Brian Rubins (pictured), director at Alternative Bridging Corporation says for residential developers undertaking projects with predicted sales of £2m or £3m bridging lenders will consider 65% of estimated sales revenue, equal to 80% to 90% of cost.
High-street lenders, however, usually do not lend more than 60% of cost.
Rubins adds: “Bridging finance is now an alternative source of funding for commercial loans, where to go when other lenders are not readily accessible. Although bridging started life as the short-term fix, today it is anything but.”
Alternative claims that regardless of supposed government support for small businesses, many are not receiving the funding they need and small property investors and developers are being hit hardest.
“Just consider the frequency of borrowers seeking an extension of their bridging loan from six to 12 months or even from 12 to 24 months and how often one bridging finance lender refinances another,” adds Rubins. “This is not a short-term fix but a demonstration of bridging lenders being used as an alternative source of financing. The bridging market will finance the purchase and then top up the loan as the value of the security is increased. Additionally, long-term finance will be more readily available when the property has been put in apple pie order.
“Alternative lenders are becoming part of the mainstream and brokers and borrowers will start recognising them as a first port of call and not where to go after all else has failed.”
Alternative has also appointed a new internal business development manager in Soner Enver, a move which Rubins says is “testament to the strong growth of our business.”