£2 Billion Lending Record for Bridging Industry

  • Industry consolidates expansion with gross bridging lending of £2 billion in 2013
  • Annual lending growth is driven by extra projects, with the total number of loans up by a third
  • Bridging interest rates reach record lows, averaging 1.11% over two months to 1st January

Gross bridging lending totalled £2.0 billion in the twelve months to 1st January, up 3.3% from the annual figure in November 2013.

This brings annual growth in gross bridging lending to 27% – up from £1.57 billion in gross bridging lending in 2012.

In the two month period from 1st November to 1st January 2014, industry gross bridging lending was £419 million, up 5.5% from £397 million in the previous two months.

If lending continued at this rate for a year, gross lending in the next twelve months would be £2.51 billion per year.

Duncan Kreeger comments: “Economic progress feels more solid by the week, and it’s branching out across every area of business. By securing vital projects against property, firms and individuals stand to make the most from a year of great opportunity.

“Bridging has grown up from the industry it once was, and it’s still evolving in 2014. Lenders are expanding and opening their doors to different types of borrower. An economy on the move needs rapid finance that can really get projects started – and short-term secured lending is moving to fill that gap.”

Trends in the Bridging Industry

The most significant factor powering the expansion of gross lending is growth in the number of deals agreed.

Industry loan volumes during the two months ending 1st January increased by 10.8% compared to the previous two month period. This brings loan volumes for the whole of 2013 to levels one third (33%) higher than the preceding twelve months.

Meanwhile, the average value of a bridging loan was largely static. The average loan is now worth £459,000, representing a slight drop of 1.4% from the two months ending 1st November.

On an annual basis, loans in 2013 were larger than the previous twelve months, in line with the long term trend. For the last twelve months as a whole, loans averaged £430,000, or 5.2% more than the average loan in 2012.

Duncan Kreeger continues: “Just a few years ago the average bridging loan was worth half what it is now. Since then, the biggest transformation has been a growing interest from bigger property developers, professional investors and small businesses looking for more significant funds.

“The last few months have seen growth focused on volumes as enquiries are coming in thick and fast. But the long-term trend in terms of loan sizes is also moving upwards. Multi-million pound deals aren’t uncommon anymore, and as 2014 unfolds, even the most ambitious ideas are becoming ever more possible.”

Loan to Value Ratios

Loan-to-value ratios across the bridging industry have risen by almost one percentage point in recent months. In the two months to 1st January the average LTV was 48.1%, or 0.9 percentage points higher than LTVs of 47.2% in the previous two month period to 1st November.

On an annual basis loan to value ratios are still lower than previous highs. The average LTV across all twelve months of 2013 was 46.4% – down from 48.0% in 2012.

Duncan Kreeger comments: “Proper underwriting and a “safety first” approach have always been cornerstones of the best bridging lenders. Higher LTVs are completely consistent with that principle, but as properties grow in value more gearing is not always necessary.

“There is certainly space to lend at higher loan ratios this year, and the industry definitely has capacity to fund bigger loans where needed. Just as business and investment opportunities are opening up, the property market is putting the pedal to the floor. Alongside rates that look set to stay low for some time, slightly higher LTVs could mean more projects will have access to the finance they deserve.”

Bridging Interest Rates

As a whole, 2013 witnessed the lowest interest rates on record for the bridging industry, averaging just 1.19% across the entire year. This compares to 1.37% in 2012 and an average interest rate of 1.55% in 2010, the first year of the West One Bridging Index.

On bi-monthly basis, rates have also fallen to a record low. In the final two months of 2013, bridging loans cost on average 1.11% per month, down from 1.22% in the two months ending 1st November.

By comparison with other asset classes, potential returns for those funding bridging loans remain several times the total return of mainstream investment classes. Monthly product rates currently stand at 4.5 times those of 10 year government bonds, with a monthly spread of 0.87 percentage points.

Mark Abrahams, CEO of West One Loans, concludes: “Nearly seven years on from the financial crisis, markets are still shaking with volatility.

“Equities of all kinds are far too risky to form a large portion of most investors’ portfolios, and most fixed income products are set for years of trauma as central banks begin to wind up artificial bond-buying programmes like quantitative easing.

“As mainstream lenders already feel the first withdrawal symptoms from artificial stimulus and special measures, money from normal investors will be more in demand in 2014. And from a lending perspective, that will also be a serious advantage for privately funded lenders.”

