Commercial Property – the unsatisfied opportunity
Lending on commercial property is a huge, unsatisfied market with a limited number of brokers who truly understand the dynamics, according to Brian Rubins, managing director of Alternative Bridging Corporation (Alternative). Traditional lenders and some bridging lenders are also restrictive in their offerings.
Rubins points out that commercial loans can be made to investors, dealers and the business community for purchase, refinance and to raise working capital and can range from £250,000 to £5m or even £10m.
Rubins said: “Traditional markets are not relaxing their criteria and our experience is that underwriters are being more demanding and seek to have all the i’s dotted and t’s crossed before parting with the cash.
“Some bridging lenders are reluctant to make loans in excess of six to twelve months or do not have a suitable internal funding structure to do so and while they may provide a quick fix, they do not satisfy the borrowers need to have sufficient time to improve the property before seeking long-term refinance. Surrendering to a shorter period than needed is short-sighted and likely to incur the borrower in extra cost by needing to refinance the first bridge before being able to negotiate a long-term loan. This can be avoided if the lender and borrower have a clear view of the strategy and are able to agree a loan for 18 – 24 months at outset.”
Recently Alternative loaned against: a large, vacant retail store being fitted out for a new tenant; a pre-let retail park while planning permission was being finalised and where it will probably then provide the construction finance for it to be built, numerous residential investments and and hotels including one where the borrower could benefit from substantial debt forgiveness if a demanding timescale could be met.