Why good decisions start with considering alternatives

Most of us instinctively value having alternatives.

Whether we're seeking a second opinion or exploring different options before making an important decision, we rarely settle on a single route without considering what else might be available.

Yet when it comes to lending, many individuals, businesses and even experienced professional advisers still default to the traditional banking route they already know. Not because it's necessarily the right solution, but because they simply may not realise another option exists.

Alternative lending has become an increasingly familiar term, used to describe lending provided outside traditional banking institutions. Often referred to as private capital or private debt, it covers a broad range of specialist lending solutions serving different markets, clients and circumstances.

Put simply, 'alternative' describes where the capital comes from. What the name doesn’t capture is the experience, judgement and commercial thinking that sits behind alternative lending.

People rarely dismiss alternative lending after exploring the options and deciding it isn't right for them. More often, assumptions have been made before the conversation has even happened. Some people may think it’s only relevant in distressed situations, others that it is prohibitively expensive. Many, particularly within the trust and fiduciary sector, simply won’t have considered that specialist short-term lending is an option.

Why alternative short term lending matters

As traditional bank lending has become increasingly focused on longer-term facilities and more standardised lending criteria, and the requirement for assets under management (AUM), alternative lenders have become increasingly important in supporting legitimate short-term liquidity requirements.

The need for that short-term liquidity hasn't disappeared. Financial transactions rarely complete in perfect sequence. Tax liabilities don't always arrive at convenient moments. Valuable opportunities often demand decisions long before longer-term finance can be arranged. That's where we have an important role to play; complementing the traditional banks offering when timing, complexity or temporary liquidity require a different approach.

Trust and fiduciary alternative lending considerations in practice

‍Short-term lending is well understood within the construction, development and private client markets. Less widely recognised is the role it can play within trust and fiduciary structures, yet it's here that we're increasingly seeing some of the greatest opportunities to add value.

Working alongside trustees, family offices and professional advisers, we understand that short-term liquidity requirements arise for perfectly legitimate reasons. A tax liability may need to be settled before funds become available. A family requirement may arise unexpectedly, or an investment opportunity may present itself at short notice. Equally, a trustee may wish to avoid crystallising a loss or creating a new tax liability by selling an asset at an inopportune time.

None of those situations point to financial distress, they point to a timing requirement and specialist short-term lending provides a valuable option that many trustees may simply not realise is available to them. Our role is to support trustees and their professional advisers, respecting existing relationships and always working through them to deliver the best outcome for their clients.

Considering the wider commercial picture

Choosing the right lending solution is rarely about simply the cost of borrowing. Of course, price matters, but focusing solely on the headline rate can overlook the wider commercial picture.

A transaction that takes months to progress, consumes significant professional time or fails to secure approval carries its own cost. Opportunities disappear, clients incur avoidable liabilities and assets may need to be sold when a short-term facility could have preserved long-term value.

We've seen plenty of situations where the cost of waiting ultimately outweighs the additional cost of borrowing. That's why conversations shouldn't begin and end with price. They should begin with understanding the value that that right alternative solution can unlock.

Experience makes sense of complexity

Across Hawk, our expertise has been built over decades, across private banking, property, development, construction and specialist lending, combined with first-hand commercial experience as owners and investors.

Property-backed lending remains the foundation of what we do. Increasingly however, we're also helping clients whose circumstances extend beyond straightforward lending requirements, whether through sophisticated ownership structures, security over other high-quality assets or simply because a different approach is needed.

We also know not every opportunity will be appropriate for us directly, so through the expertise we've built and the trusted professional relationships and specialist networks we've developed, we're often able to help clients explore solutions they may never previously have considered.

Looking beyond the name

‍So alternative lending isn't simply about where the capital comes from. It's about the experience, judgement and commercial thinking behind it.

Traditional banks and specialist alternative lenders each have an important role in the market, and the question isn't which is better, but which is better suited to the circumstances in front of you.

What matters is having the right people around the table who have the experience, judgement and willingness to understand your circumstances to advise you on your lending options. We know that some of the best outcomes begin with a conversation, so before deciding something isn't possible, speak to Hawk.