Short term funding - the way it should be done

 As a broker, how often do you find you've done all the running on a promising loan app with a short term lender – only to find that there's no money available when it comes to settlement day? The lender gives you any number of reasons why the loan's not going to go ahead – but you know reading between the lines that actually they're simply underfunded.

Well we're different. We have a variety of funding sources – balance sheet, bank, institutional funding, private investors both wholesale and retail – and this means that we have never walked away from a deal simply because we were unable to fund it.

How we work

The first step is to share your scenario with us. We'll tell you within hours whether your deal's got merit. If it is too big for us, or if we feel that it falls outside of our lending parameters, we'll let you know right away. We won't waste your time and set up a crisis of expectations for your customer.

But let's assume now that the deal you've presented is in range. First thing - we'll give you an indicative estimate of likely rates and fees, including your brokerage fee of course.

Working closely with you, we'll then provide clear guidance on what we need to complete our due diligence credit process. Depending on the availability of data, this usually takes only a few days.

What we do always need is a formal independent valuation of the security property. Depending on the security type and location this can take some time, though usually not more than a week.

With valuation in hand and due diligence complete, we'll issue a terms letter if credit's approved - or we'll let you know promptly if we decline.

If your customer accepts our offer, legals and settlement will follow in short order. This whole process realistically takes about two weeks from go to woe – not long given our average first mortgage loan of around $2m. Second mortgage loans under $500k we'll typically do even quicker.

Lining up the funding

We don't only start to assemble investors once credit is complete and an offer has been accepted. Right up front, when we discuss your scenario on day one, we will have already made an assessment of our funding capacity. Once an offer has been made, the assurance we provide is that the funding is already lined up.

Short-term Funding-

• Provides added value for customers;
• Pays generous upfront commissions (earned more frequently);
• No clawback clause for early settlement;
• Diversifies income streams away from the big banks and larger senior lenders.

"Brokers who have not operated much in the commercial market are starting to think outside the square and understand the value of short-term solutions and the opportunities available to them," says Broadway.