The world’s top online marketplace for small business loans is expanding its activities within the property finance sector.
Funding Circle has launched a short-term bridging product, and now offers the “full suite” of commercial property finance loans. Funding Circle introduced its property offering to investors in April 2014. Over £60m has been channeled into property-linked transactions via the marketplace over the past 12 months – highlighting the demand for such opportunities within the platform’s investor base.
Funding Circle has reportedly been fielding a large number of enquiries from businesses looking for shorter-term property loans. Demand on both sides of the equation persuaded the platform to introduce the new bridging product. The bridging loans complement Funding Circle’s existing property finance offering, an arsenal which includes commercial mortgages, development loans and investment loans.
The shorter term bridging loans are fairly flexible in application. They may be used for equity release against unencumbered properties, for the speedy acquisition of development sites, for refurbishment loans, and so on.
In terms of practicalities, experienced property professionals may seek up to £2m in the form of a bridging loan, with a maximum term of 12 months. The maximum permitted loan-to-value ratio is 80%. There are no early repayment fees or exit fees for borrowers.
Parik Chandra, property finance specialist at Funding Circle, commented:
"Since we extended the loans we offer to small businesses to include property finance a year ago, we have been inundated with demand from successful property professionals who continue to find it difficult to access finance from traditional sources. Being able to provide a bridging product means we now offer the full suite of commercial property products, providing the liquidity that the property market needs and supporting projects across Britain. A modern property market needs modern finance – finance that is fast, flexible and simple."
Product diversification is common among the larger P2P outfits. They’re able to leverage off reasonably well-established brands and loyal investor bases in order to transition swiftly and effectively into new markets. Although hiring the right people, with the right level of expertise, is of course a necessity.
Funding Circle stressed that the largest commercial house builders continually emphasise that they will only be able to meet between 50% and 60% of future demand for housing in the UK, leaving the smaller property developers to pick up the slack. This of course opens up a substantial financing opportunity, and Funding Circle is well placed to deliver.
AltFi is returning to Amsterdam for its second annual Summit in the city. The inaugural event last year was a roaring success, with key figures from across Continental Europe's alternative finance and digital banking sectors highlighted. These included Jeroen Broekema, managing director of Funding Circle Netherlands, and Mieke van Engelen, head of innovative partnerships at ABN AMRO's standalone lending platform, New10.