Bridging Finance is one of the Handy Options for Getting the Capital Your Business Needs.
Whether you are looking for a loan to expand your business or purchase some new equipment, bridging finance for business use is a great option. You can manage your cash flow during this time with the help of bridging funds. Bridging funding or loans is one of the most helpful ways to get cash in hand when you need it the most. You can apply for a bridging loan for terms from 1 month to 12 months. Bridging finance requires an exit strategy, this could be sale of the property offered as security or refinancing to a longer term more traditional loan.
Various Types of Bridging Loans
Below we have mentioned various types of bridging funds available for the borrowers.
● Capitalised Bridging loans
Capitalised bridging funding is when all the fees and interest associated with the loan is added to the loan amount needed, there are no monthly payments required for this type of funding as you repay the original loan amount plus the costs at the end of the term. The terms for this type of funding is 1 – 6 months and they are great for managing cash flow.
● Interest Only Bridging Loans
Interest only loans have a 12 month term, for the term of the loan you will be required to make monthly interest only repayments and then repay the principal sum at the end of the 12 months. This funding is great for anyone looking for longer terms than the capitalised loan, businesses need to have at least 6 months trading to qualify for this type of funding.
How to know if Bridging Funding is appropriate for you?
Bridging funding allows the borrower move forward with their business plans whilst waiting for their exit strategy to occur. It allows you to gain access to funds for your business quickly with minimal hassle. Some points to consider are:
● Can you afford the bridging funds?
● Can you make repayments for both the bridging loans and the current ones?
● For how much time will you need the loan?
● How much time your current home might need to get sold if this is the exit?
Advantages of Bridging Finance
● It is a quick and easy way to access funding for your business using the available equity currently held in your real estate assets.
● You can choose to pay only the interest rate for the new bridging loan and principal amount later.
● You do not have make monthly interest payments as costs can be capitalised.
Eligibility Criteria for a Bridging Loan
Loans One has to ensure that you can handle the additional stress of bridging finance. Thus to apply for this funding, you should have:
● Planned exit strategy
Bridging loans require an exit strategy as they are only short-term loans. This can be selling a house, refinancing or expected business income. These following details will lower the bridging finance risk.
● Financial affordability and stability
It is necessary to know if you can handle all the financial responsibilities, including loan amount required. Since it can become difficutl to pay both the mortgages simultaneously, Loans One team will examine your risk profile. It includes existing mortgage obligations, income, personal debts, and many more.
● Enough Savings
Sometimes lenders also wish to check out if the borrower has sufficient turnover in their business bank account to meet the monthly commitments. It will help them meet all the obligations as they have to make two loan repayments simultaneously.
● The realistic selling price of the property
Selling your property as an exit strategy is a great way to repay bridging finance. However, always look to sell for a realistic price to ensure that the commitments can be met within the terms of the loan.
So if you need financial help and information regarding bridging finance, then talk to our experts over the phone or chat with them online.
Call us now at 09 888 5252 to learn more about our secured short-term business loans. You may also drop us a message via our contact page, and we’ll get back to your enquiry as soon as possible.