Short-term finance shines in the gloom

CONOR MURPHY, MANAGING DIRECTOR, CAPRICORN FINANCIAL
CONOR MURPHY, MANAGING DIRECTOR, CAPRICORN FINANCIAL

With the restrictions on commercial and development finance and lack of appetite among high street lenders for this type of business, bridging finance can often be the best option for small-scale housing developers.

There is a plethora of well-funded bridging lenders in the market all vying for business and happy to lend on a wide variety of assets and the sector has been a ray of sunlight in a gloomy sky.

As high street and commercial lenders have restricted lending and tightened criteria in this area since the credit crunch hit, bridging firms have enabled smaller housing developers to continue trading.

Without this I would dare to suggest that fewer developments would have been built and lots more unusual property types, such as mixed use developments and houses in multiple occupancy, would be lying empty.

Crucially, as the cost of traditional commercial financing has increased in recent years, especially with regard to lending fees and other charges, the cost of bridging financing has not risen.

It appears relatively economical by comparison and flexible, with swift underwriting, offers routinely produced in days and loan terms geared to meet the needs of borrowers.

Obviously, bridging finance is still not the solution for everyone and it should only be considered in short-term situations of less than 12 months as a maximum.

However, where there is a clear exit strategy in place bridging finance might be just what your customers are looking for.