Donna Wells, Director at F4B
Speed, expertise and experience are critical factors when it comes to sourcing bridging finance and the strength of our long-standing relationships with numerous lenders means that we, as a packager, have a clear insight into how their products and criteria can provide the right outcome within certain timeframes.
This was outlined in a recent case with Together where we combined to deliver a £400,000 commercial bridging loan in just nine working hours. In this particular case, a portfolio landlord, who owned 10 investment properties, wanted to move quickly to purchase an office building in London to expand his portfolio.
The speed at which this case was completed, and the funds released, underline the benefits attached to the specialist underwriting teams within such lenders and the quality of the packaged documentation supplied. Obtaining as much information as possible at the pre-application stage to ensure everything is disclosed can often save a huge amount of time further down the line. For brokers who may not be too familiar with the intricacies and complexity of such cases, the right questions are not always being asked early enough in the process. Meaning vital data or insight into the borrower, their financial background or the property in question can often be missed, leading to costly delays.
Detail really is everything and it’s our job to know exactly what types of cases every lender will accept to ensure applications are packaged correctly. Identifying the right lender for the right case is only part of the process. Further down the chain, brokers need to recognise the types of transactions which may benefit from a variety of short-term solutions and how they work in practice. However, these are often missed due to a lack of time and/or understanding
Commercial and semi-commercial bridging
As a business, we’re currently seeing huge amounts of activity within the commercial and semi-commercial property sectors and we expect to see continued growth in Q2 and beyond. As highlighted, its important for brokers to recognise opportunity and, with this in mind, it never hurts to get back to basics and outline what this kind of opportunity looks like.
In short, a commercial bridging loan is a short-term facility secured against commercial property for either a purchase or capital raising but what is considered suitable security for a commercial bridging loan?
This can be secured against the following types of security:
- Commercial & semi-commercial (mixed with residential) property
- Industrial property
- Land, with or without planning permission
The flexibility of this type of bridging loan also means the borrower can consist of any of the following:
- Private individual
- UK limited company
- Offshore company
- Limited Liability Partnership (LLP)
- Foreign nationals
There are numerous examples where this type of facility has benefited many borrowing scenarios and brokers can always pick up the phone to a packager or specialist distributor to find out exactly how if they are in any doubt.
Short-term lending expectations
This is just one area of bridging finance on the rise, and increased business levels across the board are resulting in some bullish lending expectations over the next few months. This was illustrated in the latest sentiment survey from the Association of Short Term Lenders (ASTL) where the research – which was conducted by the association among its members shortly after the Budget – found that 73% of bridging lenders are confident about the long-term prospects for the UK economy, compared to 64% when the survey was last run in July 2020.
In terms of the outlook for the bridging sector and their own businesses, 87% of lenders think the turnover of their business will grow in the next six months and 77% expect the turnover of the wider bridging market to increase. Lenders were said to be divided over whether or not they think competition in the bridging sector will rise in the next six months — 47% think it will remain the same, while 43% think that competition will increase. Only 10% of lenders expect a decrease in competition in the next six months.
As highlighted in the research, we have seen a significant increase in positivity compared to last summer and this reflects how bridging lenders have evolved and adapted over this time. Let’s hope the broker community evolves and adapts with them to tap into the opportunities which will continue to emerge.