London leads the world with innovative, interesting and enterprising financial instruments. Modern finance has become truly international with online access to global markets. Quick silver capital flows rapidly to increase the options for bank or private bridging finance.
In their book, Quick Silver Capital, Richard B. McKenzie and Dwight R. Lee noted how the “rapid movement of wealth has changed the world.” Modern capital “can be sent around the globe at the speed of light….” Consumers have developed a 24/7/365 Internet mentality and private bridging finance has responded.
More individuals and small businesses have access to a wider range of financial instruments today. The Credit Crunch continues to drain the coffers of banks with numerous lawsuits and non-performing assets on the books. These banks are forced to become more conservative in their lending practices.
All loans have a limited time parameter. Financial circumstances change and debtors need immediate cash infusions to span gaps. A lucrative property may be available, refurbishment may be desirable or a short-term loan may be needed to finalize a deal. A good bridging loan can lead to high profits.
Most customers seeking a short term bridging loan have already qualified for a longer term loan. This is a distinct advantage. They have already proven that they are creditworthy. The bridging loan can fulfill immediate cash flow needs before a larger loan can be refinanced.
These are the three essentials for all bridging loans:
I) Short time period
II) Immediate needs
There are more private financing companies who specifically provide bridging loans. They understand client needs and offer customised terms and conditions to fit debtor needs. The private financiers will do their due diligence to make sure the debtor can handle the short-term loan conditions.
Previously, banks had a monopoly on finance. They continue to have more capital at their disposal with a wider variety of financial products and services available.
The after-effects of the Credit Crunch remain because they were never resolved. Many of these banks lack liquidity – that is why they were bailed out. Governments continue to invest good money after bad money into failing banks.
Most banks are already highly-leveraged and overwhelmed with non-performing loans. They also must deal with lawsuits regarding mis sold PPI, interest rate swaps and LIBOR. This has levelled the playing field. A private bridging finance company is more agile and unencumbered with these burdens.
Moreover, rigid conservative banks will be even more hesitant to make a bridging loan. They already have too many bad loans on their balance sheets. They are trying to improve their loan quality by lending to individuals and companies with higher credit ratings. They might think you already have too much debt and are too risky for their stressed portfolio.
There are also more international and national political entanglements with larger banks. More banking customers are experiencing a longer application process where the bank seems very reluctant to lend money to anyone.
Private Financing Advantages
According to Greenfield Capital Bridging Lenders, there is a “wide array of tailor-made products and services to suit every need”. When you need vital funding, a private bridging finance company might be better suited to satisfy your needs.
Small private firms must make bridging loans to make money. They offer a faster application process from 24 hours to days. They are more flexible because they want your business.
Some debtors want short-term loans for credit repair or to break the endless cycle of debt. Most banks want to keep you indebted, so they will not give you bridging loans with flexible terms or conditions. Banking loans will continue the cycle of dependence.
You can get unique products and services from more specialised private financing firms. You will be dealing more directly with owners and entrepreneurs who can change the rules to fit your needs. There is no double talk or delay.
Private firms might have exclusive bridging finance experiences leading to superior customer service. They understand your needs. They have the flexibility to respond accordingly.
Streamlined private financing firms can modify repayment schedules and terms. Many banks only offer the “corporate line.” Private finance firms can better fulfill the immediacy and flexibility needs for bridging loans and finance. Private financing companies need your business; they will offer unique financial products and services.
Bridging Finance News
Securing a Small Business Bridging Loan
Many small business owners rely on small business funding to pay for their start-up costs and their initial operating costs. A small business bridging loan can be used to pay rents, to pay for business supplies, marketing, and even salary expenses when your revenues are low.
Bridging Finance on Buy to Let
A client approached us who had an outstanding mortgage of £200,000 on a villa in Spain, the villa was worth £210,000. The bank were recalling its debts due to the weakened Spanish economy and offered the client a short settlement opportunity to pay £160,000 to clear the mortgage on the villa. This is a classic example of when bridging finance should be used. The lend was unusual, but time critical.
Tim Capper reports on Financial Mis-Selling for Maple Leaf Financial. Our aim is to ensure you get honest advice and proper guidance to ensure a suitable recommendation can be made to pursue a financial claim
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