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The bridging finance market in Australia has been developing swiftly in recent years. The Australian market has been following the trend of the United Kingdom. Estimates on the size of the UK market vary. Market analyst Datamonitor estimated the total size of the UK market at the end of 2006 to be around 1.2 billion pounds (3 billion dollars). Other market participants contend that this estimate is very conservative, and that the total size of the market is closer to 2.5 billion pounds (6.25 billion dollars) and growing at 15% per year.
The nature of bridging finance itself explains the differences in estimates. Typically short term and customised to suit the particular needs of individual borrowers, accurate information on the volume of loans can be almost impossible to gauge. Additionally, short-term finance has traditionally occupied a small corner of the finance market. Poorly advised borrowers and shonky operators have combined to keep these products on the fringes of the traditional lending sector.
However, the landscape is changing. Sophisticated, experienced lenders have been adding bridging finance loans to their suite of products, and for good reason. Options for borrowers who find themselves in a short term cash squeeze are increasing. Finance brokers looking for new ways to assist customers are also looking to bridging finance to expand their offerings.
Bridging finance can be useful in any number of situations. Some of the common scenarios include:
- Purchase of a new property when the sale of an existing property has not yet settled.
- Business operators seeking to fill a cash-flow gap when taking on a new account
- Builders and developers seeking to release funds to support development projects.
- Businesses requiring funds to pay urgent debts (such as tax) which can then be repaid to the lender over several months
In addition to the traditional property secured bridging finance products, Commerce Credit is able to provide smaller bridging loans secured against motor vehicles. These vehicle secured facilities can be very cost effective for loan amounts under ,000. They are particularly useful for small transport operators seeking options to manage their cash-flow or small business operators without sufficient equity in a property to use as security.
This is just one example of the innovative products being developed in the bridging finance market. Jon Howie, director of Commerce Credit notes that this trend is likely to continue “Many short term lenders have become a great deal more sophisticated in recent years. We see this continuing, as private lenders compete to serve this growing sector of the market”.
Contact Commerce Credit for information on all your business lending requirements. We are specialists in providing innovative, competitive, appropriate finance solutions to all small business.
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