Lender sourcing: Using alternative lenders
Real estate finance brokers should consider challenger banks and specialist funds as a useful alternative for development finance.
Traditional lenders increasingly focus on lower risk, lower leverage transactions, partly driven by increased sector regulation and capital allocation requirements.
This is particularly true in SME development, where there is an increased risk inherent in construction and continued uncertainty regarding market conditions.
As a result, many of Britain’s developers are having to explore other funding options to assist in delivering the hundreds of thousands of new homes the country needs, along with the commercial properties to support an area’s growth.
The retreat of clearing banks and other larger lenders is opening the door to a new breed of alternative lenders, from challenger banks to specialist funds.
There are a number of reasons to consider alternative lenders for development finance, including:
- The number of challenger banks and specialist funds entering the market is growing significantly
- They can offer faster, more flexible and competitive funding at a higher leverage.
- They are often open to providing more bespoke options to borrowers
- Some of the new entrants are focussed almost entirely on the SME sector
Accessing these lenders, and knowing who are the most appropriate for a specific development can be challenging.
The good news is that the Native Finance platform, provides finance brokers with access to over 350 real estate lenders across development, investment and bridging finance.
The platform help brokers to identify the best lender for a loan based on a number of parameters such as asset, leverage, location and borrower profile. Read more about it here.