When is the best time to think about Bridging Loans?Published on 21st May 2018 - Last update on 8th January 2019
In order to thrive in your chosen sector you must be able to embrace change, and sometimes very quickly. Growth, expansion and innovation have always been essential ingredients for a sustainable future. Yet regardless of whether you run an established company or an emerging SME, pushing ahead with your vision can be a tall order. Although applying for finance from your bank may seem like the obvious solution, you could be left waiting for decisions with no guarantee of success. This could be time you simply don’t have. However, depending on the complexity of your request, with Bridging Finance you could receive essential funds in as little as 48 hours. As a means of quickly gaining access to a large lump sum for your business, when is the best time to think about using Bridging Finance and why would you choose this product in particular?
What is a Bridging Loan?
A Bridging Loan is a short-term business finance solution typically secured against property and land that you either wish to purchase, renovate or refinance. Bridging Loans allow you to acquire up to 80% of the funds you require, or possibly more. However, funding amounts typically start from upwards of £10,000, depending on your current circumstances. Because Bridging Loans work around a percentage, there is no maximum limit to what you can borrow. That said, lenders may impose their own restriction according to how much they’re willing, or able, to lend. Although traditionally considered as a means of raising funding to help purchase property, their application can also benefit other areas of your business.
What can I use a Bridging Loan for?
Bridging Loans can be used for a variety of purposes in regards to property-specific goals. As well as providing assistance when purchasing real estate, Bridging Loans can also support renovations and refurbishments. As such, this makes this form of finance suitable for a wide range of sectors where having a permanent address or being in close proximity to your customers is crucial. The sectors that could benefit most from this type of funding include catering, manufacturing, retail and construction. However, because Bridging Loans carry a high interest rate, they aren’t considered appropriate if you’re looking for a long-term finance solution.
When should I apply for a Bridging Loan for my business?
Bridging Loan terms typically last 6-12 months, although unregulated lenders could extend the agreement further to around 18 months. Thus, this type of finance is ideal if you’ve agreed a set, or estimated, completion date for the purchase or redevelopment of a property. The reason for this is that Bridging Loans require you to have the agreement fully repaid by a specific date, or within an agreed term, depending on whether you’ve chosen a Closed or Open Bridge product.
Although Bridging Loans allows you to deal with interest in 3 different ways (pay monthly, rolled-up-interest or retained interest), you also need to strike an appropriate balance in regards to the timing of the final repayment. Remember, Bridging Loans possess a high rate of interest, so you need to strike an appropriate balance between the length of the term and when the final payment needs to be made. You need to make sure that you have enough time to gather the necessary funds, but don’t delay the date or period of the final payment further than necessary as this will result in your business paying more interest in the long-run. However, if you’re still not sure if a Bridging Loan is quite right for you, you could explore if a Commercial Mortgage could be more appropriate for achieving your goals.
Need a lump sum for your business at short notice?
Providing your business with all the funds it needs to grow and expand into a sustainable future can be frustrating. Sometimes, you may even need the cash sooner than what you initially thought, putting you in a difficult position. Whether you’re looking to relocate, renovate, resolve cash flow issues or even pay down existing debts, the cash demand from your business can sometimes be too much to bear. Although you may consider paying a visit to your local bank, you could be left waiting weeks for a decision, leaving your business’ finances stranded in the meantime. This where Bridging Finance can help. With a Bridging Loan, you could acquire up to 80% of the expenditure or project costs you’re looking to subsidise, often in as little as 48 hours of applying. So if you’re looking for cash support in order to achieve your goals, apply for Bridging Finance today, or find out more with Rangewell.
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