Historically, short-term debt was provided on a small scale by private individuals with some very high terms. Out of that evolved a more institutional group of bridging providers funded by wealthy individuals who then provided more structured debt with clear terms and visible market pricing.
A few of these firms have evolved into large professional providers but as private businesses their scale has meant they have to reconsider their funding strategies as they outgrow their access to private money.
Alongside this you now have banks, such as Hampshire Trust Bank, which have access to retail savings, backed by a strong capital investor and this allows a scalable offering. Some of the larger private bridgers have now had to source other funding to enable them to maintain future commitments and to continue to grow.
The other options available to them include investments funds, warehouse lines from banks and also progression to trying to obtain a banking licence. Providing warehouse lines is something we would consider at Hampshire Trust.
Those that are progressing to a full banking licence have quite a challenge. A challenge in terms of costs, timescales and process but a challenge they believe pays off. Banks, however, can provide diverse product offerings. For instance we offer bridging but also true development finance and term finance, allowing customers to move through the different products in one environment or to dip into the product of choice.
I believe that the bridging lender landscape has evolved for the better. I feel brokers now have good availability of professional bridging providers, both in the private and the banking sector, that in reality complement each other and ensure the market is competitive and liquid.