Make bridging boring again – Diamond

A high-profile lender failure has prompted uncomfortable questions across the market, while brokers, borrowers and funders have all found themselves looking a little more closely at how bridging businesses are run.

When confidence is tested, attention naturally moves away from ambitious lending targets towards the things that keep a lender standing when markets become more challenging. Perhaps that is exactly where our focus should be.

Which brings me to a conclusion I never thought I’d write. Maybe it’s time to make bridging boring again.

Adam Tyler, CEO of the Bridging & Development Lenders Association (BDLA), recently spoke about the sector’s “continued professionalism”, highlighting disciplined underwriting alongside a growing focus on governance, transparency and sustainable growth.

I’d argue that is no bad thing. Every so often, an industry benefits from taking a step back and reminding itself what good actually looks like.

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The best deals rarely become stories

This isn’t meant as a criticism of the sector. Quite the opposite, in fact. Bridging finance has earned its reputation by finding solutions where other lenders can not, often within demanding timescales and against genuinely complex circumstances.

Even so, when people are borrowing hundreds of thousands, or even millions, of pounds, they are not looking for excitement. They want a lender that does what it says it will do, keeps them informed and gets the transaction over the line. In my experience, the best bridging cases are usually the ones people rarely talk about afterwards.

Nobody rings six months later to tell you how wonderfully uneventful their bridge was. They remember the transaction that nearly collapsed or the refinance that became a race against the clock. Those stories inevitably get repeated, but they should not become the standard by which we judge good lending.

The real work happens before anyone notices it

Large facilities and impossible deadlines all make for good case studies because they show what specialist lending can achieve. There is absolutely a place for those stories, but they can leave the impression that success is all about pulling rabbits out of hats.

Personally, I do not think that is where the real value lies. It is found much earlier in the process by asking better questions, understanding the risks properly and putting a structure in place that gives the borrower the best chance of reaching a successful exit.

Keeping complexity where it belongs

The important thing is not pretending challenges will not arise because they almost certainly will. It’s how they are dealt with when they do. If that sounds a little boring, I’d suggest that is exactly how it should be.

Good lenders absorb as much complexity as possible rather than pushing every issue back onto the borrower. Most borrowers do not need a running commentary on underwriting discussions, solicitor queries or valuation points. They simply want to know where things stand, what happens next and whether the transaction remains on course.

For me, that is one of the biggest differences between simply providing finance and providing a genuinely good lending experience. The complicated conversations should happen behind the scenes, allowing the borrower to concentrate on the project rather than the process.

Consistency builds trust

If there is a big positive to come from the scrutiny our sector has experienced this year, perhaps it’s that we are talking more about the fundamentals again. Governance, underwriting, communication and operational discipline aren’t particularly dazzling topics, but they are the foundations on which successful lending businesses are built.

Perhaps that is why I think we should make bridging boring again.

Not because specialist lending has become any less innovative or ambitious, but because the best transactions are usually the ones that unfold pretty much as everyone expected. Borrowers complete their purchase or refinance, move on to the next stage of their plans and rarely give the loan another thought.

When that happens, the bridge becomes entirely forgettable. In my book, that is a job well done.