Top tips for bridging market borrowers
The Ronseal advert slogan “it does what it says on the tin” sums up one of the key attributes of a short-term lender. Cut away all the jargon and the products, the borrower simply wants to know that if a lender says they can do something then they will do it and will stick with their decision.
Since Cowgills launched PMJ Capital in 2015 the bridging market has continued to expand. With new lenders entering the market with what seems to be increasing regulatory demands it is fair to say the market is confusing at best.
The offering is diverse, as are the products available, but in my opinion the fundamentals remain as the ability to deliver a funding package with the minimum of fuss and having the funds to complete.
Clearly price is an influencing factor for borrowers, and whilst I accept that lenders need to be competitive, for transactions which are usually time sensitive or opportunity driven I would argue that confidence in the availability of funding and the lender principals remains paramount.
A borrower was rarely unable to complete on or lost a deal due to the price of borrowed funds but deals have been lost as a result of the inefficiencies of lenders whether through lack of funds, misunderstanding of the transaction, an inability to be commercial/flexible or ‘changing of the goalposts’.
Communication is also important throughout the process and this extends to both the lenders and the borrower’s professional teams. Bridging, whilst not in itself complex, can be made difficult if all parties are not clear on what is expected of them, including information requirements at the outset and not having constructive dialogue as the case progresses.
Personally, I am a strong advocate for ‘picking up the phone’ as more can be achieved in 10 minutes of dialogue than in a round of emails. Sometimes the lender just needs to get stuck in to make things happen!
My top 5 tips to borrowers would be:
1- Know your lender. Understand whether they are lending their own money, if they are subject to funding lines or really just acting in the role of a packager. Through PMJ Capital we use our own funds and are not reliant on any external parties or funders which has been a really important element in helping us to complete deals quickly and flexibly.
2 – Have the ability to talk to a decision maker and have confidence that they understand the transaction and will be contactable if you need to speak to them.
3 – Be completely upfront about any wrinkles in the transaction or background issues that may come out in the due diligence process.
4 -Select your appointed solicitor with care – someone who has experience of dealing with bridging lenders helps.
5 – Make sure you stay in the loop. It is as much the borrowers’ responsibility to drive a deal forward as it is the broker, solicitor or lender. Equally don’t be frightened to pick up the phone.
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