You might have been in the building and developing business for years. You might have completely clean credit and a solid business track record. You might have been with your current bank for the last 20 years.
Even so, you might still have been turned down for building finance for your next project.
We are seeing enquiry after enquiry that seems to fit the above description, clients that should be able to walk into any high street bank and get the funding they need.
For the most part this is not happening, however. Banks, for reasons only they know, are refusing to grant loans on commercially viable projects, at low loan to values in great locations. You might think this is just on developments including flats, which have been tougher than houses to fund, but it isn’t the case. All sorts of projects are being refused by main stream lenders, often for seemingly spurious reasons.
Those that do get passed are often laiden with catches such as refinancing an entire portfolio or only lending part of the amount required (which is as much use as a “no”). We are even seeing clients turned down on the basis of no experience when they are employing a main contractor to do all the work for them.
We speak to clients that have come to us having waited for a number of years before looking to raise finance, believing that the credit problems are behind them and that funding will be readily available. We have the same conversation multiple times a day from clients up and down the country covering a range of projects.
It does not look like the situation is likely to change any time soon, either. Talking to various sources it could be a number of years yet before the high street is back to lending into development projects, meaning relying on them as an option for building could be a fruitless exercise.
We think this is ridiculous.
We are funding flats, houses, and conversions, renovations and quick purchases. If it is a good scheme we are interested to lend. Of course, we have our parameters and cannot do them all but if it fits our criteria (generally up to around £500,000) we will try and lend you the money.
To us a good project is one we want to fund and just because a bank says no does not mean that your project is stuck at the planning phase. We have been lending all the way through the recession and the credit crunch with no intention of stopping any time soon. Our lending book is growing at record levels with quality schemes from professional builders and developers who have found good sites that make good returns.
The thought process is pretty simple: You want building finance, we lend it and we are in business to fund your business. The practice isn’t much more complicated, we are easy to deal with, you get a personal service and you will probably want to deal with us again.