Although the recession may have officially ended; the economy is still struggling to relax and the strain is evident across the faces of bankers and business owners everywhere. With lending criteria still at its strictest level; small and medium businesses are continuing to face financial rejection leaving many wondering if the chance to obtain vital business funding is even possible?
Whether a small, medium or large corporation; with the support and assistance of a specialist commercial mortgage broker a bridging loan may be the ideal business finance solution.
What is a Bridging Loan?
A bridging loan is a form of finance, designed to provide short term assistance for those urgent and unexpected situations.
Whether the requirement is for residential or commercial finance; a bridging loan is commonly used for property deals and is agreed for between one to twelve months.
There is no restriction in to just how what a bridging loan may assist with however the common purposes may often include one of the following:
- To complete the purchase of a property at auction
- To complete the purchase of one property whilst awaiting for the sale of another
- To complete the purchase of land
- To assist with unexpected cash flow situations
- To assist with development finance
- To assist with refinancing
Whatever your personal situation; a bridging loan is designed to provide swift financial aid and, dependent upon the commercial broker you may choose to work with, the borrowed sum can often be secured within three working days making it the ideal form of business lending, in effect ?bridging the financial gap?.
Public Sector Net Debt As A Percentage Of GDP
How Can I Be Sure a Bridging Loan Is Right For Me
For many, bridging finance may be considered the ?last resort? following continuous rejection over banking loans however, as a short term form of lending; a bridging loan is not without its risks which is why, when considering such finance you must ask yourself; is a bridging loan right for me?
A bridging loan may be the only way for you to keep your finances on track, save you from losing money and reduce the stress and hassle that financial worries can quite easily bring and if a short term loan can sufficiently tide you over then it could be the ideal solution for you. However you must be 100% sure that you will be able to pay back the borrowed sum within the agreed, small time frame, failure to do so will result in a loss in equity.
A specialist broker service can provide a bridging loan where banks fail to assist and can secure the desired sum (the exact amount will be dependent upon your specific needs and the lender) and many may even, at the end of payment, possibly transfer your loan into a steady commercial mortgage agreement.
NB. As a form of short term lending, a bridging loan will commonly have high interest rates.
Bridging Loan Types
A bridging loan may often be split into two categories:
Open Bridging Loan- Commonly used for residential purposes, an open bridging loan can assist with the purchase of a new property before the sale of a previous property has begun. This loan type is deemed risky, particularly within the struggling market.
Closed Bridging Loan-A closed bridging loan is the less riskier option and is taken out with a guaranteed exit date in place i.e. the completion of a property sale.
Bridging Loan Requirements
No form of financial lending is an easy option with an easy process however a bridging loan is often considered the riskiest form of lending on the market which is why; during the application process borrowers will be asked a number of questions and be expected to provide an array of documentation.
The requirements may often include:
- Proof an existing property is on sale
- The mortgage agreement of the property wished to be secured/Property valuation
- Business and personal income information
- Information regarding assets
- Information regarding any existing financial obligations
When applying for a bridging loan it is vital to ensure that all information provided is as clear and accurate as possible.
What Do I Need to Do?
If you feel that a bridging loan is ideal lending for your needs, then why not consider contacting a commercial finance specialist? An experienced finance broker will be able to assist with whatever your needs and situation may be. Whether you have previously faced rejection at the hands of high street lenders or not; the right mortgage broker will be able to assist in ensuring all your needs are taken care off.
By analysing your commercial and personal financial history, income levels and taking any equity into account; a commercial finance broker may be able to secure a bridging loan within a matter of days.
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Source: http://www.charlestonfinancial.co.uk/bridging-loans-an-introduction/
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