Assetz Capital hits bridging loans and small business lending milestones

Peer-to-peer lender Assetz Capital said it has hit a double milestone, providing over £100m in bridging loans and a further £50m in small business funding, “as the appetite for alternative forms of finance continues to rise across the UK”.

The Manchester-based fintech adds that since it was founded six years ago it has lent over £780m to small firms and property developers, helping build 3,700 homes in Britain.

Bridging finance is popular among property developers as a quick, short-term, form of borrowing against assets to refurbish a home or a flat before selling it on at a higher price. This type of loan often takes weeks to approve, while a mortgage may take months.

Peer-to-peer lenders, such as Assetz Capital, moved into this area since the financial crisis in 2008, as banks cut back on lending to smaller property developers, fearing defaults.

Popular bridging loans

Bridging finance hit £4.3bn in the year to June 2017, a 26.1 per cent compound annual growth rate since 2013, according to data from professional services group EY.

Assetz Capital director of intermediaries Damien Druce (pictured) said: “Bridging loans have increased in popularity, due to their speedy execution and convenient interest payments which are typically rolled up over term, rather than paid monthly.”

However, the UK housing market remains anaemic, with buyers weighed down by Brexit concerns and an easing economy. Year-on-year prices rose by just 0.6 per cent to an average of £214,946 and month on month they fell by 0.2 per cent, according to the data from lender Nationwide last week. House prices lifted by 0.9 per cent in May a year ago.

“Nationwide’s data confirm that house prices remain on an essentially flat trend, primarily because Brexit uncertainty has instilled some caution among buyers,” said economist Samuel Tombs at Pantheon Macroeconomics.

Chasing scale

Nationwide chief economist Robert Gardner added: “While healthy labour market conditions and low borrowing costs will provide underlying support, uncertainty is likely to continue to act as a drag on sentiment and activity, with price growth and transaction levels remaining close to current levels over the coming months.”

Assetz Capital, like most peer-to-peer ventures, is racing to add customers and hand out loans to boost scale, which it later hopes to turn into profits. These fintech firms continue to attract billions from investors who believe this wave of companies can emulate Big Tech giants such as Facebook and Google.  

- June 6, 2019