Our Head of Specialist Lending offers some insight into the mysterious and magical world of bridging finance.
What place does bridging have in the market?
Historically, clients could seek short-term funding from their own banks. However, since the last financial down turn these banks just haven’t been willing or able to do this. As a result, the short-term finance market has matured to meet this need and is now an essential part of the UK economy.
How many bridging lenders are there?
Almost infinite, as new lenders enter the market on a regular basis. Some are very well-known and easily accessible, but others are very niche and look to procure business in a very selective manner. Some are even exclusive to Enness. It is therefore impossible for the borrower to accurately assess the market, and not much easier for an intermediary. This is where the Enness Specialist Lending team excel.
What is the cheapest bridging loan you can get?
An interesting question, which makes the point that ‘bridging’ has become synonymous with high interest rates and eccentric lenders. Not true. For example, Enness arranged a loan recently for £12m with one of London’s oldest banks at a rate of well under 4%. Short-term finance is far from a last resort – it’s an essential tool we use as part of our financial engineering.
How long a term can you get?
Theoretically there are no constraints on term. However, the cost of funds generally means the term is up to 2 years and more usually 6-12 months.
What is the average rate?
With such a broad range of rates I think an ‘average’ might be misleading but a ‘typical’ interest rate is about 9%.
What is the most important part of a bridging application?
In any financial proposal I don’t think there is any single ‘most important’ aspect. It’s like a jigsaw; all the pieces have to be there and are equally important. However, the key for most short-term loans is for us to be happy with the exit.
Do you think brokers always find the best solution?
No, there is seemingly a lot of inexperience in the industry. Some lenders push themselves and their products on the vulnerable with many following the ‘path of least resistance’. This is rarely the best advice from either a structuring or cost of funds perspective.
What makes Enness good at arranging bridging loans?
Experience, reputation, and an unrivalled ability to access the very best funding in the marketplace.