The lender, which listed on the Aim in December, reported a year end loan book of £36.4m at the end of 2020, and is predicting a year end loan book size of £40m by the end of this year.
Chief executive officer Agam Jain (pictured) said: “We are still quite small, but we have got an ambitious growth plan, so hopefully in the coming years we will be a bit more prominent.”
He added that there was no need to enter new segments. The lender is focusing on property developers, people buying properties mainly for refurbishment and commercial property.
“From our point of view, there’s lots of opportunities and it is competitive, but you know just by being better and more aggressive we’re going to get our share,” he said.
Jain said that listing was challenging due to the pandemic, adding that the process took around six months.
He said: “It’s not necessarily the easiest way of raising capital, and if people have got connections with private investors of a large enough scale that might not be a motivation for them. But for us, we wanted to go down this road because you know we want to build a brand as well, not just a loan book.”
He added that the pipeline for the business was “very good” and “higher than it has been ever”, but chancellor Rishi Sunak’s upcoming tax announcements on 27 October could have a dampening effect.
Jain said: “If you ask me today, it’s a very good pipeline but it only takes a bit of bad news, especially on taxes, for people that do these projects to feel it’s not worth it anymore. When that happens, then obviously things will change.”
He added: “I think everybody is very optimistic about the economy, particularly in our segment. But I think the next dampener will be when Rishi Sunak announces what he’s going to do about tax.
“We’re on this sort of optimistic gravy train at the moment. I don’t know whether we’ll be able to think, it doesn’t matter, we’re going to pay a bit more [in taxes], but we can still carry on as we are.”
During the pandemic Jain said that there was a “three-month pause” among bridging lenders during the initial lockdown. Most lenders, including Vector Capital, ceased new lending due to uncertainty. The firm restarted new lending at the end of June 2020.
Jain said: “Our industry was less affected than others…because we were lending against property and the property prices didn’t crash in three months. We still had a bit of equity, and then when our borrowers asked for a holiday we were able to be considerate the request and give that.
“We weren’t foregoing the interest, we were just deferring it, it didn’t affect our results that much. As a consequence, we also didn’t actually have any bad debts, which you could have expected.”
He said that the market was still growing but warned that a correction could be on the horizon, as loan to values (LTV) continue to climb.
He explained that twice in the past lenders had gone up to 90 per cent LTV or 100 per cent LTV, with some even going up to 105 per cent LTV as they expected property prices to rise.
Jain said: “We are still trying to play a safe 75 per cent LTV, and the reason for that is there will be a correction at some stage, and you don’t want to be that lender who, in order to grow its loan book and get a bigger market share, went out at 100 per cent or 105 per cent LTV.”
He added: “The market is expanding, there is a lot of opportunity there, but we still think that lenders should be responsible and safe and not over egg the pudding.”
Jain said that recently developers had been struggling with margin, as materials were taking 12 weeks or more to arrive and prices had gone up by between 20 to 30 per cent.
“This means that their project is taking longer to complete, they’ve got more costs and more interest being accrued. Assuming that their expectation that their sale price will hold up, a lot of them are getting very close or borderline.”
He said that to adjust to the changing environment it was important to be supportive, especially if you were working with someone on several projects.
“We have to be supportive for mutual interest. Trying to pull the rug isn’t going to help anybody.”
Some cases had begun to edge up to 90 per cent LTV, he added, but as these clients were doing multiple projects they could offer other security from their portfolio.