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Returns from Bridging Loans Outpace Alternative Investments in 2013

  • Bridging loans outpace other alternative investments with a 10.8% annual return
  • Volatility also favoured by bridging with a full two percentage points between bridging loans and fine art

Investments in privately-funded bridging loans have generated the best return among a key group of alternative asset classes in 2013, according to the latest research from lender West One Loans.

Private investors in short-term secured loans will have made a total annual return of 10.8% over the course of 2013. This compares to 5.1% for fine art, 1% for fine wine, and a loss of 29% for gold.

Those who placed a £500,000 investment in bridging on 1 November 2012 would have made returns of £53,800 – more than double returns from the same investment in fine art (£25,500), fine wine (£5,100), or the £144,900 loss incurred from making the same investment in gold.

Mark Abrahams, director at West One Loans, comments, “Bonds are still offering feeble yields, while the equity markets haven’t shown the rally some were hoping for. And while the UK recovery feels solid, global growth has been marked down again. Meanwhile, many mainstream investments will be adversely affected for years to come as the world is weaned off artificial financial support.

“In that context, private investors are looking at alternatives. And while fun investments like wine and art can serve as a partial replacement for lucrative mainstream investments, they do not currently offer the stability – or the potential returns – that investments in real business projects can provide.

“Bridging loans offer the chance to invest in some of the most profitable assets in today’s economy – small businesses and property. Small, credit-worthy businesses are the leading edge of our economic recovery, so investing in their future is a recipe for a good return. But by combining such targeted investments with the security of property, ambitious returns are achievable without significant risk to capital.”

 

Volatility by Alternative Asset Class

Comparing the same asset classes by volatility, bridging loans also come out on top, with a three month standard deviation of 0.1%.

Gold and fine wine currently see roughly the same price volatility, at 3.1% and 2.8% respectively, while art follows closely with a three month standard deviation of 2.1%.

Financial intermediaries are increasingly turning to alternative investments in response to the current economic climate.

In a recent West One Loans survey, 30% of brokers said that they decided to offer bridging finance as a means of increasing the range of alternatives on offer to their clients. Meanwhile nearly 30% of brokers offer bridging finance because the financial climate has forced them to diversify.

Mark Abrahams continues, “With the transition to normal economic conditions fraught with complications, no asset class is immune to a world of imperfect information and sometimes wild reverses of fortune.

“Sophisticated investors want exposure to a decent return, but they also want a diverse portfolio that works to minimise volatility. We know this is a key concern for fund managers – according to a recent survey from Barings, two thirds of fund managers are concerned about volatility in today’s market .”

 

Background on the Bridging Industry

Bridging loans – or short-term secured loans – provide businesses and individuals with loans up to the value of £10 million for anywhere between one month and one year.

The latest West One Bridging Index saw industry gross bridging lending reach £1.93 billion in the twelve months to 1st November. This is up 5.5% since standing at £1.83 billion only two months before.

On an annual basis, this brings growth to 29% compared to the previous twelve months to November 2012, when gross bridging lending was £1.49 billion.

Duncan Kreeger, director at West One Loans, comments: “Bridging loans provide crucial support for credit-worthy borrowers and great ideas. In a warming economic climate, that support is vital for growth.

“Bridging has grown up over the course of the recession – just as most mainstream lenders have wandered into troubled waters. Now that the economy is picking up, all forms of alternative finance are steaming ahead – and bridging in particular is making the most of the competitive advantage won in the dark days of recession.”

Bridging Industry to hit £2.7 Billion in 2014

• Brokers expect gross bridging lending to hit £2.7 billion in 2014
• Bridging industry set for fresh record – with gross lending set to grow by a third in 2014
• Intermediaries expect even lower rates on bridging loans in the New Year

Gross bridging lending in the UK is expected to surpass £2.7 billion over the course of 2014, according to a survey of over 250 financial intermediaries.

This represents annual growth of a third (33%), bringing the industry to a new record high, according to the latest West One Broker Sentiment Survey.

Expansion will bring gross bridging lending to over £2.7 billion over the course of 2014, after gross lending of £1.93 billion in the twelve months to 1st November.

Lending in 2014 will be more than three times greater than total lending in 2011, when gross bridging lending totalled £0.91 billion.

Duncan Kreeger, director at West One Loans comments: “Bridging loans provide crucial support for credit-worthy borrowers and great ideas. In a warming economic climate, that support is vital for growth.

