The rise in popularity of crowdfunding as an alternative to bank lending is seeing it fast become a mainstream source of borrowing but there remains a gap in the market according to Clive Banks, a Director of Bricks Finance.
He said: “Crowdfunding has revolutionised the way people think of raising finance but it isn’t the only alternative to big bank borrowing. For instance, there are many occasions when wealthy people need cash for short term projects or to pay off partners and unravelling other investments to get at their money isn’t a viable option. Neither is the bank because these high net worth individuals often don’t have regular salaries and three years accounts to back their case. The borrowing and lending relationship for the ‘Crowd’ is generally a remote one that is unlikely to be interested in lending in these circumstances. And even the challenger banks are now huge with complex lending processes. However, borrowing through smaller firms can be swift and highly tailored to individual circumstances.”
Director Jerry Rihll added that typical circumstances where this specific type of lending is appropriate include property purchase or development, tax and Accelerated Payment Notices and divorce settlements. “We arranged a £140,000 bridging loan within 48 hours enabling our client to make a final payment on a yacht while other sources of income were delayed. We also approved and funded £700,000 within 10 days to kick start a property development. Bricks has developed a model which is win/win for all parties and it’s growing because we are locally focussed in the Exeter area and we have shown a level of personal service, flexibility and responsiveness that big firms cannot match.”