We treat credit risk and financial fraud with paramount importance—this is at the heart of what we do. This is because loan repayments are contingent on the borrower's successful exit from the underlying property project.
Before committing to a loan, we examine the viability of the borrower's payment schedule. This includes monthly interest payments, as well as the intended exit plan—typically by refinancing or selling the underlying property as a whole or in tranches.
In our sector, it's common that extensions and further advances are agreed. Indeed, the bridging loan market could not operate if every loan that was one day overdue was forced into recovery action. A bridging loan is a commercial agreement that is not comparable to, for example, a residential mortgage. Some degree of tolerance period is virtually universal in the bridging loan market, as it allows a degree of flexibility for the lender to resolve common situations that are beyond the control of the borrower, such as delays in planning permission.
Each time one of these is requested, we thoroughly review the borrower's track-record and the project's progress to ensure continued suitability before approving an extended term. The borrower in this instance would pay interest for this period from our funds.