"Historically, borrowers often had to choose between short-term bridging finance and long-term mortgages, but term loans now offer a middle ground"
Specialist lending has always been one of the most dynamic areas of property finance. It’s where creativity meets opportunity, offering solutions to borrowers whose needs often don’t fit into conventional categories.
As the market continues to evolve, term loans are becoming increasingly prominent as one of the most effective tools for brokers. They provide both flexibility and stability, which, let’s face it, is exactly what many clients need right now.
Adapting to the market
Unlike the mainstream mortgage market, in specialist property finance a typical term loan provides funding for three to five years. This gives borrowers a suitable period to stabilise their cash flow or build a track record, enabling them to complete a project or release working capital. At the same time, a term loan can be far more flexible than traditional mainstream solutions, with underwriting that mirrors bridging finance and terms tailored to fit a borrower’s unique circumstances.
For example, a loan can be structured so that some or all of the interest is serviced, and interest-only repayment options are commonly chosen by businesses going through transitional phases or developers waiting for income streams from a new asset to stabilise.
Historically, borrowers often had to choose between short-term bridging finance and long-term mortgages, but term loans now offer a middle ground — a way to meet medium-term funding needs without locking clients into terms that might not suit them. For businesses facing cash flow challenges or developers refining their projects, this kind of adaptability can make all the difference.
Term loans in action
At Alternative Bridging Corporation, we’ve seen growing demand for our term loan products, whether it’s helping developers bring their visions to life or giving entrepreneurs the support they need to grow. Here are some real-life examples of how they’re being used.
In Berkshire, a talented restaurateur took on the challenge of transforming a dormant public house into a lively Italian dining spot. The business had already begun to find its footing, but to take things to the next level, they needed a financial solution tailored to their unique situation.
We provided a three-year interest-only term loan of £580,000. This funding gave the restaurateur the breathing room to enhance operations and focus on strategic improvements without being tied down by the restrictions of traditional finance.
The result? A bustling restaurant that’s now a central hub for the local sporting community. With their finances stabilised and the business thriving, the restaurateur is in a strong position to move forward with long-term refinancing.
We also recently completed a case in Shropshire, where a developer was working to bring a charming period building near the England-Wales border to life as a holiday letting project. They had successfully converted the property into three beautiful apartments, perfect for holiday rentals. However, their existing short-term finance was no longer a good fit for the project, and they needed a solution to maintain stability and move forward.
At Alternative Bridging, we provided a £315,000 term loan secured against the property, giving the developer the financial stability they needed to reduce operating costs and build reliable income streams. The three-year loan was carefully structured to match their cash flow, ensuring repayments were manageable while they worked toward long-term refinancing.
This solution gave the developer the breathing room to focus on their goals during a crucial transitional period.
Versatility
For brokers, term loans add another string to the bow, offering clients a solution that bridges the gap between short and long-term finance. Moreover, the flexibility to structure repayments around a client’s cash flow allows brokers to deliver truly tailored solutions.
However, it’s not just about flexibility; speed is equally important. The property market moves quickly, and timing can make or break a deal. Term loans, with their streamlined processes, allow brokers and their clients to act decisively. This responsiveness is crucial for making the most of opportunities when they arise.
Recognising the potential of term loans isn’t just about understanding their features; it’s about seeing the opportunity they represent. For brokers, they offer a way to strengthen relationships by delivering effective, tailored solutions. In a market that often demands creativity and agility, term loans are proving to be an important component of any broker’s toolbox.
