BRIDGING LOANS
BESPOKE BRIDGING LOAN
& SHORT TERM LENDER
Once
considered
as
only
a
niche
product,
short-term
lending
or
bridge
lending
has
seen
huge
year
on
year
growth
this
decade
due
to
the
flexibility
and
quick
completion
times
these
loans
can
offer.
As
High
Street
Banks
have
suffered
liquidity
restrictions
and
tightened
their
criteria
new
lenders
have
entered
the
market
offering
a
diverse
and
innovative
range
of
products
that
have
seen
the
market
grow
to
an estimated £4Bn per annum.
Bridging
loans
can
be
a
great
solution
for
clients
who
need
finance
quickly,
either
to
take
advantage
of
a
time
limited
opportunity
or
to
resolve
an
emergency
situation
but
for
lenders
that
offer
these
loans
they present a unique set of credit management challenges.
Typically
written
over
periods
of
3-18
months,
the
key
components
to
a
successful
bridging
loan
are
a
suitable
asset,
acceptable
use
of
funds
and
of
most
relevance
from
a
credit
management
perspective,
a
clearly
defined
and
plausible
redemption
strategy,
often
referred
to
in bridging as the exit.
The
interest
on
most
bridging
loans
is
charged
up
front,
built
into
the
gross
loan
advance
and
deducted
by
the
lender
at
the
point
of
completion.
As
a
consequence
although
some
bridge
loans
offer
monthly
servicing
many
do
not
and
it’s
therefore
vital
that
lenders,
in
the
absence
of
regular
monthly
contact
to
collect
payments,
maintain
a rigorous focus on their post completion loan book.
As
a
lender
we
have
always
believed
in
a
pro-active
relationship
with
our
borrowers,
one
where
we
maintain
regular
and
at
least
monthly
contact
to
monitor
the
progress
on
their
redemption
plans.
Regular
interaction
of
this
type
maintains
borrower
awareness
of
the
short-
term
nature
of
our
loans
and
the
need
to
maintain
absolute
focus
on
the
redemption
process.
A
close
relationship
also
gives
us
maximum
visibility
at
all
times
on
any
potential
problems
and
enables
us
to
work pre-emptively with our borrowers to resolve these.
During
the
processing
of
each
loan
request
we
build
a
strong
relationship
with
the
borrower(s)
and
as
soon
as
their
loan
completes
we
send
a
letter
confirming
completion,
the
redemption
date
and
advising
them
that
we
will
be
liaising
regularly
throughout
the
loan
term
to
ensure
everything
remains
on
target.
As
the
redemption
date
of
the
loan
approaches
we
increase
the
frequency
of
contact
reminding
the
borrower
of
both
their
obligations
and
the
penalties
for late redemption.
The
majority
of
our
loans
are
redeemed
by
the
sale
of
an
asset
and
in
such
cases
we
insert
a
specific
clause
into
the
loan
agreement
ensuring
that
the
borrower
provides
us
with
a
monthly
report
from
their
marketing
agent
detailing
all
interest,
viewings
and
offers
made
on
the
property.
Once
a
sale
has
been
agreed
we
ensure
that
the
borrowers
solicitor
keeps
us
appraised
of
the
conveyancing
process
relating to the sale.
Of
course,
despite
all
the
measures
above
late
redemptions
do
occasionally
occur
but
by
this
stage
we
have
invariably
developed
such
a
close
and
reciprocal
relationship
with
the
borrower
that
a
mutually
acceptable
solution
is
usually
found.
In
the
credit
management
of
bridging
loans,
as
with
so
much
in
life,
communication is key.
John Clifford
Managing Director
Central Bridging