Funding Circle is pushing further into the real estate lending space by offering a new short term bridge loan tagging property developers. According to the peer to peer lender, over the last 12 months Funding Circle has lent over £60 million for property loans creating a solid base in this sector of the lending market. Funding Circle described their new product as addressing a pressing need for small developers to gain quick and easy access to finance, especially in light of the challenges for developers to receive traditional bank finance. Funding Circle described the bank lending environment property developers as “deeply dysfunctional” as banks are “hamstrung by bad debts, capital requirements and legacy IT issues.”
Funding Circle UK states it has received a “significant number” of enquiries from businesses interested in taking shorter-term loans. The move is seen as complimentary to Funding Circle’s existing range of property finance loans, which include commercial mortgages, development and investment loans. Property developers and investors can now request a range of short-term loans for almost any purpose, including:
- equity release against unencumbered properties;
- quick acquisitions of development sites, with the speed of execution allowing borrowers to negotiate discounts;
- land purchases where the developer wishes to optimise planning permission prior to refinancing onto a more traditional development finance package;
- refurbishment loans, following which borrowers will refinance onto traditional buy to let mortgages;
- auction purchases.
Parik Chandra, property finance specialist at Funding Circle, commented on the new service;
“Since we extended the loans we offer to small businesses to include property finance a year ago, we have been inundated with demand from successful property professionals who continue to find it difficult to access finance from traditional sources. Being able to provide a bridging product means we now offer the full suite of commercial property products, providing the liquidity that the property market needs and supporting projects across Britain. A modern property market needs modern finance – finance that is fast, flexible and simple.”
Funding Circle matches businesses looking for short-term property finance directly with a range of investors. To be eligible, businesses must have a track record in property development, investment or trading. Funding Circle has facilitated over $1 billion in loans and is currently processing over $80 million per month in lending.