Mortgage Soup fires the questions at David Castling, head of intermediary distribution at Atom bank.

Mortgage Soup (MS): Atom recently enhanced its Growth Guarantee Scheme (GGS) criteria. Why have you made those changes now, and how is the GGS performing?

David Castling (DC): The enhancements mean we can now consider applications from first-time buyers for all businesses that are eligible for the scheme, whereas in the past applicants may have had to demonstrate at least two years of experience as a business owner.

With care homes, we’ve also reduced the minimum rating required from the Care Quality Commission to ‘Requires Improvement’.

These changes mean that we will be able to provide GGS funding to a much broader range of SMEs, especially in areas which are currently underserved by mainstream commercial lenders.

With our residential mortgage proposition we have adapted, refined and championed an inclusive, flexible approach for first-time buyers, helping customers realise their dreams of home ownership.

GGS allows us to afford a similar opportunity for those embarking on their journey of business ownership.

The GGS has a really important role to play for brokers and business borrowers, as it provides access to rates that might not otherwise be available, funding which they can devote towards investing and growing their businesses.

We have been big supporters of both the GGS and its predecessor, the Recovery Loan Scheme, as we have recognised how valuable this support can be for ambitious SMEs.

The Government’s Spending Review has provided the scheme with funding until April 2030, and that certainty is invaluable as it allows brokers and lenders to plan for the long term use of the scheme.

MS: PBSA is another area where Atom bank has adapted its proposition. What drove those changes?

DC: The student housing market is changing significantly. Historically, properties like houses in multiple occupancy (HMO) have been the dominant asset class for investors, as students have got by with a house share arrangement.

But things are changing. Some of this is down to regulation, where HMOs are under greater scrutiny, and we have seen HMO numbers drop quite noticeably over the last seven or eight years.

However, I think there’s a cultural side as well. Students are having to pay a lot to attend university now, and there is an expectation that they shouldn’t have to make do with such modest accommodation.

PBSA is shaping expectations of students, who are starting to see onsite facilities like gyms, concierge services and cinemas as attractive features of student life, particularly as they become more common.

That’s driving a real increase in interest in PBSA from investors, and it’s something we want to support at Atom. So we have adapted our lending approach to ensure that investors looking to purchase a PBSA can do so at higher LTVs and on more attractive terms than if the case involved an HMO.

Investors are looking for a stable, predictable income yield and that’s becoming increasingly difficult to achieve from traditional property investments, but it’s an area where PBSA can really deliver.

MS: What challenges are businesses and brokers having to overcome at the moment?

DC: Much of the interest we are seeing from businesses at the moment is about funding growth, which is really encouraging. But that often means leverage is crucial – the business wants to maximise the amount they can borrow in order to kick on and turn those aspirations into reality.

This is where lenders need to look carefully at how they are operating, and whether they can improve the potential size of the loans on offer. This was a key element of our thinking a few months ago when we introduced a simplified stressed interest rate for affordability.

By moving to a much simpler equation, where we stress test against a rate of 1% plus Base Rate plus margin, it can mean borrowers are able to obtain larger loans. Those additional sums can make all the difference to their growth plans.

Pricing is an important consideration too. One of the frustrations we hear from brokers is that some lenders take too much of a sweeping attitude towards business borrowers, treating them as if they all represent the same level of risk, simply because they are borrowing at the same LTV level.

That’s problematic, as it can mean that lower risk business borrowers are saddled with higher cost borrowing, for no real reason.

Bespoke pricing is more complex by its very nature, but it means borrowers often benefit from quotes that reflect their actual circumstances. It’s about delivering a truly fair deal, rather than basing everything off an immobile rate card.

MS: What does the future look like for the commercial market?

DC: From an Atom perspective, we are always looking at how to scale up what we do in a slick, manageable way. Our technology improvements last year have meant an increase of 130% in capacity, without a comparable jump in headcount.

Just as important is being creative in product design and criteria. There are too many sectors which are completely underserved by high street names, but with a common sense approach we can support businesses in those sectors to grow and achieve their ambitions.

2024 was a difficult year for the commercial market, and 2025 wasn’t much more straightforward, but there remains some real optimism among the SMEs we have worked with.

They have spotted opportunities, have got the right fundamentals in place, and are pushing on with their plans.