6 Key Factors to Consider for a Commercial Bridging Loan

A business owner cannot ignore any financial issues for long. Failure to find a quick solution will allow the problem to spiral out of control. Even worse this it might result in downsizing the company, loss of staff or lead to bankruptcy.

A strong cash flow is essential, if you want to have the necessary funds at any given time to complete a transaction. When the worse does happen, commercial bridging loans are the ideal financial tool to help your business operate smoothly. Any funding gaps between transactions and cash flow issues can be solved with the use of bridging finance.

Here are 6 key factors that you need understand about commercial bridging loans.

1. Purpose of the loan

First of you need to know when such loans are truly needed. Some of the main circumstances that might demand a bridge loan include:

  • Launching a business startup
  • Paying back creditors
  • Expanding a business
  • Fixing cash flow problems
  • Purchasing more office space
  • Buying commercial property or shops

Remember a bridging loan isn’t limited to only commercial use by companies. Any individual can take advantage of such a loan for their personal use. For example when you are looking to purchase a new home and need some funds to cover your costs until you sell your current property.

2. Amount to be borrowed

These loans can be very flexible, particularly when it comes to borrowing amount. Usually the low end of the scale starts at around 20 thousand pounds, and this can go all the way up to several million for very large transactions.

The exact amount that you will be eligible for will be determined by the valuation of the collateral you put forward. This is usually a property you own equity in that is used to reduce the risks of handing out the loan for the lender. The ability to scale up or down to meet the needs of the individual borrower is one of the greatest benefits of this type of loan.

3. Type of Collateral

As mentioned you will need to put forward an asset you own as collateral. The most common form is property. This could be anything from residential, semi-commercial or commercial property, as well as retail shops, land to development sites.

4. Waiting Time

This type of borrowing is a short term loan, and as the name implies not only is the overall loan term short, but also the waiting period. Once the application is completed and sent you can have the required money in your account in a matter of days. Even very large amounts can often be transferred within 48 hours when required.

5. Rate of Interest

A very important consideration is the higher than average interest rates associated with these short term loans. It has to be financially viable for you to take out a high rate loan and be able to pay back the full amount in time.

6. The Loan Provider

Finally you need to decide on the source of the loan. You could check with the high street lenders to see their offers, but these days many people are turning to specialised online sites dedicated to offering the best deals. We are one of the premier UK lenders focused on all forms of short term secured loans, Click here to check out your debt consolidation options.

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