Due to the type of borrowers we are lending to and the nature of the projects they are funding, the need for loan extensions in professional, short-term lending is very common. When someone is running a business and the bridging loan is to fund a business project, their ability to repay is often dependent on other factors over which they may have very limited control. For example, delays in refurbishment work, problems with refinancing from the new, long-term lender, or more often than not, planning applications taking longer than expected.
For example, if someone took a bridging loan, they expected the planning application to be approved within 3 months, so they take a 9-month loan term, and the planning takes three times as long, they are going to need an extension. As we are working closely with them throughout the term, we can see that it has not worked out as planned. It doesn’t mean the money won’t be there, just that it’s not there yet. And when you get a client like that – someone who has to re-bridge a bridging loan – they tend to be very conscious of their situation, so are actually far less likely to default.
We regularly accept these extension requests and we assess each one on its individual merits and there is usually nothing to be concerned about from our point of view or the borrowers’. It is just a case of working together to find a solution that allows the borrower to get back on track and reach the exit strategy as smoothly as possible.