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Developers relying on short term bridging finance

The Association of Short Term Lenders (ASTL) has announced that its members lent £319.4 million worth of loans to building developers in the last quarter of 2017. Of this amount, £197.8 million was short-term bridging finance. This reveals a growing trend for developers to rely on short-term lending.

This lending figure does not include what is termed

“light refurbishment” such as the installation or renovation of bathrooms and kitchens and conservatories that do not require extensive structural changes or planning permission.

The ASTL reported that the last quarter of 2017 was a good period for bridging lenders, with a 19.6% increase in loan values compared to the previous quarter.

Benson Hersch, CEO at ASTL says that the government wants to support small to medium building firms because of the housing crisis. Small to medium building firms can have difficulty raising money from large lenders. In a recent survey, 57% of these developers said that access to finance was the biggest obstacle.

Benson Hersch said:

“Increasingly these small developers are relying on short-term funding solutions, because traditional forms of finance are often not available to them.”

He said that bridging finance companies were providing funding solutions for developers, which the government and the baking industry was not providing.

A Bridging finance broker can help developers find the best alternative lenders that can provide bridging loans to enable them to complete developments. Loans are available for both renovation of existing property and new home developments.