If a business wants to grow, securing the right funding is crucial. Out of many financing options, commercial bridging loans are notable because they are both fast and flexible. However, these loans are not ideal for every circumstance.
Knowing when to choose a commercial bridging loan over other options in the UK is important for informed financial decisions. Read the article below for more information.
Available Alternative Financing Options best suited for Business
Long term loans in the UK of this nature tend to have a fixed interest rate along with structured repayment schedules. Best suited for established businesses with a stable credit history.
- As opposed to term loans, lines of credit are flexible borrowing options where businesses can draw money as needed, subject to a preset credit limit. Interest on a line of credit is charged only on the amount utilised, in other words, not the whole amount.
- Invoice financing refers to an advance payment on client invoices to help shore up cash flow instantly, rather than waiting for clients’ payments.
- This method involves selling shares of the business to an investor in exchange for money and, as such, is best suited for startups or high-growth companies.
Reasons for choosing a Commercial Bridging Loan
1. Speed
Getting a commercial bridging loan in the UK is particularly advantageous because of its rapid availability. Most loans have a slow approval process, which encompasses credit scoring and lots of documents being filed.
There is a lot of paperwork that goes into capturing an opportunity, which can take multiple days. Bridging loans, on the contrary, can be set up very quickly, sometimes in as little as 48 hours. This speed is crucial for securing a property deal and other timely expenses.
2. Short-Term Loan Gaps
These loans are specifically designed to capture short gaps in funding and generally last from a few weeks to one year. If the need for cash flow is highly pre-emptive, like waiting for a property’s sale proceeds or the approval of secured loans, bridging loans become a suitable option as these loans help meet temporary cash flow needs without opening long-term financial commitments.
3. Easy Approval Conditions
Bridging loans tend to have easier terms than a bank loan. Businesses with bad credit history, along with multi-faceted income structure and non-traditional assets, might find it easier to gain approval. This kind of help allows business turnaround specialists to assist companies in need of structural improvement.
4. Commercial Real Estate Buying, Selling, and Remodelling.
Bridging loans come in handy for businesses purchasing, selling, or renovating commercial real estate. The loans make it easier for borrowers as they do not have to worry about slow approval phases and thus helping them take full advantage of market opportunities.
Conclusion
Choosing the right financing option in the UK depends on your business’s unique situation. Commercial bridging loans shine when speed, flexibility, and short-term solutions are paramount. When used strategically, commercial bridging loans can provide the financial agility your business needs to seise opportunities and navigate transitions smoothly.