Capital bridging finance is a short-term loan designed to assist companies that require cash flow. It has become an effective solution for covering working capital requirements or funding new property purchases.
Bridge loans offer businesses that require a short-term cash injection but may not qualify for more traditional lenders an alternative solution. Bridge loans typically are secured against property, assets or accounts receivable.
Flexible Criteria
Lenders need to have flexible criteria in order to provide bridging finance to clients. This means they will take into account a range of asset types as security, including residential property, commercial property and land.
Bridging lenders do not evaluate past performance; rather they consider how borrowers plan to repay the loan and use their funds. This allows them to provide funding in instances where traditional banks or high street lenders cannot assist.
They can be utilized for financing auction buying, development exits and property refurbishment projects, among other uses. Furthermore, they provide an immediate source of capital to borrowers who require immediate purchase, construction or renovation projects.
Bridging loans differ from conventional mortgages in that they do not need to be repaid until there is an exit strategy in place. This explains why many borrowers prefer bridging loans over long-term lending options.
Flexible Assets
Capital bridging finance often relies on flexible assets. This strategy offers investors a fast way to access capital – oftentimes quickly than anticipated – which makes it an attractive option for raising large amounts quickly.
No matter if you’re a homeowner looking to purchase a new home before selling your existing property, or an investor with a broken property chain who needs their loan approved quickly in order to avoid missing out, there are various reasons why people require short-term financing.
Businesses often enlist the assistance of capital bridging finance when they require funds for payroll, rent, utilities or inventory costs while waiting for long-term financing to be secured. These funds may be secured against equipment, unpaid invoices or projected future sales figures as well as equity in the business itself.
Property developers and investors often turn to this type of finance when purchasing or developing properties, as it offers them quick and convenient solutions that solve various problems quickly and conveniently. Plus, with large sums of money at their disposal, they can take advantage of opportunities before their competitors do.
Flexible Interest Rates
Are you in search of a flexible way to boost working capital, capital bridging finance could be the ideal solution. These short-term loans provide businesses with cash when they need it most – often at short notice and without any minimum cash flow requirements.
These loans can be secured against equipment, the value of unpaid invoices or projected future sales. Some specialist lenders even lend against equity in the business entity itself – including limited companies, LLP partnerships and SPVs.
The interest rates you’ll pay on a bridge loan vary depending on the lender. They tend to be higher than those for bank loans, yet provide an easy and fast source of finance.
Bridge loans are a popular way for businesses to obtain financing to cover overhead or purchase new assets while waiting for the sale of an existing asset. They’re even used in the IPO market to guarantee businesses have access to capital before going public.
Flexible Timescales
Bridging finance offers property developers and small to medium-sized enterprises (SMEs) a flexible solution in times of economic uncertainty. It enables them to carry out renovations, expand their portfolios or raise cash quickly in order to meet their business commitments.
Bridging loans are increasingly popular due to their speedy approval process. Sometimes completed within just a few days or hours, bridging loans provide those needing fast access to funding who need it urgently.
Capital bridging finance can also be utilized in other circumstances that necessitate quick, short-term borrowing. For instance, those looking to purchase a property at auction or with a broken property chain can arrange bridging financing to purchase their new residence quickly.
Bridging loans come with a range of interest rates. Some are charged monthly, while others can be rolled up or retained, giving borrowers flexibility when it comes to making interest repayments.
