence in the small business loans market, the GFC was to provide us with a stern test, in no small part because of the massive disruption it caused to securitisation markets that are a critical part of our business model.
But the lessons we learnt during that crisis stood us in good stead, both for the economic recovery that followed and for the current economic crisis induced by COVID-19, the global pandemic that is leaving a trail of yet unknown economic and social damage in its wake.
Back in 2006, a small group of people with backgrounds in either commercial property lending or working as third-party originators saw a market opportunity to provide credit to small businesses wanting to access to sensibly communicated and delivered property finance solutions. This market sector wasn’t a priority for the major lending institutions, opening the door for small, nimble lenders of which Thinktank was one.
Like all start-ups, we had our share of challenges such as raising capital and building the critical, long-term relationships with wholesale funders, origination partners, regulators and service providers that typically take time and a track record. We had the additional problem of building a commercial property finance business model based on securitisation, a relatively new concept in the market, with one of only two commercial mortgage-backed securities (CMBS) issuers then being the preserve of the AMP Bank. Fortunately, some of us had been part of that business.
It took some work, but we eventually secured the support of those banks involved in the securitisation, and those relationships have lasted till today. Upon launching, the loan book began to grow steadily, business relationships began to mature – and then GFC struck in September 2008 with the announcement that the seemingly invulnerable US financial institution, Lehman Brothers, was filing for Chapter 11 Bankruptcy.
As would be expected, our growth slowed dramatically. The disruption in the wholesale funding and securitisation markets took an exacting toll. But we focussed on our core business and worked our way through it – learning many valuable lessons and building new, strong relationships along the way.