How can bridging finance support UK SMEs?

Bridging has become a popular form of alternative finance for borrowers in need of fast capital to take advantage of short-term investment opportunities – gross annual lending reached a total of £4.7 billion in Q3 2017, up 10% on the same period in 2016. Importantly, sentiment towards bridging remains positive across the sector, according to a new survey.

This week, the Association of Short Term Lenders (ASTL) revealed that the vast majority of bridging lenders in the UK are upbeat about the future. With bridging loans now regarded as a useful finance tool for a growing number of individuals or businesses in need of fast capital, 78% of ASTL members expect their company’s turnover to grow. Importantly, when considering the key areas within the bridging sector prime for growth, 93% of respondents believed short-term finance was ideally positioned to support SME house builders in the future.

With demand for UK property consistently high, increasing the available housing supply through new developments has been identified as essential in helping alleviate market demand. Moreover, with 57% of SME developers identifying access to finance as their biggest obstacle, the Government has committed to support these scaling businesses as part of its housing strategy. In this respect, bridging finance has an important role to play in encouraging the construction of new homes, providing a source of finance needed for SMEs to truly capitalise on development opportunities.

However, bridging finance is not only limited to supporting SME developers; entrepreneurs and business leaders can also turn to bridging should they wish to take advantage of an immediate and lucrative business venture. For example, MFS recently provided a bridging facility to help a client complete a business expansion opportunity. This client intended to act on this opportunity by selling one of their buy-to-let properties, but a delay in the sale meant that they would not have access to the necessary funds in time. By working quickly and efficiently, MFS provided a tailored bridging solution that ensured the client did not miss out on the expansion opportunity, with exit provided upon the eventual sale of the existing buy-to-let property.

Be sure to speak to one of MFS’ underwriters today to find out how our tailored bridging solutions can support SMEs, brokers and individual borrowers in need of fast finance.

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