From time to time, business owners need to take out short-term loans. In our experience, these are the most common reasons entrepreneurs will apply for a bridging loan
Sometimes a really good business opportunity will present itself at short notice. The process of obtaining a bank loan is a lengthy one and the finance required may take too much time to be approved, meaning a business person could lose out on the deal being offered. A bridging loan will enable them to take advantage of the opportunity, thanks to the speed in which approval is given and the finance released.
A bridging loan is also used by company owners to tide them over in times of short-term financial difficulties. It can either bridge a gap in cash flow caused by being forced to wait for a large payment to arrive or buy some time while longer-term arrangements are made with the banks or investors.
When a company outgrows its current premises, owners will be keen to move to a larger building as soon as possible. A bridging loan enables them to find somewhere suitable, refurbish it and move in with minimum disruption to business continuity. The bridging loan can easily be repaid once the old building has been sold.
Offices and retail premises that are old, shabby and down at heel do not inspire confidence and are likely to put paying customers off. Many entrepreneurs obtain bridging loans so they can refurbish their property, not only making it look better, but also adding value to the property. Once the refurbishment is complete, owners can then apply to remortgage their property thanks to the increased value of the premises.
Property developers of all sizes use bridging loans in order to get on with their renovations as soon as possible. The fewer delays, the sooner developers will be able to get a return on their investment before moving on to the next project. Alternatively, they use the property they are finishing renovating to arrange a bridging loan so they can buy the next property – with the greater purchasing power that buying with cash can afford.
For any more information with regards to applying for a bridging loan, please get in touch!