New entrants have spent considerable sums on marketing and existing lenders have, for the most part, taken the decision to do the same. This is due, in the main, to the increased demand from borrowers looking to exploit large gaps in the property market that the recent financial crisis has created.

On the funding side, investors in bricks and mortar and others with cash to invest have been attracted by the returns to be made from funding these loans.

In the absence of any real forecasted capital growth in residential property over the next few years and property players who have become ‘reluctant landlords’, investors have gravitated towards income producing investments such as asset-backed lending. In the current low loan-to-value environment, these are experiencing a low default rate.

West One Loans itself is wholly privately financed by high-net-worth investors. With a large number of investors who have different requirements, we are able to fund a wide range of loans, including both first and second charges, residential and commercial, nationwide including Scotland.

Currently, West One Loans is authorised by the FSA to run an unregulated collective investment scheme (UCIS) which is used to fund non-regulated loans. In effect, this enables it to pool together private investor funds at source in order to lend. However, without FSA lending authorisation, West One Loans is currently restricted from funding regulated loans.

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It is estimated that this sector is currently less than 20% of the overall bridging market. Nevertheless, it is an important source of finance for those requiring short-term funds and who do not wish to commit to long-term mainstream finance or go through the lengthy process.

From an overall business perspective, it makes sense to seek FSA regulation to fund regulated loans in an increasingly competitive bridging finance sector. Bridging lenders can maximise their business opportunities by expanding their horizons and not limiting themselves to the crowded non-regulated space.

Given the quality of regulated lending, this will be an attractive opportunity to UCIS investors and opening up to new markets can only help alleviate the supply and demand issues.

In short, as high street banks continue to remain sidelined, the opportunities for private investor-based bridging finance have never been better.

The challenge facing borrowers to secure finance is still very significant, particularly for entrepreneurs with excellent track records in property development and refurbishment. They continue to be shut out from so-called mainstream lenders still reluctant to lend.

This reluctance, coupled with historically low interest rates for savers, has thrown open the doors to private investors, who can see the income opportunities loud and clear. These borrowers (and the collateral they are offering) represent a very good risk reward for the returns they are happy to accept to have continuous access to the capital markets.

West One Loans has lent over £60m in the last 18 months and has a very large pool of funds available to lend this year and moving forward. We have yet to agree a loan with an introducer that we have been unable to finance and that is pivotal in building any long-term relationship.

In addition, we are seeking to become FSA regulated in order to offer investors a wider range of loans to invest in by being able to make regulated loans on borrower’s principal residences, a market estimated to be around 10% to 20% of the current bridging market. FSA regulation would certainly be beneficial should the FSA decide to regulate second charges on people’s homes and /or the buy-to-let market.

There can be no doubt that these are exciting times for our industry. We are doing business with exciting and entrepreneurial borrowers who are relatively unfazed by these austere times, and need to partner up with like minded people with the vision to help them realise their goals.

Private investor funding can help them achieve things that clearly would not be possible if they had to rely on mainstream financing.

Mark Abrahams, chief executive officer of West One Loans