"If you support a borrower when things are tough, you have been able to build a relationship that’ll last a lifetime."
I have been in the property lending market long enough to appreciate that in property lending, more than in any other business, it is key to build and nurture lasting relationships with your borrowers, and I know that building those relationships comes down to being a solutions-focused lender. Due to the nature of the business, the large number of unforeseen circumstance that may occur over the lifecycle of a property development project and numerous risk factors along the way, it is paramount that lenders build a partner-type relationship with the borrower instead of a stick and carrot lender-borrower-type relationship. This was made even more palpable throughout 2020 when the Covid-19 ‘black-swan event’ resulted in the property market being effectively shut down for weeks and many projects being frustratingly delayed. At Blend Network, we were lucky enough to have plenty of liquidity even at the height of the pandemic, which enabled us to keep actively lending and supporting property developers who had been left out in the cold by their previous lenders.
You get what you pay for
Our conversations with borrowers reveal that property developers’ experience over the past year has taught them the hard way that a solutions-based lender is worth its weight in gold. It has also taught them that cheaper is not always better, that in property development, like in any other sector, you get what you pay for and that often it is worth paying that extra Penny to get excellency, flexibility and access to a lender you can trust. As we say here at Blend, ‘if you think it’s expensive to borrow from a professional, wait until you borrow from an amateur’.
As lenders, one of the things we have learnt at Blend Network is that if you support a borrower when things are tough, you have been able to build a relationship that’ll last a lifetime. Again, as the saying goes ‘if you can’t handle me at my worst, you sure don’t deserve to handle me at my best’ and that is the way borrowers we speak to feel about the relationship with lenders.
Solutions-focused lender
One thing that we know for sure is that some things will always go wrong or get delayed in property development. That is just the name of the game. Whether it is due to bad weather, market changes, supply chain disruptions or, as it was the case last year, totally unexpected factors. So, as a borrower it is key to work with a lender who a) is able to grasp the issues that come up along the project’s lifecycle, and b) is flexible enough to help the borrower find solutions instead of adding to the pressure and stress by putting a spoke in the borrower’s wheel. Due to their nimble setup and more flexible structure, alternative lenders and peer-to-peer property lending platforms have proven to be able to offer a higher degree of flexibility compared to traditional lenders and banks who are often held back by heavy management command chains and tight credit policies. In summary, the experience of the past 12 months has made borrowers realise the importance of working with a solution-focused lender they can trust.
