When many hear the terms 'bridging finance' and 'bridging loans', you might think of lending instruments which allow you to buy a new property before you've managed to sell the property you already own. However, while bridging finance can be used in that situation, it also has a range of other uses – and it can be a handy option for business owners looking for funding, especially short-term.
Bridging finance can be utilised to cover a funding gap on a short-term basis. It's designed for use while you're seeking a longer-term financial solution, completing a deal, or waiting for a specific issue to be resolved. This funding usually comes in the form of a secured loan, so you'll need to have assets to obtain it. However, there are a few unsecured options on the market.
Because bridging finance is usually required promptly, it tends to be quick to arrange. What's more, because it's only provided on a short-term basis, lenders often have flexible criteria in place. That means you could find it easier to secure a bridging loan than other types of finance.
Four ways business owners can use bridging finance solutions
If you own a business, you may want to consider using bridging finance to help you to:
1) Solve temporary cashflow problems
If you're struggling to keep your company running smoothly because you're waiting for payments from clients, for example, or there has been a seasonal drop in demand for your products, you could take out a bridging loan. If your company is in this situation regularly, however, it may be worth looking at a longer-term strategic solution as well, such as invoice finance.
2) Improve a building
Whether you want to renovate a building for use as a new shop, factory, office, or healthcare practice, you'll need funds to do it – and that's where a bridging loan can assist. This type of lending instrument can also be used to refurbish properties to let them out or sell them on.
3). Pay unexpected bills
However well organised you are, you can still get thrown off track if a bill or an unexpected cost you suddenly arrives. If you don't have the cash to hand to settle it, you could apply for a bridging loan. However, make sure you can afford to make your repayments on time.
4) Purchase a commercial property
A bridging loan takes less time to process than a commercial mortgage, so it can be the best solution when, for example, you want to buy a property at auction. If you're a property developer or a landlord, bridging finance could help you expand your portfolio when your capital is tied up elsewhere.
To find out more about bridging finance and discover whether it's the right option for you, contact us today for a free consultation. We can provide you with independent, tailor-made advice to help you reach the right decision.