Poll looks at how bridging finance is funded
A poll by Bridging & Commercial found that 36% of respondents believed the majority of bridging finance was funded by private money, and 38% thought that private money accounted for a minority of the funding. The remaining 26% thought that it was about equal.
There are no published figures on how bridging lenders are funded which is why opinion is split. Funds to finance bridging lending can come from institutions, such as banks, or private investors including family office funds. The proportion of private to institutional funding is not known.
In most cases, the borrower is not affected by where the funds come from for their loan. Some bridging finance experts are concerned that large institutions may want higher returns and exert an element of control over the loans they fund. They are also more cautious in their lending decisions. This could result in higher interest rates and stricter loan conditions.
On the other hand, some experts say that private investors that provide bridging finance funds are more flexible and are happy with smaller returns. It is also possible that private sources can release funds quicker and this makes money available faster for the borrower. This is particularly beneficial for time sensitive deals.
Some say financial uncertainty over Brexit negotiations could cause some funders to leave the bridging finance market. It is unlikely this will have a significant impact on the bridging market, as there are always investors looking for returns from the bridging finance market.