“Bridging has grown up over the course of the recession – just as most mainstream lenders have wandered into troubled waters. Now that the economy is picking up, all forms of alternative finance are steaming ahead – and bridging in particular is making the most of the competitive advantage won in the dark days of recession.

“Looking at the figures so far this year, brokers’ expectations are looking pretty spot on. And 2014 looks particularly exciting given how accurate the same predictions from intermediaries were a year ago.”

Loan to Value Ratios to Rise

Brokers expect loan to value ratios in the bridging industry to rise in 2014. The net proportion of those expecting higher LTVs, minus those expecting lower LTVs, has hit a record high – with a net 38% expecting higher loan to value bridging loans. The latest West One Bridging Index shows average LTV currently stand at 42.8%.

Duncan Kreeger concludes: “Higher LTVs will allow bridging lenders to lend on more ambitious projects. Bridging loan sizes have already doubled on average since 2010 – but most recently LTVs have been falling as property has risen in value. That has left plenty of capacity for larger loans, which will be realised over the next twelve months.

“This expectation confirms that loans will keep growing next year, making more use of increasingly valuable security.

“Larger loans are particularly great news for the biggest deals in both the property and small business markets, which rely on rapid access to considerable finance.”

Bridging Interest Rates to Fall

Bridging interest rates are expected to fall over the course of 2014. A net proportion of brokers expect lower rates in twelve months’ time compared to prevailing conditions in November.

This comes as the latest West One Bridging Index shows rates averaged 1.22% in the year to 1st November, down from 1.38% in the previous twelve months.

However, in line with wider financial conditions, expectations for bridging interest rates have revealed a turning point. A net 27% of brokers expecting lower bridging product rates in November compares with a net 49% expecting rates to continue falling in March. November’s figure represents the slimmest majority of brokers expecting lower rates for one year.

Duncan Kreeger concludes: “For around half the price of borrowing on credit cards, businesses and individuals can access loans of up to millions of pounds via the bridging industry. That’s ideal for the most economically vital projects – in need of significant sums for short periods of time.

“While the wider economy struggles to balance recovery with rising interest rates, bridging continues to grow more useful and more affordable.”

Alternative business finance in 2013 already outstrips 2012

•   Loans to small businesses arranged via the bridging industry already surpass 2012 total
•   Short-term secured loans to SMEs set to hit £342 million in 2013 – after 42% annual growth
•   90% of bridging intermediaries report more business loans than a year ago

Alternative business finance in 2013 is already ahead of last year’s total, according to a recent survey of over 250 financial intermediaries.

In just the first nine months of 2013, short-term secured loans for small and medium sized firms (SMEs) totalled more than a quarter of a billion, according to the latest West One Broker Sentiment Survey.

Business lending now makes up approximately 20% of lending in the bridging industry, which equates to £255 million for the first nine months of 2013, based on the latest industry data. This compares to an annual total of £252 million for the whole of 2012.

Based on current trends, short-term secured loans will provide SMEs with over one third of a billion pounds in business finance this year. An expected £342 million in 2013 represents 42% annual growth from 2012.

Duncan Kreeger, director at West One Loans comments: “Economic optimism isn’t just a vague feeling. We’re definitely feeling the heat of real, solid growth in the office every day.

“But while the UK economy might be 1.5% bigger than a year ago, mainstream business loans have gone twice as far in the wrong direction – down 3.2% over the same twelve months.

“If small firms had even the same access to mainstream loans they enjoyed a year ago, we could have seen even better numbers for UK economic growth. Sadly, due to some lenders, growth is still fighting against a receding tide of most commercial finance.

“Fortunately a surge of alternative finance options has developed and is growing to fill the gap. Commercial bridging loans are an increasingly vital option for the business community – an essential element in the story of economic growth. Small firms across the UK have both the security to underpin these loans and the profitable business plans to make the most of commercial finance.”

On an individual basis, 90% of financial intermediaries report at least some growth in short-term secured loans for small business purposes, up from 83% six months ago.

Approximately one year ago the same measure stood at 82% of brokers.

Duncan Kreeger continues, “Business lending isn’t just vital for the economy. It’s becoming an essential tool for brokers too. Since we started asking this particular question, there’s been a strong but stable majority reporting more lending to small businesses.

