Next Generation Lending – Peer to Peer Bridging Loans
Peer-to-peer lending is one of the fastest-growing industries in the UK financial sector, and this pace of growth is matched with ongoing innovation and ingenuity. As such, every year new partnerships are being formed and business ideas explored, and one of the latest and most interesting avenues for P2P investment is in bridging finance.
What is Bridging Finance?
Traditionally, the larger a loan is, the longer it takes to arrange and to repay. Something the size of a mortgage, for example, might take months to set up and years to pay back. However, there are many situations in the business world where this timeframe is prohibitive; businesses need to seize control over their cash flow to make the most of opportunities as they present themselves.
This demand for fast financial solutions has led to the development of “short term lending”, where brokers arrange a large loan for businesses to cover costs while they arrange a longer term solution. A typical example of this would be in the real estate industry, where a house may be purchased at auction before a mortgage can be arranged. A short term “bridge” loan that covers the initial purchase until a mortgage can be put in place has become increasingly popular over the past decade.
P2P Bridging Loans
This highly lucrative sector has recently been combined with peer-to-peer funding sources, with firms such as Kuflink offering to connect borrowers with funding through an extensive network of peer lenders. Their digital platform allows lenders to pick and choose their investments in real time, or to contribute to a “pool fund” which will be spread amongst many different investments.
What sets Kuflink apart is that they fund the first 20% of each loan themselves; until 2016, they traded as a bridging lender themselves under the name Alpha Bridging. By putting their money where their mouth is, Kuflink demonstrate confidence in their ability to choose safe, secure opportunities for their P2P investors.
P2P Development
The staggering pace of innovation across the peer-to-peer finance industry provides dozens of different ways to invest, and hundreds of products to choose from. The sheer variety of methods in which peer to peer funding can be combined with regular finance using digital technology allows everyday savers to make their money work for them however they want.
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