Bridging the gap with relationship-led lending

By its nature, bridging finance is normally about speed.

Developers looking for a bridging loan will typically bedoing things like securing an auction purchase, taking advantage of anopportunity that has arisen unexpectedly or acquiring an asset where the sellerneeds to move quickly. For these transactions, borrowers need a lender that canunderstand the deal, make decisions and deliver funding without unnecessarydelays.

At VM Finance, we’re very open about being arelationship-led lender. We celebrate the work of our clients and go the extramile to make sure they’re supported in delivering their vision. But how doesthat work in bridging finance, where time comes at a premium?

In this article, we talk you through our bridging offer andhow we bring our relationship-led philosophy to short term lending.

The need for speed when an opportunity arises

Auction purchases are an obvious example of when bridgingfinance needs to work at pace. Once the hammer falls, the clock is ticking andthere is a fixed period in which to complete. Distressed sales can presentsimilar opportunities, with attractive acquisitions available precisely becausethe seller needs certainty and speed.

Our bridging product has been designed with those situationsin mind.

We’ve introduced a streamlined application and enhancedapprovals process, reducing some of the information requirements and allowingus to focus quickly on the borrower, the asset and the fundamentals of thedeal.

There’s also flexibility around searches where timingbecomes an issue. Our preference is always to have searches because theinformation they provide is valuable to both us and you, the borrower. However,where a particular search could hold up an otherwise viable transaction, theremay be circumstances where we can complete while that process continues.

This is a nuanced situation. Moving quickly shouldn’t meanignoring potential issues, so where searches arrive following completion, wecan work through anything they uncover with the borrower and understand whetheraction needs to be taken.

In this sense, speed and relationship-led lending can worktogether rather than being competing priorities. That being said, it’s stillimportant to do all the necessary due diligence.

Staying involved beyond completion

A bridging facility might be shorter than a traditionaldevelopment loan, but 12 or 18 months is still a significant period.  A lot can happen in this time, particularlywhere refurbishment or development works are involved.

Our bridging range includes bothlight and heavy refurbishment options, covering everything from non-structuralreconfigurations through to schemes involving minor structural alterations.Depending on the project, we can provide drawdowns against architectcertificates or light-touch monitoring reports.

That naturally creates an ongoing relationship between usand our bridging clients.

We want to understand how work is progressing, get out tosite where appropriate and keep the lines of communication open throughout thefacility. Sometimes that might mean a formal site visit. At other times, itcould be as straightforward as receiving progress photographs and having aconversation about how things are moving along.

The important thing is that this philosophy generally leadsto long-term relationships that create financial wellbeing for all involved.

Creating the right conditions for success

What we don’t want relationship-led lending to be is anotherlayer of process to potentially slow down a deal. If it’s done properly, itshould do the opposite.

Regular communication gives everyone a clearer picture ofwhat’s happening and creates an opportunity to identify potential problemsbefore they become bigger ones. If something isn’t progressing as expected, wewant the borrower to pick up the phone and speak to us, the same as we’d expectin a standard lending facility.

This is particularly important for refurbishment projects,where borrowers may have varying levels of experience and where unexpectedissues can emerge once work begins.

We’re not interested in simply providing funding and waitingfor the repayment date. This is completely contrary to our philosophy and ourvalues. We want to help create the financial conditions in which a viableproject can be successfully delivered.

That’s an approach that benefits everybody involved.

Our client wants to complete the project and achieve theirintended exit, we want the facility to perform successfully, and brokers andprofessional teams want to see the transaction reach the outcome everyoneenvisaged at the beginning.

In practice, financial wellbeing is achieved through structuringfinance around the realities of the project and maintaining a relationship thatgives everybody the best possible chance of reaching a positive outcome.

Relationship-led, whatever the length of the loan

Bridging finance will always need to be quick. That’s one ofits fundamental purposes.

But quick doesn’t need to be impersonal.

We want our clients to know who they’re dealing with, havedirect access to our team and feel comfortable having a conversation with uswhen circumstances change.

Whether we’re funding a development over several years orproviding an 18-month bridge, the principle is the same: understand theborrower, understand the asset, structure the funding appropriately, stay closeto the project and work towards an outcome that creates financial wellbeing foreveryone involved.

That’s what relationship-led bridging looks like.

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