Special Features

Securing bridging finance on complex cases in the current environment

Jonathan Rubins | Director at Alternative Bridging Corporation
16th September 2020
Jonathan Rubins Alternative Bridging
"It is, however, still possible to secure bridging finance on complex cases if you work with the right lender."

This is an interesting time for bridging brokers. Feedback from the market shows a surge in demand for bridging finance from clients, but in the current environment many lenders have limited appetite for new loans, making it harder for brokers to make the most of the opportunity when applications come with complications.

It is, however, still possible to secure bridging finance on complex cases if you work with the right lender. By way of example of the types of cases that can be possible in the current environment, here are two cases studies of loans we approved at Alternative Bridging Corporation this July.

Regulated bridge to development loan

We received an application for an advance to repay an expired bridging loan secured against a prestigious but tired family home, owned and occupied by a single lady.

A family member, an experienced developer, is negotiating on her behalf for planning permission to demolish the house and replace it with a block of 12 apartments. Consent has not yet been granted and is anticipated within the next few months.

After grant of planning permission, the bridging loan will be repaid from a development facility. In the event of planning permission not being given, the house, which is in poor condition, will be refurbished and resold.

Fast turnaround involving a corporate structure and a receiver

A property company director owned her personal residence in a partially owned corporate vehicle and occupied the apartment under an Assured Shorthold Tenancy. The purchase had been financed by a challenger bank.

For personal reasons the remainder of the shares in the corporate were transferred to the director and this change of control breached the terms of the bank loan.

As a result of the breach, the lender appointed a receiver. We were able to provide funds to repay the bank loan before the property could be sold by the receiver to a third party.

These are two examples of cases that were not straight forward but were possible because we were able to work together with the broker to identify a pragmatic solution to the problem. It was also important that the case was well-packaged when it was originally presented to us, as this made it clear that the fundamentals of the proposition were all sound, despite some of the hurdles.

It’s still possible to secure bridging finance in complex situations in the current environment, where there is a strong case to do so. It’s therefore important to make sure that an application for finance includes well-communicated reasoning for the funding as well as realistic exit scenarios.

With these in place, there is no reason why brokers shouldn’t be able to make the most of the current demand for bridging finance from clients.

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