It is perhaps a testament to the flexibility of the bridging product that its use has grown so noticeably over recent years. From the origins of the traditional loan to ‘bridge’ a funding gap we now offer loans for an ever-increasing spectrum of reasons. Whether it is for those downsizing who have yet to sell their existing property, protection against chain-breaking or enabling the purchase of a property at auction, bridging loans are increasingly being seen as something of a panacea for specialist funding. Speed has also been a factor in the growth of the product combined with a flexibility to address requirements such as capital raising and for a variety of niche uses such as funding lease extension premiums.
At United Trust Bank we are used to customers approaching us for bridging finance for a variety of uses and interestingly over recent months we have seen an increase in enquiries from business owners who are now looking at bridging loans to address a variety of circumstances relating to the business.
Examples of the types of the applications that we have received over recent months range from loans to support cash flow, loans to invest in the business and in one case to raise funds to buy out a business partner. So, why have businesses started considering bridging as a product? Perhaps one element is a restriction of the availability of funds from more traditional lenders. In past years business owners might have approached their high street bank for a business loan in the first instance, but in the current climate there is certainly restricted credit availability on the high street.
My belief is that it is the specialism of the lender as much as the product that has encouraged applications from new quarters. Bridging lending is bespoke lending and providers combine personal service with experience and an ability to structure more complex loans. This represents a seismic shift away from tick box lending which often resulted in a ‘computer says no’ response.
It could be argued that with loan applications considered on its own individual merits, with the decision being made by an individual with a genuine understanding of the case rather than the criteria, for all their innovation are actually signalling a return to ‘old fashioned’ lending. Many business owners will remember the days of branch based lending where the branch manager would know and understand you and your business. They would be aware of the local environment and the attitude, ambitions and plans of loan applicants. Perhaps, ironically, it is for the most old-fashioned of reasons that the most modern of products is gaining prominence for today’s businesspeople.
In a similar vein, and in keeping with responsible lending, is the paramount importance of the ‘exit route’. For each and every loan, prudent and responsible lending means understanding how the loan will be repaid. This protects both the lender and also ensures a duty of care is extended to the borrower. United Trust Bank actively encourages mortgage introducers to explore with us the opportunities that bridging loans have to offer their clients and their businesses.