The iBridging deal is the first in a range of partnerships Borro.com has signed with mortgage brokers looking to offer their clients short term finance when other providers are unable to offer funds.
The pawnbroker has signed on 25 brokers in the past three days, all of whom came to Borro with clients looking for short term finance. Brokers can earn 6% commission on any referrals.
Borrowers are charged interest on loans which can range from a couple of thousand pounds to the hundreds of thousands. Interest rates vary, but the average on loans up to around £100,000 is 4%. Loans above that value are charged at a lower rate, of around 3%.
There are no other charges to borrowers, who can secure finance on the day of application and repay the loan at any time during the contract with no early repayment charges.
Contract lengths vary and borrowers effectively pay on a month by month basis.
Borrowers do not have to undergo any form of credit checking or complete a complex application as loans are made against high value assets, which are valued by Borro at no extra cost.
Steven McColl, investment partner at iBridging, said the arrangement is proving popular with high net worth clients who are short on cash but have a lot of equity tied up in high value personal belongings.
Paul Aitken, CEO and founder of Borro, said the deals were more expensive, but suitable for some clients who needed to borrow on short notice and couldn’t use more traditional methods of releasing funds.
Aitken said: “We’ve been working with iBridging and have seen considerable interest in this type of finance, particularly from customers looking to invest in property in one form or other.
“It could be their refinancing is taking longer to go through than they’d expected, or they’ve been turned down because access to credit is so much tighter.
“It could be they need cash to raise their equity in an existing property or something as small as finding the money to pay for upfront fees and surveys.”
Borro will consider diverse assets as collateral for the loan, ranging from valuable cars, fine art, sculpture, jewellery to helicopters. The only condition is that the borrower must own the asset outright.
The asset is taken into insured vaulted storage, paid for by Borro, until the loan is repaid.
McColl said the deal wouldn’t be suitable for all customers, but said to brokers: “It’s a nice bolt-on in terms of short term funding options.”
Aitken agreed: “This is about brokers being able to service as many customers as possible given a tricky credit environment. It’s a good, flexible option.”
Specialty finance provider Kreos Capital provides Borro with debt finance to fund the loans.