“But now the sheer volume of cases is having a clear effect on the market. Commercial enquiries are sweeping across the whole industry and nearly every broker is sharing the proceeds of that growth.”

Brokers also want more options for commercial loans, with a record 42% listing this as their top priority. This compares to one third (32%) six months ago, and one quarter (26%) in November 2012.

Duncan Kreeger explains, “It’s an exciting time for potential borrowers too. Short-term secured loans are becoming more flexible and more closely personalised, as well as better understood by the experts.

“Intermediaries are critical in explaining new developments and finding the best option. So as demand for business loans continues to grow it’s encouraging that brokers share the excitement about commercial lending.”

Across all types of borrower, intermediaries reported average volume growth of 54% compared to September last year, up from 49% six months ago, and 46% reported year-on-year growth approximately one year ago in August 2012.

Growth in total lending volumes via brokers comes in the context of steady growth in industry lending when measured by value. Gross bridging lending has grown by 37% over the last twelve months, now totalling £1.79 billion per year, according to the latest West One Bridging Index.

Bridging loans set to outperform £2 billion prediction

  • Bridging industry on track to provide £2.1 billion in gross lending over course of 2013
  • In second quarter, gross lending already hits annualised rate of £1.97 billion
  • Industry lending volumes up 30% in twelve months

The UK bridging industry is on track to provide borrowers with over £2 billion in short-term secured finance by the end of 2013, according to the latest West One Bridging Index.

In the second quarter, industry gross bridging lending was £492 million, or an annualised rate of £1.97 billion. In the twelve months to June, gross bridging lending was £1.76 billion.

Annual lending has grown by 9% since the first quarter, and has grown 39% since the second quarter of 2012.

At the average rate of the last 12 months, industry gross lending will total £2.1 billion in 2013.

Duncan Kreeger, director at West One Loans commented: “Our £2 billion prediction for this year was labeled out of date when mortgage lending recovered slightly.  Now it looks like an underestimate.  That’s because of the different culture in the bridging industry – we’re not afraid of the projects that deserve real investment.

“Rather than maintaining a dusty balance sheet of long-term mortgages, the bridging industry is financing real, practical and dynamic projects.  Where mainstream lenders are still too afraid to tread, and find themselves held back by capital adequacy rules, this industry is giving developers, landlords and small businesses the loans they need.

“In 2012, bridging provided over £1.5 billion of these loans to people who needed them.  It’s encouraging that the industry is on track for an even more important milestone this year. While banks are cutting costs to raise returns for their shareholders, we’re investing for growth – and lapping up market share in the process.”

The amount lent has grown on the back of both higher volumes and larger loans.  Loan volumes grew by 10.8% between the first and second quarters. On an annual basis, this puts the number of loans advanced by the industry 30.4% higher than the number of loans in Q2 2012.

Meanwhile, the size of the average bridging loan was £405,000 in Q2, compared to £397,000 three months earlier. This represents quarterly growth of 2%, leaving loans in Q2 10.1% larger than in the same three months of 2012.

Duncan Kreeger comments: “The worst of the financial crisis could be over, but the long-term implications are only just becoming clear.  SMEs are still largely ignored by high street lenders, despite having solid collateral and reliable business plans.

“Part of filling that gap is providing more loans – and part is lending larger, ambitious amounts when required.  We’re doing both those things for SMEs.

“Meanwhile, property prices are on the rise which is great news for borrowers looking for greater returns on their equity. But property development is still at stall speed compared to normal levels, and only the plainest vanilla property developments can get finance from the high street.  We’re stepping in where a project looks sensible, lending against the real value of a development and considering risk in individual terms rather than applying a one-size-fits-all policy like the big banks.

“Making the right decision pays off for our investors, and means entrepreneurs and developers can avoid the stampede of herd mentality from the big lenders.  That breathing space is helping to prevent five years of credit crunch turning into a full lost decade.”

Loan-to-value ratios have continued to grow. The average loan ratio in the second quarter was 46.4%, up slightly from 46.2% in Q1. However, this still leaves average LTVs just below the 46.5% seen in Q2 last year.

Duncan Kreeger continues: “Security allows the reach and ambition that the bridging industry exists to provide.  But more reach and more ambition is always welcome when the circumstances are suitable.

“Higher LTVs are a vote of confidence in our borrowers – their finances and their businesses.  And the latest pick up in loan ratios matches the long-term trend to more of that optimism.” 

