There are many different types of finance and it can all become a little daunting at times trying to decifer which financial options are suited to different circumstances. Bridging finance is a form of short-term financing often used to literally 'bridge' the gap between loans. But why would you choose this type of finance over any other and who is it suited or even available to?
Bridging finance - how does it differ from other forms of finance?
Bridging finance is often selected for its flexible application and ease of access. Unlike other loans, where it can take weeks if not months to access large sums of money, bridging finance is different, it can often be accessed within 24 hours and can provide loans of hundreds of thousands of pounds.Also, unlike other loans, bridging finance is often leant based on the feasability of the proposed project for which the funds will be used and not the individual filling in the application. This can allow business' and entrepreneurs to access funds allowing them to make time sensitive purchases. So, in a nut-shell bridging finance is different to other loans because of its flexibility and accessibility.
Who makes use of bridging finance?
As mentioned above, it is often business-people that access bridging finance whether that's a landlord using the loan to purchase a new property or a restaurant looking to refurbish. Businesses are often in a better position to make use of bridging finance as they often have the ability to raise funds in the short to mid term by selling assets to repay the loan. So, for example - a landlord may have spotted a great investment opportunity but doesn't have the funds to buy the property outright yet a quick purchase is be essential to secure the property. They can apply for bridging finance to cover the deposit or the full value of the property plus any refurbishment. After rennovating the property and putting it on the market the landlord can recoupe the cost of the loan as well as any charges and still make a healthy profit. The main advantage the property developer has is that this all takes place in a number of weeks or months, not years. This allows them to use bridging finance as a short term solution. They also have the ability to raise funds to repay the loan which is essential when planning to use bridging finance as this is not suitable for anyone seeking a long term loan. Those which make use of bridging finance will either have secured a mortgage or other finance to repay the loan immediately.
What types of projects are suited to the use of bridging finance?
The great thing about bridging finance is its flexibility, there are in fact very few things bridging finance cannot be used for, but here are some of the common projects which can make use of bridging finance:
Purchasing new property for development or resale
Renovating a business premises
Buying a new business
Buying land for development
The 3 main benefits of using bridging finance
There are a number of advantages to using bridging finance but here are the 3 main benefits:
1. Flexibility - bridging finance can be applied to a wide range of projects from adding an extension to buying a property, from rennovationg a business to buying it outright. Where it can be difficult to convince your bank of the viability of a project and secure funds through a traditional loan, bridging finance can provide timely access to large sums of money for a diverse range of applications.
2. Accessibility - as already mentioned, a great feature of bridging finance is that it's loan is decided based on the feasability of the project and not necessarily the individual applying for it. So, if a landlord on face value looks like a bad investment due to a lack of cash flow and high asset invesments,they may be able to access bridging finance in order to release some of the wealth locked away in those assets. A bank would be much more likely to look at the person before the project.
3. Speed - traditional loans often take weeks to approve and longer still until the funds hit your account which is no good if your sale is time sensitive. Bridging finance can often be acquired and be in your account within 24hrs.
Where to get your bridging finance?
There are many providers of bridging finance, all have their own approval criteria and will lend differing amounts depending on their own security and wealth. If you want fast bridging finance try visiting www.faster-bridging-finance.co.uk.