Otherwise Bridging Finance May Turn Out To Be Quite Expensive

Category: Finance.

Expansion is a step that should come naturally in any business that is successful. But it often happens that the entrepreneur lacks the necessary finance to take his or her business to the next level and reach a wider network of consumers.

Some business owners even think of expansion as absolutely necessary and strive to make it happen. If temporary cash shortfall is your problem, bridging finance is the best solution. In fact, bridging finance is typically used for business and commerce. Bridging finance can be granted for many types of properties, such as commercial properties, farms, land, etc. Bridging loans are the ideal solution when you need instant capital for the purchase of a commercial property. Bridging finance also comes with the advantage that it can be approved fast and easily. They are short- term loans and their repayment period is usually up to two years.

Furthermore, unlike other loans that entrepreneurs can take out in order to purchase a commercial property and expand their business, the availability of bridging finance is normally not affected by bad credit records or arrears, as this type of loan is secured and short term. Speed is probably the greatest advantage that bridging finance brings, and we all know that time can be critical in business when you are looking to close a very important deal. Bridging finance is a relatively new solution for business developers, but one that has been embraced very quickly by many due to its numerous advantages. This type of loan enables you to get a hold of the finance you need to purchase a second commercial property. The ideal situation is that you already have a proposed buyer for your existing commercial property, as well as an exchange of contracts. Considering bridging finance is only advisable when you are absolutely sure that your existing property will be sold within a certain time frame.

Otherwise bridging finance may turn out to be quite expensive. The financial institution that acts as the lender takes on more risks with a bridging loan than they would take with a commercial loan, which explains the higher rates, as well as your obligation to repay them in a shorter period of time. Therefore, before opting for a bridging loan, you have to consider all the aspects and do your sums properly, because in spite of its attractiveness as a short- term arrangement and the prospect of quick capital, bridging finance generally comes with higher rates. If you wish to purchase a commercial property, bridging loans will place you on a stronger negotiating position, whilst dismissing the possible need to sell your existing property or other assets. It is highly advisable that you consult with an independent financial adviser, who can discuss your options with you and provide you with all the information you need before making a choice. Bridging loans are generally available for the purchase of commercial properties such as an office complex, professional practices, leisure facilities, industrial facilities, commercial and residential development, retail and licensed premises, or buying property at an auction.

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