Where does bridging finance come from?
There are around 130 bridging finance lenders in the UK. Some are the large banks or subsidiaries of the main banks, some are other lending institutions that have a bridging division and some are specialist bridging lenders who only provide bridging loans and perhaps development finance.
The smaller more specialist bridging loan providers have access to funds of money that they can use to provide bridging finance. These funds sometimes come from private investors who provide money that can be used for funding bridging loans. These investors use their money this way because they usually receive a better return on their money than if they made alternative investments. From these funds the bridging lenders are able to provide bridging loans, development finance and commercial bridging loans to those who require them.
Similarly, it has been recently reported that Christian Candy of the extremely successful property development and interior design company Candy and Candy, is to start providing finance through a bridging loan fund of what has been reported to be £200 million. In addition to this it is thought that a further facility of £20 million will be provided by a London based hedge fund.
It is thought that Mr Candy is looking to fill one of many gaps in the finance market where since the credit crunch people are finding it difficult to obtain finance. He is initially looking to start with providing finance in the unregulated markets by providing short term bridging finance up to as much as 80 per cent loan to value. This finance is intended to be of particular interest to people who have assets and property that are difficult to liquidate in the current climate.
Mr Candy along with his brother Nick have been incredibly successful with their exclusive property developments and have consequently made very healthy profits and have become very wealthy. They are now looking for other business opportunities that they can invest their money into in order to grow their businesses.
Once established in the bridging finance market it is thought that Mr Candy wants to expand into other areas of finance including regulated lending and also financial services such as insurance and everyday banking services.