When people talk about bridging finance, the conversation almost always starts with speed, how quickly something can complete, and how fast funds can be released. And look, I get it, in a lot of cases that is exactly what matters, because there is usually a deadline driving the whole thing.
But if I am being honest, speed on its own tells you very little about how a deal is actually going to perform.
There have been a few situations in the market that have prompted a bit more scrutiny and, probably, a more cautious approach to how people assess deals, which, in many ways, is no bad thing, because it brings the focus back to what actually matters.
So for me, and this is something we have become increasingly focused on, the real question is not how quickly you get into a deal, it is how that deal behaves from that point onwards and how well it stands up when it is tested.
Starting well is not enough
Everything still starts with underwriting, of course it does, and you are looking at the borrower, the asset, and the plan and asking yourself whether it all stacks up in the round. But one thing that is sometimes overlooked is that good lending is just as much about what you choose not to do as what you decide to proceed with.
The number of enquiries in bridging finance significantly exceeds the number that convert into live deals, as lenders take a measured view on what is likely to hold together over time.
If you start from a position where the assumptions are grounded and the risks are properly understood, you give yourself a much better chance of dealing with what tends to happen next, which is that things move, timelines shift, and parts of the original plan need to be revisited. Because, in practice, they almost always do.
Where deals really take shape
This is the part that, in my view, does not get enough attention, because a deal very rarely comes unstuck on day-one. It tends to be somewhere in the middle where things become more difficult, when costs move away from where they were expected to be, or an exit that looked straightforward at the outset takes longer than anticipated.
That is not unusual, it is simply the nature of property transactions, where key actions are often delayed, even when the importance of starting early is understood, with an assumption that the process will come together at the right moment – but often, it does not.
The lender’s role during the deal
At Inspired Lending, we’re perhaps unusual in that we don’t reduce our involvement once we are in a deal. In fact, this is probably where it becomes more important.
For example, we don’t hand something off internally so that the borrower suddenly finds themselves dealing with a completely different team. Instead, there is continuity in the relationship, and the same conversations carry on throughout the life of the loan. That might sound like a small detail, but in practice it changes how situations are handled when something moves away from the original plan.
If a borrower comes to us and says they were expecting to reach a certain stage by a particular time but have not quite got there, the starting point is not to look at how that is penalised, it is to understand what has changed, how that affects the overall plan, and what needs to be adjusted to keep the deal moving in the right direction.
Because ultimately, and this is probably the simplest way I can frame it, if they complete, get it done, get it on the market and either sell or refinance, we get repaid, so there is a natural alignment in what both sides are trying to achieve. Their outcomes are our outcomes.
Keeping the end in sight
That alignment becomes even more important as you move closer to the exit, because while every deal has a defined end point from the outset, the timing of that end point is not always as clear in practice.
From our perspective, we are trying to maintain a clear view of what a realistic exit looks like and where there is a delay, assess whether that route to repayment still holds up based on what we can see.
If it does, and it has been properly evidenced, it usually makes more sense to work with the borrower to get there rather than defaulting immediately to additional charges that may not improve the outcome.
While those charges might deliver something in the short-term, they do not necessarily help the deal reach a successful conclusion, and over time they can undermine the relationship as well, which is not in anyone’s interest.
And we just do not want to be known as that kind of lender.
So for us, looking at the full life cycle of a deal, from how it is structured at the outset, through how it is managed during the term, to how it exits, gives a much clearer picture of what healthy lending actually looks like in practice.
