There’s always a bit of excitement when a loan completes. The facility letter has been signed and, for a moment at least, everyone can stop looking at their inbox every three minutes waiting for the next question from a solicitor. That’s all well and good, but I sometimes think we treat completion as the finish line when, in reality, it’s only the beginning.
In my view, a completed loan isn’t the measure of success. A successful exit is.
That’s why I’ve always believed a lender earns its reputation after drawdown rather than before it. Getting a deal over the line takes expertise, but seeing it through to redemption takes something a little bit more.
One transaction probably captures that better than any other. It was the largest loan Inspired Lending had written at the time, beginning life as a £5.7 million facility to refinance and refurbish a prominent mixed-use investment property in Shepperton before ultimately growing to £6.3 million.
The asset itself wasn’t straightforward. It comprised 11 retail units alongside 25 residential flats, while additional residential and commercial properties were used to support the facility. The ownership structure was also complex, involving an offshore parent company and trusts.
None of that concerned us because we knew exactly what we were lending against and why the borrower needed the funding. The plan was to refinance an existing lender, refurbish the residential units and exit through a combination of refinancing and property sales.
As the refurbishment progressed, additional funding became necessary to complete the works. We revisited the transaction, looked again at the business plan and remained comfortable with both the borrower and the exit strategy. As a result, we increased the facility to £6.3 million before it was ultimately refinanced successfully.
I suspect some people will hear that and assume something had gone badly wrong with the scheme. I wouldn’t. I’d say the project changed, which is something entirely different and entirely commonplace.
If you’d judged that loan halfway through, you’d probably have reached a very different conclusion from the one you would have reached at the end. That’s precisely the point. Success isn’t determined by what happens when a project hits a bump in the road. It’s determined by whether everyone still gets where they intended to go.
I don’t think we spend enough time talking about that side of lending. At the beginning of a transaction, everyone naturally focuses on the terms because that’s where every deal starts. A few months later, though, the conversation usually looks very different. By then, borrowers aren’t talking about the rate. They’re talking about the project and looking for a lender that’s prepared to have a sensible conversation about the best way forward.
That’s where continuity really comes into its own. Dealing with the same people throughout the life of a loan means decisions are based on a proper understanding of the project rather than a snapshot taken on a particular day. It also means less time explaining the background and more time working towards the same objective.
None of that means saying yes every time a borrower asks for something. Good lending still means asking difficult questions and making sure the revised exit remains realistic. Sometimes the answer will be no. Other times, supporting a borrower through a change in circumstances is the right commercial decision because the fundamentals of the deal haven’t changed.
Perhaps that’s why I’ve always believed the real test of a lender starts after drawdown. Completion tells you the funding was delivered. It doesn’t tell you whether the project did. That answer only comes later, once the borrower reaches the exit they originally set out to achieve.
Anyone can celebrate a drawdown. The real measure of success is whether, months later, the borrower has achieved the outcome everyone was working towards from day one. That’s always been the part of lending that interests me most, and it’s certainly the standard we’ve always tried to hold ourselves to at Inspired Lending.
