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Commercial and property developer borrowers are becoming more comfortable with short-term lending to execute on financing needs in an uncertain market, according to lender Assetline Capital.
The non-bank lender recently extended the maximum term of its short-term capital lending product from 18 months to three years, competing in a market where 18 months is a common loan term.
Royden D’Vaz (pictured), national head of sales and distribution at Assetline Capital, said the ability to provide between a three and 36-month term meant it had more flexibility to meet the needs of the market.
“One of the main reasons we extended to 36 months was due to broker feedback.
“We spoke to brokers across the country, and many said 18 months was not enough time for their borrowers. They wanted a minimum term but also a longer maximum term.
“This extension relieves borrowers of time pressure and reduces the ask for loan extensions.”
According to Assetline, there has always been strong demand for short-term capital lending for business and property borrowers, but there has also always been a ‘level of apprehension’ about them.
The lender has seen bridging or short-term lending evolve in recent years, particularly thanks to institutional funding, which means it is becoming more accessible to brokers and borrowers.
“Borrowers are becoming more comfortable with short-term lending as it becomes more mainstream,” D’Vaz said.
Assetline has found there has been a wider variation in borrower needs in the current market. D’Vaz said that short-term lending options can help borrowers facing a range of diverse scenarios.
“One of the most common scenarios we have seen is when a borrower has purchased a property with a view to developing it in the future, but planning and DA approval extends above 18 months,” he said.
“A 36-month term gives the borrower the comfort of getting it done knowing they have some time to get their plans in place. It provides an assurance a shorter-term loan product can’t provide.”
The products can also help property and businesses owners cash out equity to renovate or fit out their premises, buy some time while refinancing, or settle on a new purchase before selling.
D’Vaz said in a changing market, some borrowers wanted to move quickly on buying opportunities, but wanted to hold off selling in the hope that prices would increase in the near term.
“Others want to get in and get out as fast as possible,’’ he said.
Assetline Capital recently joined the Loan Market Group panel, giving more than 5,000 brokers across the country access to the non-bank lender’s wide range of lending solutions.
The lender also appointed Jason Lucas as its new state manager for Queensland in March this year, and has recruited three new BDMs in Victoria as well as two new BDMs in NSW.
“By expanding our footprint, we want to help brokers get to know our business and help familiarise them with our product suite, especially in the short-term space,” D’Vaz said.
“Listening to brokers and adapting to the changing market underscores our commitment to ongoing growth as a business.”
Assetline Capital has funded over $1.9 billion in property-backed transactions across Australia for small to medium businesses, property investors, and SMSFs since 2012.
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