Whilst property transactions continue to be the bread and butter of bridging lenders, reduced liquidity in the banking sector due to the economic downturn has led SMEs and entrepreneurs to turn to bridging for other reasons.
In the past six months, Bridging Finance Solutions seen a national increase of 53 per cent in lending to companies and individuals looking to use short-term finance for something other than property acquisitions.
Steve Barber, Managing Director of Bridging Finance Solutions said: “The signs are there that bridging’s move into the mainstream will continue even as the economy shifts further out of recession. There will always be a place for fast short term funding whether in a rising or falling market. In recent years, more professional firms have entered the market and competition has driven market prices down and ensured transparency of terms.”
Short-term lenders are also seeing an increase in high-street bank referrals. Once considered competition to banks, bridging is increasingly recognised by professional advisors as complementary to traditional long term finance. Banks are introducing customers whilst material changes occur to propositions to allow for credit sanction.
Steve added: “Professional advisors are recommending bridging to businesses going through takeovers or mergers, as it’s often necessary to arrange capital swiftly. Similarly, for management buy-ins (MBIs) or buy-outs (MBOs), funds can be raised based on the existing business’s balance sheet or directors assets whilst due diligence is carried out for longer-term funding.
“In a challenging market for many businesses, bridging has also provided a lifeline. Whether it’s to deal with cash-flow issues, purchase stock or pay a tax bill, the speed and flexibility in which bridging finance can be arranged can make the difference between business stagnation or growth. As the short-term finance market continues to mature, the onus is on professional advisors and intermediaries keep on top of developments and latest products from trusted and established short-term providers.”
Bridging Finance Solutions are regulated by the Financial Conduct Authority, and the Financial Ombudsman Service, Patrons of the NACFB and members of the ASTL, raising standards in the short term finance sector.