Funders can't back a loan book they can't see

Welcome to the first issue of The kennek Brief. Every two weeks, we'll cover what's moving in funding, technology and lending ops for UK bridging and development lenders and the funders who back them. Expect one big idea, the numbers that matter, and questions you can take straight to your team. It takes about five minutes to read.

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In October, the administrators of Market Financial Solutions said in a progress report that its loan assets may be substantially below the £190m shown in its books. MFS has been in administration since February, and earlier this year Century Capital also collapsed.

I won't speculate on the detail. The lesson for lenders is already clear: a funder can only back what it can see.

📊 The number: 48%

The share of bridging transactions that were regulated in Q2, up from 41% in Q1, according to Bridging Trends. It was the biggest quarterly jump since 2022. More regulated lending means more compliance, more documentation, and more for a funder to check.

Funders are scrutinising, and the best lenders still get funded

Institutional funders are looking harder at the bridging platforms they back. But lenders who pass diligence are still raising serious money. Quantum Development Finance secured a facility of up to £500m from Goldman Sachs on 2 October.

Credit quality is part of the difference. The rest is evidence. Can you show a funder what is on your book, what has changed, and who changed it?

In diligence, funders underwrite your data and controls alongside your credit book. They want:

• Loan-level reporting they can rely on, without waiting for someone to rebuild a spreadsheet
• A timestamped audit trail on every restructure, extension, rate change and default
• Clear balances and redemption figures at any point in a loan's life
• Speed, in diligence and at every drawdown

What moved this fortnight

• Funding: Quantum's Goldman Sachs facility takes its total funding lines to as much as £700m.
• Market update: Aspen launched 85% day-one LTV refurbishment finance and cut rates. GB Bank now offers refurbishment rates from 0.79% a month. Bank Rate is 3.75% after a 6–3 vote in September, and many expect a rise on 5 November, which puts pressure on refinance exits.
• Lending ops: Market Harborough halved the minimum loan on its Core Bridge range to £100,000. Second-charge bridging rose to 22% of transactions in Q2, the highest since 2021.
• Technology: Underwriting UK launched its W.A.L.T. underwriting platform, and PIXELBRINK launched Eben, a research and credit-paper platform for property lenders.

Put together: lenders are writing more, smaller, more complex loans for the same revenue. Cost-to-serve per loan now matters.

The kennek view: why a platform fixes this, and spreadsheets don't

Most lenders can produce a loan tape if they have a week and a patient analyst. Funders don't give you a week. The problem with spreadsheets and bolted-together tools is structural:

• The data lives in several places. Origination in one tool, servicing in a sheet, accounts somewhere else. Every handover is a place for numbers to drift.
• Controls depend on people. An audit trail that relies on someone remembering to log a change isn't an audit trail.
• Cost grows with volume. Every extra loan means more re-keying, more checking and more headcount.
• Knowledge walks out of the door. The person who understands the interest calculations in the sheet is a key-person risk.

A purpose-built loan management platform deals with each of these at the root:

• One system of record. Enquiry, underwriting, servicing and redemption sit in one place, so reporting comes from the same data your team works in.
• An audit trail by design. Every change is timestamped, with a before and after view, and it can be exported. Lenders tell us they value this for funder and institutional due diligence and for resolving borrower disputes.
• Servicing logic built in. Retained, serviced, rolled and compounding interest, with the day counts you use. Restructures, extensions and default interest are handled in the platform, not in a side calculation.
• Automation of the manual work. AI extraction turns an unstructured broker email into a structured enquiry. Credit papers and underwriting checklists are generated from the data. Redemption statements take one click.
• Capacity without headcount. The same team can service more loans, which is the right answer to thinner margins and smaller loan sizes.

There is a buy-versus-build point too. Building your own system means funding a development team, maintaining it, and defending it in every diligence. A specialist platform is built for bridging and development lending, and it improves as other lenders ask for things. Larger banking platforms such as nCino are built for the biggest lenders. kennek is built for specialist lenders with loan books in the tens to hundreds of millions.

What to look for when you buy:

• Can it show who changed a loan's terms, when and why, and can you export that?
• Does it handle your interest conventions without custom workarounds?
• Can it handle restructures, extensions and defaults inside the system?
• Does it connect to the data sources you use for KYC, AML and company checks (for example CreditSafe, Companies House and Land Registry)?
• Is it clear what is live today and what is on the roadmap? Ask for a demo of your own scenarios, not a script.

Questions to ask your team

• If a funder asked for your full loan tape tomorrow, how long would it take?
• Can you show who changed a loan's terms, when and why?
• Does your reporting come from one system, or from several spreadsheets stitched together?

If you don't like the answers, it's better to find out before the funder does.

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If you're raising or renewing a funding line this year, I'd be happy to show you how lenders are getting diligence-ready on kennek. Reply to this issue or send me a message.

Want to get in touch? Contact us at kennek and the team will get back to you.

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Sources are linked throughout. kennek's views are our own and are not financial advice.

First published in The kennek Brief, issue 01, on LinkedIn. Subscribe there for the next issue.