It is often a financing, complete in itself, in replacement of loans from the mainstream lenders providing an alternative source for financing property development or business expansion, according to Alternative Bridging Corporation Limited.
“While a number of bridging loan lenders have ventured into satisfying specialist short-term requirements, for example development finance it is not as easy as it looks,” says Brian Rubins, managing director of Alternative Bridging.
“Analysis is key and knowing the right questions to ask avoids wrong decisions and enables quicker response. When the project encounters delay and cost overruns, is it time for lenders to cut and run, leaving the developer stranded, or is it time to rely on experience and extend the period and increase the facility? To make the correct decision needs confidence backed by experience so borrowers are advised to choose lenders carefully.”
Rubins accepts that a bank loan, from either a high street source or a Challenger Bank, if available, is often cheaper than a bridging loan. But he points out that the key words are “if available” and to them should be added “when”.
“What is being proven time and time again is that speed and certainty of funding and the ongoing relationship outweighs the argument of cost,” he says.
