The smarter way to find Bridging Finance
What is bridging finance?
Bridging finance is a short-term option to help both start-ups and established SMEs bridge the gap that can exist between debt and payment.
It can provide your businesses with an, often substantial, amount of money for a short period. As the name suggests, it is intended to ‘bridge’ the gap between needing to pay for something and having available funds to do so.
Typically, such business finance is often more expensive than other types, particularly in the high rates of interest that it attracts.
Why choose bridging finance and what can your business use it for?
Businesses with highly seasonal sales may consider bridging finance to tide them over at times when revenue is low. Start-ups also use this form of finance to provide additional working capital that will help them speed the transition from a loss-making enterprise into a profitable one.
Bridging finance is also often used when purchasing commercial property or investing in high price tag assets. It can also be used for modernising and refurbishing existing premises.
Some businesses use bridging finance to refinance to longer-term debt to improve their financial position.
Where can you find a specialist bridging finance provider?
At Financer.co we can partner you with many bridging finance providers.
When you apply online for business finance with us, we match your needs with providers who understand your sector and have plenty of insight into the help that your business requires.
What else should you know about bridging finance?
There are two types of bridging finance. Closed bridging finance is when the provider knows the source of finance you will use to pay off the loan – and when these funds will be available. Open bridging finance is provided with no clearly stated exit strategy. For obvious reasons, higher interest rates apply to such financing.
Bridging funding typically is offered with repayment terms of between one and 18 months. The loan is repayable in full with accrued interest at the end of the term. There are no monthly repayments, making such financing attractive to businesses with limited cash flow.
Business bridging finance can be expected to be more expensive than other alternatives, particularly in terms of the interest rates that it attracts. It is also important to consider the arrangement and any other fees that are applied on top of this. Bridging finance tends to attract severe penalties for failure to repay at the end of the term – these are likely to be upwards of one per cent of the total loan value.
Bridging finance is usually quicker to arrange than traditional business finance options, with an application process of five to 15 days being the norm. You will need to use assets or other forms of security to arrange your financing.
Bridging finance is available from a number of providers who you can apply to online today.
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