Maximising opportunities with multiple funding lines

By Philip Gould 4th July 2024

In today’s rapidly changing economic landscape, lenders are realising the critical need to diversify their funding sources.

Several factors can contribute or impact the successful underwriting and execution of a deal, including the capacity and criteria of the funding line itself.

Relying solely on one funding stream can be risky and limit growth potential.

If there are changes to the financing requirement as a deal progresses, it is a possible that a transaction that was a perfect fit at origination, could become unviable due to criteria constraints rather than an increase in credit risk.

If there are no other funding sources available the deal may fall through, leaving the client disgruntled and the lender and broker missing the out on an opportunity to support their client’s financing requirement.

By diversifying funding sources, lenders can increase their capacity to support their client’s during both the initial origination as well as throughout the underwriting and execution phases of a transaction.

This not only mitigates the risk of losing deals but also provides financial stability and resilience in the face of economic uncertainties.

A key advantage of multiple funding lines is the ability to access funds faster.

Funding methods often involve lengthy approval processes, extensive paperwork, and rigid eligibility criteria.

Securing funding which allows a lender to go forward with certain deals without additional credit approvals subject to meeting pre-agreed criterion, increases efficiency, saving time and resources; savings which allow for preferential terms to the Borrower.

Another key advantage of adding funding lines is the potential for increased flexibility and agility. Lenders may encounter changing funding landscapes or shifting lending appetites.

By broadening their options, lenders can adapt and respond more effectively to these changes.

Furthermore, expanding funding sources with different criteria allows lenders to tap into a broader range of opportunities.

Different funders may have varying priorities, interests, and areas of focus. By increasing the variety of funding lines, lenders can target additional opportunities that align with their specific goals, mission, and activities.

This opens new avenues for growth, innovation, and impact.

Whether it is a new lender entering the market and looking to scale rapidly, or an established lender seeking to innovate and expand, having access to multiple funding lines that embrace agility and flexibility, can unlock a lender’s full potential, and help them stay ahead in today’s competitive specialist finance market.

An appetite to increase funding capacity also fosters a culture of innovation and creativity within organisations.

When Lenders rely on a single funding source, there may be a tendency to conform to that funder’s priorities and expectations.

However, by pushing for further diversification, lenders explore new ideas, approaches, and solutions without being constrained by the preferences of a single funder.

Avamore Capital strives to offer agile funding solutions to support SME property developers and investors.

I believe a variety of available funding lines is crucial in making this happen.

At Avamore, I consider funding to be our inventory, and I aspire to have as wide a variety of stock on the shelves as is necessary to meet the ever-increasing needs of our clients while also maintaining a clear focus on Avamore’s core capabilities and areas of expertise.

Avamore provides innovative financing solutions to SME property developers and investors.

Product innovation is key to achieving this, and the availability and variety of funding sources sit at the heart of our strategic thinking.