Finance · 29 August 2019

Everything you need to know about bridging loans for business owners

British businesses in need of short-term funding for important projects are increasingly turning to bridging loans. Attracted by record-low bridging loan rates and flexible borrowing terms, the popularity of the commercial bridging loan is growing at record pace.

Back in 2011, total annual bridging loan transactions in the UK was believed to have reached approximately 750 million. By 2016, this had increased to more than 4 billion and is still accelerating quickly. Demand for these dynamic short-term loans has been met by an equally fast-growing market of lenders, now populated by numerous independent bridging specialists.

But in what way does the appeal of a bridging loan outstrip more conventional lending options? More importantly, in what instances is a bridging loan preferable to and more affordable than a traditional loan?

How bridging finance works

Bridging finance is a form of ultra-short-term finance, often used to make purchases and meet payment obligations where there are strict deadlines in place. The idea is that you bridge? a financial gap as quickly and conveniently as possible, subsequently repaying the loan within a matter of months.

Typically, bridging loans are available from as little as 10, 000 and often with no upper limits whatsoever. The funds can be made available within a matter of days, irrespective of the loan amount and its intended purpose.

For example, you could apply to borrow 500, 000 at the start of the week to purchase a property at auction, receive the funds by the end of the week and pay for the property outright. After which, the loan is repaid within a few months (rarely more than 36 months) in one lump sum payment or lump sum payments on or before an agreed date. With bridging loan rates starting below 0.5% per month, repaying bridging loans as quickly as possible adds up to outstanding value for money.

Best of all, eligibility can be established primarily (or exclusively) on the basis of collateral. This can be particularly useful for business owners, who have difficulty in proving traditional income but for whom access to appropriate assets isnt usually an issue. Commercial properties or on occasions even vehicles and valuable assets can be used as collateral to secure a bridging loan. Even with a poor credit history, there’s every chance you could still qualify for bridging finance.

Popular bridging loan applications for business owners

Weve established the flexibility and accessibility of bridging loans, but why would you want one? What kind of everyday (or occasional) scenarios could call for this kind of short-term cash injection?


 
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ABOUT THE EXPERT

Craig Upton supports UK businesses by increasing sales growth using various revenue streams online. Creating strategic partnerships and keen focus to detail, Craig equips websites with the right tools to increase traffic. Craig is also the CEO of iCONQUER, a UK based company and has been working in the digital marketing arena for over a decade. A trusted SEO consultant and trainer, Craig has worked with British brands such as FT.com, DJKit, UK Property Finance, Serimax and also supported UK doctors, solicitors, builders, jewellers, to mention a few, gain more exposure online. Craig has gained a wealth of knowledge within the digital marketing space and is committed to creating new opportunities working with UK companies.

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