P2P firms poised to provide development exit finance
Peer-to-peer lenders have signalled a willingness to provide development exit finance, amid predictions of rising demand due to a slowdown in the property market.
This, in turn, can result in a longer wait for sales for developers, thus increasing the need for a short-term bridging facility to pay off an outstanding loan on the project.
This is an area that P2P lending platforms are aware of and open to serving as well.
Paul Sonabend, executive chairman of Relendex, said the lender will offer development exit finance to its existing borrowers.
“The rationale is that Relendex builds long-term relationships with our borrowers and works with them to ensure they maximise their profits,” he told Peer2Peer Finance News.
“Once a development is complete it is substantially de-risked. Development exit finance is therefore cheaper than development finance. It also unlocks value in a development that can be used by the developer to fund new projects.”
Read more: How LendInvest is inflation-proofing its development loanbook
He said such a loan is assessed on the same strict criteria as the original loan with updated valuations.
Meanwhile, Invest & Fund said it is seeing favourable and steady transaction rates but does offer development exit finance if required.
Read more: Invest & Fund: P2P lending has proven its resilience
The platform said it works closely with borrowers to ensure their schemes are well-managed and not overly leveraged.
“Whilst it’s obvious there is a complex economic backdrop, the active and adaptable management of our client’s projects provides significant comfort to our investors,” Alan Fletcher, partnership director at Invest & Fund, said.