Interest rates in the second quarter were slightly more competitive. The average interest rate over the three month period was 1.18%, compared to 1.24% in the first three months of the year.

On an annual basis, rates are also marginally lower. In the year to June the average interest rate on a bridging loan was 1.27%, slightly lower than an average of 1.33% in the preceding twelve months.

Mark Abrahams, director at West One Loans, explains: “Greater competition is expanding the reach and effectiveness of the bridging industry.  That’s good news for borrowers who need finance quickly at the best rate.  But it’s also good news for lenders who want to reinvest quickly, with a wider choice of potential deals.”

Returns for investors in the bridging industry remain around six times those available from traditional ten year government bonds.

This is typical of the comparison with other asset classes, for example, alternative equity investments.

Recent research by West One Loans showed bridging loan investments beating yields in the FTSE Alternative Investment Market by a factor of ten.

Mark Abrahams comments: “It seems bonds of all types are now more volatile than previously imagined.  By any measure, the bond markets are far from the safe bet they used to be.  And meanwhile, equities seem to go into reverse when good economic news comes out – hardly a good investment during a recovery.

“Worldwide, the economy is finally weaning itself off emergency government support and starting to stand on two feet.  As that process accelerates, more investors will be looking to get involved in real economic activity at the coal face of the recovery, rather than squirrelling their investments away in ex-safe havens like bonds.

“The sort of SMEs we lend to will be the medium-sized to large scale companies of the next decade, while property developers are providing the premises and homes to make that recovery a reality.  So it’s not surprising the bridging industry is the front-line of the recovery – with peer-to-peer lenders leading the charge.”

Government Business Bank outgunned by alternative finance

– Business Bank’s initial £300m already overtaken by £354m in short-term secured loans to small and medium-sized businesses
– Life-time £1 billion for the Business Bank to be matched by business bridging by Q3 2014
– Expansion of bridging industry to continue – as brokers predict 36% annual growth

The government’s Business Bank will not be able to keep up with alternative sources of small business finance – and has already been outgunned since its creation.

Since the formation of the Business Bank in September, it has released £300m in small business loans, with complete take-up of the finance expected no sooner than the middle of Q3 this year.

Meanwhile, over the same period, bridging finance has provided £354 million in completed business loans to small and medium-sized enterprises (SMEs), according to research from lender West One Loans, based on the West One Bridging Index, and the predictions of 350 financial intermediaries.

Even if the entirety of initial funds from the Business Bank are transferred directly to SMEs within a single quarter, lending by alternative sources of new SME finance will have outpaced the flagship government initiative to the tune of 58%, or an additional £173 million, by October this year.

Duncan Kreeger, director of peer-to-peer bridging lender West One Loans, comments, “For half a decade small businesses have been missing out. Banks may as well have shredded the majority of quality business plans they’ve received. And for all that time the largest banks have been touting misleading excuses about a lack of demand. It simply isn’t the case. There’s enormous demand from small firms for vital investment – demonstrated clearly by the rise of alternative finance.

“Government aspirations to lend to small businesses are noble, but could be misguided. In the longer-term, the Business Bank could be doomed to failure just by a lack of firepower. And right now it’s already proving unwieldy. Just as the biggest corporate lenders are seeing their market share slip away, the Business Bank is being outmaneuvered by nimbler players.

“The Business Secretary claims setting up the new institution needs to be slow, and that it’s necessarily very complex. But if so, then the new Business Bank is just a miniature re-run of the old business model – one of stalling lending levels and near monopolies leading to poor customer service.”

Industry Gross Bridging Lending to grow 36%

Intermediaries are budgeting for 36% annual growth in total gross bridging lending, according to the latest West One Broker Sentiment Survey. Of this total figure, business bridging specifically is forecast to more than keep up with other areas.

In total, the industry provided £1.61 billion in gross lending in the year to Q1 2013, according to the latest West One Bridging Index. Business loans represent just over 21% of the wider bridging industry, with secured loans for property-related purposes making up the rest.

The proportion of borrowers choosing to use secured loans for business purposes has more than kept up with the size of the total bridging industry, growing as a proportion of funding as well as in absolute terms. Six months ago, in November 2012, business finance had only just broken the 20% mark of all bridging lending.

Alongside greater availability of bridging finance, borrowing rates are set to decrease too. A record 57% of intermediaries predict borrowing costs to fall, over eight times the number expecting higher rates (7%). Previously, 45% of bridging intermediaries expected lower interest rates, in November last year.

