The Three Ts Every Development Finance Lender Should Have

In today’s fast-moving property market, borrowers need to be building strong, lasting relationships with their lenders. Paul Watson, Head of Origination at development finance lender Blend Network, explains what are the three Ts every development finance lender must have and how Blend Network have made it their mantra.

The late Emilio Botin, Santander Group Executive Chairman until his death in 2014, is one of my favourite all-time bankers. To me, his vision defined banking and made it what it is today.  Botin’s speech to the 2008 Euromoney awards dinner, where Santander was named best global bank, has gone down in banking folklore. Botin reveled as a commercial lender from northern Spain picking up the biggest prize in banking in front of the big investment banking-dominated institutions of bigger and richer countries, especially UK and the US.

Alluding to a poem by colonial-era British poet Rudyard Kipling, the late Santander executive chairman declared: “If you don’t fully understand an instrument, don’t buy it. If you would not buy a specific product for yourself, don’t try to sell it. If you do not know your customers very well, don’t lend them any money. If you do these three things, you will be a better banker, my son.”

The reason I tell this story is because we at Blend Network deeply believe in the spirit of Mr Botin’s words, which in our case is translated into the three Ts: Trust, Transparency and Track record. The three Ts have become part of Blend Network’s DNA, embedded in its culture and allowed it to build strong, lasting relationships with its borrowers and to double its volume of lending last year and the year before that. So, what are Blend Network’s three Ts?

Trust

As a property developer, investor or broker, you need to trust your lender as much as you trust your wife or husband. Trust is key in everything we do, but more so in property when one foot wrong can mean a deal collapses and ends up costing the customer thousands of pounds and/or a lost deal. At Blend Network, our priority is to build relationships of trust with our borrowers to ensure their deals progress smoothly and they return to us for their future projects. A returning borrower, of whom we have many, is a borrower who trusts his lender.

Transparency

Transparency is one of those things that is hard to appreciate until something goes badly wrong. How many of you have ever had to face hidden fees from a lender disguised into the small print? Or a lender who agreed to lend before unexpectedly pulling out of the deal at the last minute? Sadly, those things happen too often because many lenders lack transparency.

At Blend Network, we put transparency at the heart of everything we do. What you see is what you get and that’s why we also like to always meet our borrowers in person, because as Joseph Safra used to say, and as we also like to say, “eyes tell more than balance sheets.”

Track record

And how about track record? Alternative finance and peer-to-peer (P2P) property lending has gained popularity in recent years due to its flexibility, enhanced customer service and speed. Yet still many P2P lenders lack enough liquidity and are unable to fund deals fast enough; many take up several days or even weeks to fund the property deals on their platforms.

However, other platforms such as Blend Network get the deals funded in a few minutes. For example, a £600,000 loan in December to part re-finance the conversion of a former shoe factory into 24 apartments in Northamptonshire was funded in 102 minutes. Before that, a £445,000 loan to part-finance the conversion of a site into four 4-bed houses in Norfolk was funded in 36 minutes. So, from a borrower’s point of view, track record is key to ensure that their deals get funded quickly and that their projects progress smoothly.

In today’s fast-moving market, more than ever before, property developers, investors and brokers need to build relationships based on trust, transparency, and track record. Whether you are buying at auction and need to move fast to secure funding, or whether you are trying to secure an off-market development site, make sure your lenders comply with the three-Ts.

Blend Network is a peer-to-peer (P2P) property lending platform that provides development finance and bridging loans from £150,000 to £3,000,000 to experienced SME property developers and small construction companies. More information can be found at www.blendnetwork.com.