Bridging: a changed profile
By Brian Rubins, executive chairman at Alternative Bridging Corporation
Why is the bridging industry evolving so rapidly? Top of the list must be its entrepreneurial attitude, a positive approach compared with other funding sources. Some have become an alternative source of finance offering commercial and residential loans, including regulated products, and development finance. Many are now short-term lenders; not just the quick fix when time is of the essence.
It is difficult to create new relationships with the high street banks. They will support those SMEs that have built relationships and that have requirements which fit – but not all have these. A banking relationship is not having a current account and cheque book. If you do not know your manager and are not currently borrowing, you have a bank account, not a relationship. Absence of relationship is particularly troubling for the property industry, which needs to work closely with its lenders, and it is an opportunity for the bridging community.
Challenger banks have partially filled the gap; however, their bureaucracy is often greater than that of the bridging industry. Because bridging lenders have a ‘can do’ attitude, it is not surprising they are often the lenders of choice, not just the one which is available. Speed remains a major driver of business to bridging lenders as is their ability to separately underwrite those loans which do tick all the boxes. However, they should not be viewed as a source of ‘no questions asked’ loans, but a group of lenders who will measure risk and say yes whenever they can.
Alternative Bridging now provides a wide range of of short-term loans, no longer just bridging for homeowners and buy-to-let investors. In the recent past, Alternative Bridging has financed residential and commercial developments ranging from £700,000 to build two houses in South-East London to a £15m facility to develop a retail park in Gosport, Hampshire. Additionally, it has provided a wide spectrum of loans for up to two years for the business community and bridging loans for retail, office, industrial and residential investments including serviced apartments and student housing.
On the immediate horizon at Alternative Bridging is a revolving loan, similar to a bank overdraft, an arrangement where security is taken and funds can be drawn, repaid and drawn again and again without incurring interest when the funds are not needed, avoiding costly, repetitive setting-up charges. The profile will continue to innovate while the bridging industry expands.