Duncan Kreeger concludes, “Bridging is providing small businesses across the UK with over £1 million in finance every day. It’s no surprise that we’re outpacing the government’s business bank – we’ve been expanding our lending to these sorts of small, locally important firms for years now. This industry’s doing what the high street has failed to do since 2007. Bridging finance is expanding at a steady double-digit pace – and at the same time it’s becoming more affordable for our customers.”

Alternative loans outperform alternative equities

Investments in peer-to-peer lending models have vastly outpaced the alternative equity market, according to the latest research from privately funded lender West One Loans.

In the year to Q1 2013, private investments in short-term secured loans generated an average yield of 11.2%. Over the same period, FTSE Alternative Investment Market-listed shares provided an average yield of only 0.96% – 11.6 times lower than that of secured alternative lending.

The total annual return generated by secured peer-to-peer investments in short-term loans is 16.9 percentage points above that of the FTSE AIM. Strong yields, and capital secured against real estate, mean that secured peer-to-peer investments provided total returns of up to 11.2% in the year to Q1 2013. Meanwhile, AIM-listed shares over the same period saw weaker dividend yields and capital depreciation, leaving total return from an alternative equity investment at -5.7%.

Mark Abrahams, director at peer-to-peer lender West One Loans, comments, “Equity investments of all sorts are an increasingly risky source of income. And many respected fund managers seem to agree. The medicine of quantitative easing is addictive – and not necessarily the best cure. Even the slightest hint that the authorities could re-impose economic reality is met with panic on exchanges across the world.

“In the hunt for yield, peer-to-peer models are the future. Lenders and borrowers no longer need to squeeze economic activity through Victorian high streets. And many sophisticated investors are flourishing in that environment. The trend for disintermediation is accelerating.”

During the period shown above, between February 2011 and March 2013, the total returns from secured peer-to-peer loans are not only far higher, but far more stable than their equity equivalents. Over this two year period, returns from secured peer-to-peer loans showed a 3% maximum variation, compared to a 55.5% maximum variation in the total annual return from the FTSE AIM.

Mark Abrahams, director at West One Loans, comments, “Equities have their place, but when it comes to funding the most entrepreneurial small businesses, alternative lending has a growing importance too. Peer-to-peer lending is an increasingly popular way to gain access to exciting projects, while secured loans can give investors the guarantee they need that their capital investment is safe.”

“Short-term secured loans can offer sophisticated investors the chance to chart their own approach to small business and development projects. Critically, this is without the risk of owning a portion of these ventures, as is the case with many, far more volatile alternative equities. Equally, by their very nature secured loans don’t expose investors to the risk associated with unsecured peer-to-peer models.”

Scale of Secured Peer-to-Peer Lending

Peer-to-peer funding forms a growing proportion of the wider short-term secured lending market. West One Loans was the first lender to offer sophisticated private investors exposure to this market. Thanks to these private investors, the company has now provided £250 million in total funding to date.

Duncan Kreeger, director at West One Loans, comments, “While the bridging industry in general is growing at an astonishing pace, peer-to-peer models in particular have clear advantages over other funding models. Most importantly, both borrowers and investors get a more personalised product. That’s demonstrated in many ways, including the rapid growth of our own business. For West One Loans as a company, a quarter of a billion pounds is an important lending milestone that underlines the scale of our ambition.”

Scale of the Bridging Industry

Aside from the specific expansion of privately-funded loans, short-term secured loans in general have continued to grow their presence in the UK according to the latest West One Bridging Index.

Industry gross bridging lending in the year to Q1 2013 was £1.60 billion.

This represents 44% annual growth when compared to the same figure in the first quarter of 2012.

On a quarterly basis, growth slowed slightly. However, gross bridging lending still expanded by 2.5% quarter on quarter, or 10.3% on an annualised basis.

Duncan Kreeger, director at West One Loans commented: “Last month the business secretary finally acknowledged the role of alternative finance. But unlike almost every mainstream lender, this industry doesn’t need government help.

“However, Vince Cable is right about one thing – mainstream banks are talking rubbish about a lack of demand for funds from SMEs. Credit-worthy entrepreneurs and small firms are being turned down every day by the more process-driven lenders. That’s why the bridging industry as a whole is providing £5 million pounds every day, to get imaginative business plans and development projects off the ground.”