As the credit crunch started to bite toward the end of 2008, a number of short term lenders found that their sources of funding where drying up and the deals which were being agreed tended to be 70% LTV or less with lenders looking for other comfort zones.
Short term bridging loans can provide invaluable help in cases of temporary cash shortfall. Probably the most under used form of financing, a bridge can provide fast access to funding with the minimum of formalities.
The security of the land or property was not enough to secure the deal, and lenders were then looking for personal guarantees from the applicants and debentures on the companies assets. This seems to have escalated to charges on the principal's private residence as money became tighter still.
The other major change was the requirement of a defined exit route to take out the bridge, not so easy when in most cases we are looking six months down the road and who knows what will happen in the interim period. Land has become a no go area for most of the lenders as they see this asset as too risky, with no real prospect of building out on the land in the near future.
However with over fifty short term lenders to choose from any commercial mortgage broker or Independent Financial Adviser has to keep a watching brief over the lenders to see who is still lending and what they will look at, as to date we do not have the benefit of any software to help in sourcing.
Watch this space for up dates as lenders report back to us.