With both brokers and borrowers finding it much easier to identify with lending products nowadays, Bridging & Commercial spoke to Stewart Barnes, Co-Founder and Director of Portman Finance Limited, about how their business model has changed over the years and how their products have adapted.

Portman Finance started in May 2005 with the intention of bringing something a little different to the market. We offered access to both a mix of private funds and personal relationships with active lenders, providing a “one stop shop” to residential developers. The original concept was to arrange senior debt for the residential developer from a mainstream lender with Portman providing mezzanine funding from our own resources. In some instances, taking the gearing on the project as high as 85 per cent.

This business model worked well for a couple of years until the world literally stopped turning in 2008. Following the demise of Lehman Brothers, the phones went completely silent and we were left with a defunct business model.

As all will recall, whilst a few people still required funding there was a restricted number of lenders, making broking challenging to say the least.

We still had access to money so set about looking at alternative ways to get it into the limited market place in order to generate some income. Given the banks reluctance to lend to anyone or anything that wasn’t completely vanilla it wasn’t long before we identified a rather large gap in the market – the SME’s.

With our broking background we understood that both brokers and borrowers find it much easier to identify with lending products so we created a number of products including a Working Capital Loan, which is repaid over a period of up to two years using weekly capital reductions with interest charged separately at the end of each month. The most popular product we have developed is the Flexiloan, which is similar to a traditional bank overdraft allowing borrowers to draw up to an agreed limit and repay, as cash flow allows.  

In talking to our residential developer clients that have been with us since we first started, it was clear that no one, at that time, was lending on partially completed projects in circumstances where the developer has run out of funds half way through a build. This seemed odd to us as given that at the point that funds were required a lot of the build risk had evaporated and funds would only be required for a few months. We therefore also offer a loan to complete developments securing the loan with a second charge. Since we started doing this we note a number of other lenders now offer a similar product.

Again, looking to our broking background we know what it’s like when a deal disappears into a black hole on an underwriter’s desk. We therefore always try to revert quickly, positively or negatively, to an enquiry and try to keep the whole process as red tape free as possible.

Interestingly we are witnessing a definite notch up in the amount of residential development opportunities we are seeing; although this isn’t hard given we saw none for a long period of time. It may well be that our original business model will be resurrected as time moves on and confidence slowly returns to the country.

For more information about Portman's products visit www.portmanfinance.co.uk