The Impressive Evolution of the UK's Bridging Loans Sector

Comparatively speaking, the bridging finance sector in the UK is still somewhat embryonic. Short-term specialist loans have been around since the 60s, but the bridging loans market as it exists today is a fairly new concept.

It was only the mid-2000s that the UK's compact contingency of bridging finance specialists began to expand at a meaningful rate. The sector remained niche and quite heavily scrutinised for some time, appealing to an equally niche audience of prospective borrowers.

Fast forward to the present day and nobody could have predicted how the sector would evolve within such a short period of time, even today the industry watchers are convinced we have only just begun to see what this specialist arm of the secured loans sector is capable of.

Flexibility and Accessibility

The figures alone say all that needs to be said about the sector's recent performance. In 2010, total bridging activity came out at around GBP 400 million. 10 years later, the figure was closer to GBP 4 billion.

The astronomic ascent of the sector comes as no real surprise; the appeal of bridging finance for the vast majority of applicants lies in two things, flexibility and accessibility.

Bridging loan applications are assessed on the basis of their individual merit. A practice that harks back to the days when bank managers personally conducted eligibility checks on loan applicants.

Bridging finance is accessible to those who would not be able to qualify for a similar product on the High Street. Poor credit, a history of bankruptcy, no proof of income and so on - obstacles that can be overcome with a flexible bridging loan.

Bridging finance can be issued for purposes that would not be considered acceptable by a conventional lender; for example, to fund the purchase of a derelict property in need of major repairs.

The fact that bridging finance can be arranged within a matter of days is also a major point of appeal. Now more than ever, securing funding from a traditional bank or lender can be a complex and time-consuming process. For time-critical purchases such as picking up a property at auction or covering an unexpected bill, nothing rivals the speed or convenience of bridging finance.

In Search of Alternative Options

What also sets the bridging sector apart from the more conventional secured loans market is its dynamic and responsive approach to economic turbulence.

In times of economic uncertainty, most major banks remove products from the market and demonstrate risk-aversion. By contrast, bridging lenders tailor their products and services to the shifting needs of their customers in order to compensate for what is taking place at the time.

The figures suggest that more commercial borrowers and private customers than ever before are actively seeking alternatives to conventional High Street loans. Something that is only set to continue in the wake of the Coronavirus pandemic, which has triggered a major rethink in the way the UK public and its business community approach secured borrowing.