Bridging Loans – Who holds the strongest card?

Warren Buffett is often described as a thoroughbred “money man”. In nearly 60 years he has made billions of dollars of profit from his investments.

Yet when it comes to playing poker Warren Buffett is an extremely cautious individual, in spite of all his wealth and experience from his investment projects. Warren Buffett’s attitude to poker is:

“If you’ve been playing poker for 30 minutes and you still don’t know who the patsy is, then it’s you!”

(By the way, according to the Collins Dictionary a “patsy” is described as being someone that is easily cheated or victimised.)

Therefore, when someone of the calibre and with the expertise of Warren buffet accepts that in some circumstances he does not hold all the cards, regardless of his past successes in the business, then what does that tell a borrower about his position of strength when searching for a suitable bridging loan?

During the period when credit was easy to obtain (i.e. 1997 to 2007) it was the borrower who had the upper hand. Property investments were abundant. Financiers were eager to get a piece of the pie at whatever price. The capital markets were forever seeking suitable projects to invest in and eventually this went to every level in the economy, which meant bridging loans as well.

During this time if someone had even a modicum of experience, they could secure a bridging loan very simply indeed. Actually, bridging loans, mortgages, secured loans … almost all types of finance were available without any trouble. A borrower could, in effect, take a very short walk to a lender, say their name and if this carried any recognition whatsoever, they would get money. Just like that; as if by magic.

The financial markets have taught us all a valuable lesson, borrowers and lenders alike:

Money is not meant to be “easy as pie” to come by.

Forgive the seemingly flippant expression above but that is exactly how many borrowers have become conditioned to regard bridging loans and other forms of raising capital. Borrowers are meant to demonstrate that they have a truly viable project. Borrowers are meant to prove that they and their project can pay the lender his interest and return the principal. Borrowers are meant to show that they, too, are putting their neck on the line and they are willing to share a good amount of risk with the lender.

However, the problem occurs when the borrower thinks he is the one in the position of strength and he fails to show or prove any of this. But, once again, is it the Lender’s money or the Borrower’s?

Borrowers need to wise up and realise that it is the lenders who hold the strongest hand (at the moment), and it is the borrower who is the “patsy”., figuratively speaking. This is the situation as it currently stands and will likely remain so for the foreseeable future.

Whether it be a bridging loan or any other type of finance that you are looking for at the moment, then borrowers please recognise that you are not in the position of strength in the current market. Give a lender what he is looking for and, more than likely, you will get the bridging loan that you are looking for.

Pay a visit now to the Bridging Loan Direct website to learn more about bridging loans and other aspects of short-term finance. Even better, go and speak to one of their trusted bridging loan advisers