When short-term finance goes wrong

Five lenders’ tips from real-life scenarios for reducing turnaround times and avoiding futile deals

“Things don’t go wrong at the end; they go wrong at the start”, claims Andrew Littleford, director of short-term lender Interim Finance. Together with Semper Capital, Quantum Finance, and Prime Finance, Littleford is featured in issue 14.12’s forthcoming feature on short-term lending, where we asked lenders to explain opportunities and obstacles in real-life scenarios.

Here we feature their advice to brokers on avoiding the common problems that occur in short-term lending:

1. Correct documents

Unsurprisingly missing documents are a major problem for applications; typical culprits are building permits and, for some states, certificates of occupation, according to Littleford.
 

2. The first mortgage lender

The client’s original lending institution could be the source of some delays; short-term lenders need to get certain information about the client which the original lender may take a while to produce.
 

3. Valuations

Lenders can make mistakes with valuations, Littleford explains, so it helps if the broker has an idea what the client’s assets are worth before submitting an application.
 

4. Suiting the client

Both Interim Finance and Semper Capital, who submitted real-life scenarios, insist any deal must leave the client better off. It’s vital the broker provides evidence that a finance deal will lead to a client recovering (even if this takes several years), and not simply hasten their decline.
 

5. Realistic turnaround times

Both lenders argue that their turnaround times reflect unavoidable realities; Littleford notes the due-diligence requirements of responsible lending, whilst Semper’s Andrew Way argues that for large deals – with several million dollars at stake - clients will expect the process to take longer.

Read our short-term lending feature in MPA issue 14.12, on desks mid-November.