2 minute read
Alternative Bridging Corporation: What
What we’ve learnt
A long-term presence in short-term lending
Brian Rubins
Executive Chairperson Alternative Bridging Corporation
Like the NACFB, we’re also celebrating 30 years in business at Alternative Bridging Corporation this year, which by anyone’s book is a long time in short-term lending. Unsurprisingly, a lot has changed over that period, but at the same time, some things have steadfastly remained the same.
When we first started in bridging in 1992, it was a different beast to that of today. It generally provided a sticking plaster for the borrower who had been let down by a mainstream lender. The process was pretty similar to the high street lenders as well – we just did things a little quicker and of course, we had to charge a bit more because our cost of funds was greater.
Thirty years on and we still do step in to save the day, but we have greatly diversified as well. We now also lend for property development, provide overdrafts and term loans. We are now an alternative source of property finance for both regulated and non-regulated business. And our funding costs are much lower due to our diversified funding lines and so we have significantly reduced the interest rates we charge.
The market has changed drastically as well. When we launched, there were very few lenders operating, and they generally specialised, carving out their own niches. In addition, the number of specialist finance brokers was a lot less than now. Thankfully for the borrower, greater opportunity for funding and increased competition means that they have an unprecedented number of brokers they can talk to, who in turn have access to a wide range of lenders offering rates at record low levels.
Acceptable security has widened greatly too. In the beginning, the market provided loans secured on private homes, some residential investments, the occasional commercial property and, for Alternative, development sites, because we were active in residential development finance. Nowadays, there are very few property assets against which short-term lenders will not make loans – including mixed property portfolios, HMOs, student housing, residential and commercial developments, retail parks and shopping centres.
So what hasn’t changed? First, the need to have a good look at every case and a viable exit is as great today as it was in 1992. The fundamental approach to lending is the same 30 years on: a bad case is still a bad case and one to avoid.
All that said, there have been significant challenges over the past three decades and I’m sure there will be hitherto unforeseen bumps in the road in the future. The financial crash and subsequent credit crunch of 2009 was undoubtedly the most challenging period we’ve faced. In a way, however, as it was unprecedented, we just carried on lending, albeit in a more considered and cautious manner. While others were losing their heads, we came out of it stronger and ready and able to grow the business.
Who knows what the bridging market will look like in 30 years’ time, but as long as it remains service-driven by experienced lenders, it will be healthy for the broker, borrower, and lender.
