Most lenders scrutinise the borrower’s finances to assess their financial status, which is an indication of their ability to repay a loan. Non-status bridging finance are loans that are based on the merits of a deal and the value of assets rather than the financial status of the borrower.
For most loans, the Financial Conduct Authority (FCA) has guidelines for what is an acceptable financial status. Individual borrowers must submit bank statements and documents to prove their income. Business borrowers will need bank statements and audited business accounts. If a borrower has considerable assets but does not meet the FCA financial status requirements, some bridging lenders will consider the loan application and may offer a non-status bridging loan.
A non-status bridging loan lender will carefully examine the applicant’s assets and their plans for the loan. They will need to be satisfied that the borrower will be able to repay the loan within the loan period. An example of this is a building developer needing funds to complete a project. They can sell one or more properties that have been completed to cover the bridging loan repayment.
A non-status loan is regarded as high risk so will probably have a higher interest rate. The loan to value (LTV) will typically be lower so that the lender is assured that the loan can be recouped by selling the assets if it is not repaid.
Not all lenders offer non-status bridging loans, but a good bridging finance broker will know the ones that do.