Commercial loans provide a really big opportunity on the business landscape, according to Brian Rubins, a director of Alternative Bridging Corporation Limited.
The residential bridging market has its attractions but has become a crowded market place led by the promise of low interest rates combined with high expectations, he says.
Alternative and its sister companies are principal lenders providing short-term loans and development finance for the property industry and business community. And Mr Rubins added:
“Commercial loans on the other hand, for the property industry and business community are different. There are fewer brokers and the volume is larger – not by the number of loans but in their collective value.
“The reasons for commercial loans vary enormously. It may be a vacant retail unit waiting for a new tenant, an office building being developed under 'permitted development rights' or perhaps an industrial estate with some vacant or poorly let space in anticipation of refurbishment or new tenants or for the leases to be improved.
“As residential development loans expire, the completed but unsold homes, can be refinanced via a commercial bridging loan, removing the pressure to repay the development finance provider, releasing capital and reducing the cost of borrowing while maintaining the developer’s relationship with the original lender, opening the door to undertake the next project with them.
“So, 'commercial' means different things to different people but there is one common interpretation, a golden opportunity for brokers to do more business. A win, win situation for all parties."
Meanwhile, earlier this year, Mr Rubins said that the bridging loans industry needed to take a lesson in openness. Back in April he argued there are few places where such disciplines are more abused and that within the short-term loans sector there are more misleading assurances which cannot be fulfilled. These included “loans up to 90% LTV”, “interest from 0.5% per month” and “completions in 24 hours”. He added:
“Overall our industry is growing and maturing and so must each of the lenders and brokers who operate in it. We all want to attract as many new enquiries as we can and using 'from' and 'up to' may help to make the phone ring or the computer ping but, in fact, building lasting relationships is far better achieved when founded on truth and facts.
“For brokers who can be relied upon it is far better for lenders to give them access to detailed underwriting criteria so that they are fully aware of terms, preferences and red lines. It saves the broker time and rather than relying on 'from' and 'up to' and being let down, he can say to his client on day one, these are the terms and you will get them, maybe a little better but definitely no worse.”