A Bridging Loan is a lot more than a mere short-term loan – it can help you clinch important deals and even ride through rocky cash crunches to safety.
Discover all aspects of Bridging Loans and why they can be so a useful short term funding solution.
What is a Bridging Loan?
A bridging loan, as the name suggests, is a loan that aims to ‘bridge the capital gap’.
The idea of bridging finance isn’t all that novel. People have been borrowing for many years to tend to their short term funding problems. However, bridging loans, as we know them today, are a relatively new concept, mainly because of the new perspective lenders have acquired of looking at risks associated in granting short-term loans or short-term mortgages.
A typical bridging loan is:
- A short-term mortgage (termed over up to 12 months)
- Secured with collateral
- Processed faster than development loans or regular commercial loans
- More flexible than other commercial mortgage products
Today, a number of mainstream as well as alternative lenders in the UK offer very competitively priced bridging finance products. These products vary in loan amounts, loan tenures and interest rates. Being a specialist Bridging Broker, we bring industry-leading expertise and a wealth of experience on board to help you secure bridging loans that perfectly match your needs.
Why do Businesses Need Bridging Loans?
Bridging finance solutions can come in handy in a number of situations for businesses.
The following factors usually mark such situations:
- Weak overall cashflow
- Lack of liquid capital
- Urgent requirements (opportunity value of money)
Consider a situation where a new land investment opportunity arrives. You wish to grab this opportunity while it lasts and before your competitors make a move. However, you do not have the sufficient liquid capital available to purchase the said property. In such a case, you can choose to arrange for a bridging loan to secure the deal. You can then repay this bridging loan in a short term, as and when funds become available to you.
Bridging loans are also regularly used by UK businesses to cover for unforeseen expenses while completing a project. An example might better illustrate this practice.
Let’s say, a small business has recently undertaken a project to add three more business locations. While the property development works are ongoing, a sudden spike in the price of cement stretches the overall budget by 5%. Since this wasn’t previously accounted for while drawing the budget, the business finds itself in a situation where the project may well get stalled if the additional budget isn’t available. Here, a short-term mortgage in the form of a bridging loan can safely cover the shortfall, allowing for the smooth completion of the project.
Read More to find out all about how bridging finance works, and how your business can benefit from the affordable bridging finance packages we broker for you.
A Customised Bridging Loan Solution is a Click Away!
At Commercial Finance Network, our focus is always on providing project-specific finance solutions to our clients. As an extension of this idea, our bridging finance solutions, curated from the most trusted whole of market lenders across the UK, are always tailored to best fit your project. Let us know what your requirements are by contacting us, to speak with one of our Bridging Loan Experts right away.