Bridging mainstream lending?
Bridging in its purest form was originally marketed as a chain-break solution. If you sold your home and bought a new one, only to find that completion of the sale of the previous one took longer than anticipated, a bridging loan came to the rescue. Post-2008, the unwillingness of mainstream lenders to ‘bridge the gap’ created an opportunity for other lenders that looked beyond traditional lines and were not scared of their own shadows.
Today, many bridging firms call themselves ‘short-term lenders’. They have even expanded into medium-term lending. The common denominator is that loans are secured primarily by property.
The purposes of borrowing are many and varied. They include short-term cash-flow requirements for businesses, such as building up stocks; investment opportunities that require immediate cash; or even the wish of borrowers to go on the holiday of a lifetime or buy a new car. Often, early redemption of investments incurs penalties or property assets may take a long time to sell, either because people wish to maximise the price or because they are waiting for probate to be completed.
As long as the exit is clear and underwriting is professionally done, bridging is now an established part of the finance market. One day, perhaps, it will be regarded as mainstream, rather than alternative lending.
Help?
If you require assistance in raising funds rapidly please do contact one of our experienced advisers who will be happy to help.
Expected to increase
A recent report has shown that more than half of small business owners expect to use alternative financing in the future rather than traditional high street lenders. The report showed more than 60% of those surveyed will be raising finance within the next 2 years.
Demand for bridging finance is well placed to continue going from strength to strength over the next few years as mainstream lenders struggle to evolve to adequately support the thriving small business community.
The small business man is increasingly turning to specialist lending as they have the skills to understand their specific needs.
One such small business owner in Essex said “bridging finance is so easy and quick to complete and the costs now are very reasonable”. “I have been using this form of lending now for the last two years and can honestly say I have never had a problem”. “The most important thing to remember is to have a sound and logical exit strategy in place and you will be in a strong negotiating position”.
High praise indeed but it’s not surprising when on average a “clean case” can complete in less than 10 days and this is what makes this form of lending so attractive.
Bridging lenders have been quick to recognise this gap in the market and have responded with new and innovative lending ideas which are aimed at small businesses.
Bridging finance has a vast array of uses, also over the past 3 years interest rates have fallen significantly making this form of lending very attractive.
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If you require assistance raising funds please do contact one of our fully qualified advisers who will be happy help.
Rapid rise of bridging finance
Bridging finance has grown in status year on year and is going from strength to strength. In terms of lending there is little doubt bridging finance has grown in stature faster than any other form of financing.
Experts believe this rapid rise is down to three main factors which made bridging so popular in the lending market place.
- Speed of completion
- Ease of application
- Large range of uses
In these hard times of financing it has become more important than ever to be able to complete a deal on time. Bridging loans deliver funding quickly and efficiently which is something high street and private banks just cannot do.
Over the last two years bridging companies have expanded the loans available to consumers plus they have a vast array of uses. Interest rates have also reduced drastically and are now very much in line with other regular forms of lending.
Popular uses of bridging finance
Buy-to-lets
Probably the most popular with us now, helps fund a purchase quickly and can assist in negotiating a reduced price.
Buying at Auction
Becoming more and more popular with clients and allows completion that meets auction demands.
Tax liabilities
Bridging is popular when a tax demand is made for a sum that cannot be raised in the timescale given. The loan can be secured against the business premises or other suitable assets again buying valuable time.
Need help?
If you have a financial situation and need clarity of what can be done call us now and we will be very happy to talk things over.