Unforeseen threats can arrive with similar unpredictability. They can create a major personal or business crisis. It could be any one of a number of familiar scenarios – maybe an unrecoverable bad debt from a trusted customer or a contract on which your business has come to rely goes elsewhere. It could simply be that the tide of market forces has turned or that returns from a promising investment have failed to materialise. Perhaps some personal change that you hadn’t anticipated skews the direction of carefully laid plans.
Opportunities can be fleeting – unless you grasp them they’ll soon evaporate. Threats soon change from being ominous possibilities to uncontrollable realities.
The response to both situations needs to be the same – strike while the iron is hot and act quickly to either seize the opportunity or avert the crisis.
Either course of action will normally involve spending money. If you have the funds to hand, fine. If not, you have to decide how to access them. Before expending substantial amounts of money there are generally conditions to be met and choices to be made.
Most people are familiar with the conventional alternatives: increase your facility or get an advance from the bank; cash-in a liquid asset; auction the family silver; seek out a secured loan; ask the building society or commercial lender to re-mortgage your home or business property. All are tried and tested routes to raise liquidity in normal circumstances.
But unexpected opportunities or threats aren’t normal events.
How long will the opportunity last – days, a couple of weeks? How long before the threat does irreversible damage?
And how long will it take to put the funds in place?
The answer is probably much more than a few days. Conventional lenders prefer to make advances over longer timescales, usually numbered as a period of years. And their professional constraints mean that they never rush into an arrangement without first establishing their security – the solidity of the collateral, the quality of the borrower and the strength of the contract. Decisions are usually taken centrally and that means there’s a queue. The conventional route could take weeks or even a couple of months while the lender does all the usual checks and paperwork.
But raising substantial funds in very short spaces of time – without paying excessively for the privilege – can be done.
There is however one such company which specialises in providing secured bridging loans either directly or though professional channels. The appropriately named Bridging Finance Limited (BFL) is based in Manchester and has made its mark by bringing fresh order and clarity to a sector of the lending market that was itself once regarded – at best – as being rather uncertain, clouded and arbitrary. Let’s be honest, many short-term lenders are known for their expensive and unscrupulous practices.
It used to be the case that finance directors or professional advisors would have to scour the whole sector to find a bridging finance house that would accept the collateral on offer and provide the right level of funding, at a fair interest rate, over an appropriate time period. All too often it was a time-consuming ‘moveable feast’ – in effect, an auction of frenzied negotiations. The outcome was dependent on who had the funds in place to lend, the strength of their appetite for the particular deal and the scale of their interest rate expectations.
In contrast, BFL offers clients fixed interest rates, fixed time scales and rapid responses. They have a highly skilled and highly responsive team. Typically, they are able to give immediate outline decisions and generally complete transactions within five working days.
‘The big buzz is putting funds in place quickly, so that clients can grasp opportunities or avert pressure from challenging business or personal situations.’ says Baguley
Decisions about quite substantial transactions are made over the telephone in the course of the initial conversation. Then it’s all down to hard work, usually against the clock.
Making use of bridging finance generally costs more than conventional borrowing. The twin differentials of quick completion and a short-term period tend to make this specialised form of lending more expensive to administer and, of course, there is a higher element of risk attached for the lender.
Business people in a hurry or on a mission are seeking a short term expedient. They accept that the advantage they’ll gain from the advance will certainly outweigh the costs involved and normally replace the bridging funds with conventional secured borrowing well within the agreed duration of the bridging facility. This is a sophisticated service and our clients have professional advisors. They are well aware of the cost implications. It is an absolute pre-requisite of doing business that everyone understands these ground rules.
Transparency and clarity, particularly on the subject of interest rates, have replaced a certain amount of unwarranted opportunism that existed on some fringes of the sector before. That’s how BFL have been able to make such a conspicuous a breakthrough in the short-term finance market.
Urgency is sometimes a factor in business dealings. The offer should be made simply because there is a sufficiently satisfactory business argument.
For example, BFL provided £2.2 million of short term funding to a company called NGR, so that it could quickly purchase a site in Leeds that had become available. Director Chris Thomson felt it was an opportunity too good to miss, and he was delighted when the whole transaction was completed in just 3 working days. He said: “The whole process was co-ordinated by Bridging Finance Ltd, who drew upon their excellent relationships with solicitors and surveyors to ensure that the process went smoothly and all deadlines were met.”
There was no arm-twisting, no brinkmanship and no rate negotiations. In my view, that spells a clear, bright future for bridging finance.