How a business can use a bridging loan

Monday, 24 October 2011 05:16

Bridging finance has numerous business uses

Bridging finance has numerous business uses

Applying for a bridging loan offers businesses an effective way of borrowing money quickly. These loans are designed to be a flexible financial product and so companies of all sizes and across a wide range of industries may find that they provide the cash boost required to meet a number of goals.

Generally speaking, bridging finance is often sought after by firms and individuals looking to purchase property. This could be in order to complete the transaction of a development bought at auction or to ensure that an acquisition can go ahead should a delay in the buying and selling process have threatened your company's ability to take up new offices or warehouses.

Whether you are hoping to relocate to a larger outlet or simply want to expand your business's geographical reach by opening a shop or office in a new city, you will find that bridging loans are a great way to fund the acquisition.

Similarly, if you are content to stay in your existing premises but are hoping to redevelop it in order to make it larger, bridging finance can provide you with the cash needed to pay for building materials and labour.

However, there are many other reasons a company may be inclined to consider applying for this kind of finance besides the acquisition or development of a property. Indeed, it has often been taken out by firms looking to inject some short-term capital into their organisation.

If you have a pressing client order to meet, getting a bridging loan can give you the scope to hire additional members of staff and purchase equipment to ensure you will be able to deliver products and services on time. This may prove particularly effective if you need money at short notice and your usual credit provider is unable to issue a loan in sufficient time.

Other instances where bridging loans can prove highly useful for businesses are consolidating multiple debts into a lower rate repayment or to fund the acquisition of rival companies. Should you be looking to do the latter, bridging finance can ensure you'll have the resources to take over a firm quickly, making it a great way to fund the expansion of your company.

No matter what your reason for wishing to secure a bridging loan against a commercial property may be, it is vital you take the time to seek out the most competitive finance deal available.

This means, among other things, comparing bridging loan interest rates in order to find the one that best suits your company. It is also worth taking into account any other charges that your business may be liable to pay, such as valuation fees and legal costs. Depending on the organisation that you borrow from, these may be incorporated into your monthly interest repayments or be charged separately.

As bridging loans are designed to provide finance to organisations that need money quickly, a credit provider will be able to tell you if your business can take out a loan within 24 hours after your application has been submitted. If this is the case, the cash could be in your firm's account that same week, enabling your company to go ahead and realise its ambitions.

If you are uncertain as to whether bridging finance will be the best option for your business in obtaining the loan it needs, it is worth your while to seek out guidance from an expert. By getting bridging loan advice you can ask any questions that you may have about the product, before figuring out what your next step should be.



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Finance articles

  • Is a bridging loan right for budding entrepreneurs?

    Raising the money you need to start a business can be hard, however, there are alternatives to bank loans. Among them are bridging loans, peer-to-peer lending and borrowing money from friends and family, meaning you need to do plenty of research.

  • Important questions to ask bridging loan companies

    Before taking out a bridging loan, you must understand a number of key points. These include the rate of interest you will be charged, the length of time you have to repay the loan and whether there are any arrangement fees that apply.

  • Why bridging loans are only suitable for short-term funding

    You should only consider bridging finance if your funding needs are temporary. This is because the high rates of interest make bridging finance unsuitable as a long-term solution, so if you have long-term needs, you should look at other options.

  • Banks vs. specialist lenders – which bridging loans are best?

    Both banks and specialist bridging loan companies can provide the bridging finance you need, meaning you need to compare products from a range of providers. You need to look at factors such as interest rates and arrangement fees.

  • Can bridging loans work for those who only need small amounts?

    Some bridging loan companies will lend up to £5 million if you have sufficient equity in your home, however, what if your borrowing needs are more modest? If you need a sum of £10,000, bridging loans can still be an option.

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