Roxana Mohammadian-Molina

No box-ticking: why alternative lenders are quietly winning over borrowers

The alternative finance industry has seen a spectacular transformation over the past 10 years.


To begin with, the alternative finance industry the way we know it today did not even exist. If a property developer had admitted to using alternative finance or P2P lending for their project 10 years ago, the first question they would have faced would have been, “Why don’t you borrow from a bank?” Today, however, many property developers turn to alternative lenders and P2P property lending platforms as their first choice to access funding.

The catalysts for the alternative finance industry becoming what it is today have been twofold: technology and regulation. The emergence of fintech platforms has meant that several parts of the lending process can now be automated, therefore introducing a number of efficiencies and making the process fast, easy and flexible. On the other hand, P2P lending and crowdfunding platforms became tightly regulated by the FCA, therefore helping build trust and confidence among investors.

You could argue that P2P property lending has become an asset class in its own right. But why have P2P property lending platforms become so popular among property developers? The answer may be summarised in three words: no box-ticking. Indeed, P2P property lending platforms offer a high degree of flexibility and one-on-one customer relationships compared to traditional lenders. Property developers are attracted by the ease of borrowing for their projects with a lender they can actually speak to, rather than having to go through a tick-box exercise where, in the end, they face the risk of a computer somewhere saying no. Furthermore, while traditional lenders are often slowed down by complex practices and multiple management layers, alternative lenders can offer faster decision making due to shorter and more effective reporting lines. For example, at Blend Network, there is no separation between the origination and underwriting team. All lending managers in the origination and underwriting team are decision makers, often former or current property developers and investors able to speak the property developer’s language.

Last year, a ThinCats survey of more than 500 medium-sized UK businesses revealed a shift towards alternative finance for younger businesses. The survey showed that for businesses less than 10 years old, only around a third approached their bank first when seeking funding. They were also five times more likely to use alternative finance compared to those established for over 35 years.

At Blend Network, we have seen a similar trend and appetite from young, dynamic SME property developers looking to get funding for their projects, and have witnessed our strongest months of lending over the summer. Following a period of rapid growth, we are now looking to expand our London lending team by hiring a number of dynamic and ambitious lending managers to join us.

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