Certain Bridge Loan Notes Review

In this article, we will review Certain Bridge loan notes.

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Who is Certain Bridge?

Certain Bridge offers bridge financing to borrowers in the UK, where all loans are secured by properties. The company has been in operation since 2018 and has a proven track record of providing hundreds of secured loans.

The maximum loan amount lent out by Certain Bridge is capped at 65% of the borrower’s property value, which provides significant protection against any potential negative market movements. Additionally, all loans are secured within the UK and registered with the UK Companies House.

In rare instances that a borrower was late in paying back the loan, Certain Bridge has acted quickly by selling off the secured properties, thereby enabling the loan to be paid back in full, along with additional penalty interest imposed on the borrower. This has allowed Certain Bridge to maintain a spotless record of never having to write off any debts, ensuring that the loan note holders receive their 100% interest and maturities on time.

What is bridge financing?

Bridge financing is a type of short-term funding used to address immediate financial needs, often for businesses or real estate transactions. It is typically used to bridge the gap between two larger financing transactions, such as a real estate sale or investment deal.

Bridge financing can take many forms, including loans, lines of credit, or equity investments. The terms of the financing are usually tailored to the specific needs of the borrower and can be customized to address their immediate cash flow needs.

What are the features of the business bridge loans from Certain Bridge?

1. Mortgage secured: All bridging loans created are mortgage secured against property assets in England and Wales, which provides a level of security to investors.
2. Significant return: Business bridging loans are contractually issued with a substantial yield, which may be attractive to investors seeking higher returns.
3. High redemption rates: Redeemed bridging loans have constantly achieved average returns of about 70%, which is a significant growth over the generally contracted 50%.
4. Short term: All business bridge loans have a term of three to 12 months, which means that investors can potentially receive their returns quickly.
5. Maximum of 65% of secured property values: Bridging loans are formed up to 65% of secured property values, which provides considerable protection against possible drop in property prices and nonpayment of borrowers.

Are the fees competitive?

In terms of Certain Bridge’s niche market, they are competitive with the few other genuine business bridge providers. However, when compared to Bridging Lenders who do not offer the same unique selling point – a quicker turnaround time on loan applications – the UK firm’s rates and fees may appear somewhat more expensive.

Certain Bridge Investment Opportunities

There are two debt instruments available to investors who are interested in investing in Certain Bridge loan notes. The first option is the discount loan note, also known as the Battersea Bond.  This pays all interest at maturity. The second option is the fixed-income loan note, known as the Waterloo Note. This one disburses annual interest payments.

The Battersea Bond is an ideal choice for those who prefer to receive their returns in a lump sum payment at the end of the investment term, while the Waterloo Note is suitable for investors who prefer to receive a steady income stream throughout the term of their investment.

Both Certain Bridge loan notes are available for a term of two years, two and a half years, three years, and four years. For the purposes of our discussion, we will focus on the details of the bonds with 2-year terms.

The Battersea Bond and Waterloo Fixed-Income Loan Note can be accessed directly or through different platforms, including Custodian Life, Universal, and TIP.

2-Year Discounted Battersea Bond

This investment option from Certain Bridge is a secured bond with a fixed maturity period of two years before it can be redeemed or repaid in full.

The Battersea bond can be acquired in two different tiers or classes: the “standard” tier and the “plus” tier.

For the standard tier, the minimum bond purchase amount is 60,000 pounds, and investments must be made in increments of 5,000 pounds. This means that you can purchase bonds for 60,000 pounds, 65,000 pounds, and so on, but not for amounts in between these increments such as 62,500 pounds.

For the plus tier, the minimum bond purchase amount is higher, at 125,000 pounds. Investments must also be executed in increments of 5,000 pounds.

The redemption amount for the standard tier is 23% higher than the purchase price. So, if you bought Battersea bonds worth 100,000 pounds, you’re supposed to get 123,000 pounds at the time your investment will be repaid.

