MARCH 16 2022

Published in the Australian Financial Review

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Non-bank lender Bridgit has banked $7.7 million from OIF Ventures and Perennial Partners, aiming to tap into the growing gap left by big banks reluctant to offer bridging loans for people wanting to buy another property before they sell the first.

The Sydney-based start-up booked $500 million in loan applications last year, and will use the fresh venture capital to expand its same day, and sometimes same hour, loan approval technology. Of those $500 million loan applications, Bridgit approved half.

The raise comes after Adelaide Bank recently restricted its bridging loan business to existing customers, and COVID-19 led to waves of banks closing their doors on borrowers last year.

“I couldn’t believe that Adelaide Bank was pulling back on bridging loans, I also can’t believe people can’t really apply for bridging loans from traditional lenders online,” said Aaron Bassin, co-founder and chief executive of Bridgit.

“This whole industry is ripe for disruption.”

Following an oversubscribed round, Mr Bassin said investors OIF Ventures were chosen for their founder-friendly approach, while Perennial Partners could help Bridgit with its IPO plans.

Bridgit, which has rebranded from TechLend, raised $50 million in venture debt from Silicon Valley-based fund Partners for Growth last August.

Unlike venture capital, which gives investors a stake in the business, venture debt is similar to a bank loan and includes principal repayment plus interest.

Mr Bassin said venture debt allowed the company to extend loans quickly, and also meant the founders and equity holders in the business weren’t diluted.

Despite lockdown in Sydney and Melbourne during 2021, house prices have surged higher. Australian Bureau of Statistics figures show new loan commitments for housing rose 4.4 per cent to a seasonally adjusted $32.8 billion in December 2021.

Rather than charging interest, Bridgit charges a set-up fee that starts at 1.6l per cent. For a $1 million loan, this would equate to $16,500.

The fintech loans up to $4 million for a maximum of six months, and no repayments are required until either the loan matures, or the property sells.

Its technology engine pulls credit data, property data as well as information available through Australia’s growing open banking network.

“Our customers are generally existing home owners,” Mr Bassin said. “They’re not the Millennial buy now, pay later customers, rather they’re those looking to use property to further build their wealth.”