On the other hand, the plus tier has a redemption amount that’s 24% higher than the purchase price.

The investors will receive the full redemption amount, including the percentage increase mentioned above, at the 25th month from the date of purchase for both tiers.

The issuer of the bonds, who is seeking to raise 25 million pounds from investors, will be responsible for paying all fees associated with the bond offering.

2-Year Waterloo Loan Note

This investment option is a secured fixed-income loan note with a maturity period of two years.

The Waterloo loan note can also be acquired in the standard and plus tiers, just like the Battersea bond. They have lower investment minimums compared to the bond.

The minimum note acquisition is 25,000 pounds for the standard investment option and 100,000 pounds for the plus investment option. In addition, the investment opportunity allows investors to increase their investment in increments of 1,000 pounds.

The Waterloo Fixed-Income Certain Bridge Loan Notes offer a fixed interest rate of 9% per annum for the standard tier and 9.5% per year for the plus tier, with interest payable on a quarterly basis. The loan notes provide full capital repayment at the end of the investment term, which is month 25. This includes any accrued interest.

The issuer also covers any fees associated with this investment offering, which aims to raise a total of 25 million pounds from investors.

What’s good about the Battersea Bond and Waterloo Certain Bridge Loan Notes?

• Discounted Bond Purchase: The opportunity to purchase a discounted, secured bond can offer investors an attractive return on investment, especially compared to traditional fixed-income investments.
• Fixed income: The interest rate payable on the loan note is fixed throughout the investment term, meaning that investors can rely on a stable income stream over the course of the investment.
• Security: The bond and note are secured by bondholders’ individual debenture over Certain Bridge and all of its secured mortgages, funds, and assets. This means that in the event of default, holders of the bond and note have a claim on the underlying assets that secure them.
• Low Volatility: The bond and note offer no exposure to the stock market or other market fluctuations, which can provide investors with stability and predictability in their investment returns.
• Underpinned by Redeeming Mortgages: The note security is underpinned with a high turnover of constantly redeeming Mortgage secured funds owned by Certain Bridge, which may suggest a lower risk of default.
• Compliance: The Battersea bond and Waterloo loan note are fully compliant with UK regulations, with no offshore jurisdictions involved, which can provide investors with greater confidence and transparency.
• Transferability: The bond and loan note can be transferred, meaning investors can sell their investment to another party, potentially providing greater flexibility and liquidity.

What are the downsides?

• Credit Risk: There is always the risk that the issuer of the bond may default on the bond payments, which would result in the loss of some or all of the invested capital.
• Illiquidity: The Battersea Bonds are not listed on any exchange, so investors may have difficulty selling the bonds if they need to liquidate their investment before the maturity date.
• High Investment Minimums: The high minimum investment amount may be a disadvantage for some investors and it could make the investment inaccessible to a wider audience. (Note that high minimum investment amounts are not uncommon for private placements of bonds.)
• Currency Risk: If an investor is investing in a currency other than pounds sterling, they may be exposed to currency risk if the value of the currency changes over time.

Can I invest if I’m not from the UK?

Yes. As long as there are no sanctions in place to prevent such transactions, Certain Bridge accommodate investors from anywhere in the world. However, the bond and note are only offered in Pound Sterling.

Can I dispose of my investment before maturity?

In case you decide to sell your Bond or Loan Note to someone, Certain Bridge will have to conduct Anti Money Laundering verification on the person/entity to whom the investments are being transferred. After completing the verification, the company will re-register the bond and note under the new holder’s name.

You will incur a small administration fee for the sale.

Certain Bridge Loan Notes Review: Final Thoughts

They can be an attractive investment option for those seeking regular income and relative stability, but they also carry risks such as the possibility of default or changes in interest rates. As long as it doesn’t take up too much of an investment portfolio, it should be OK.

As with any other investment, it is important to remember that you should carefully assess the creditworthiness of the borrower and the terms of the loan before executing any investments.

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