Whether your business goal is to purchase property, acquire new equipment or smooth cashflow gaps, being able to receive funds can make all the difference. Fortunately, a versatile short-term business finance solution that can help you achieve your goals is Bridging Finance.
Each lender will have its own list of eligibility criteria if you want to take out a bridging loan.
The main requirement for bridging finance is a valuable asset, such as property, to secure against the loan. Because you are providing this asset as collateral, it matters less if you have a bad credit rating than it does for other types of loans.
That said, you will still be subject to detailed checks to determine your eligibility.
Bridging loans are typically 12-month agreements, though, in some circumstances, they can be extended across terms of up to 3 years. They are secured loans that use either residential or commercial property or land as collateral. As such, depending on your available equity, a bridging loan could allow you to borrow the total purchase or forecasted project cost.
However, lenders will require an upfront deposit from you equal to 20-30% of the total purchase, renovation or development cost.
When applying for a bridging loan there are two types of agreements to
When using bridging finance it is vital to plan your exit strategy. This has to cover both repaying the money borrowed and the interest charged.
Because Bridging Loan lenders offer three repayment options.
This method lets you pay back the interest at the end of each month until you repay the full loan.
Rolled-up interest is applied to the balance owed each month. Instead of making monthly interest payments, you repay the total balance of the loan plus all applied interest at the end of the term.
With retained interest lenders calculate the total amount of interest your business will be charged throughout the agreement. This is deducted from the loan amount from the start agreement. If any of the interest retained hasn’t been used, some lenders may reimburse you with a portion of these funds.
In the meantime, regardless of which option you choose, you will need to arrange another finance solution – e.g. a mortgage – that will come into effect once your bridging loan has been repaid. Alternatively, the property can be sold.
Key advantages of bridging loans are:
When using bridging finance it is vital to plan your exit strategy. This has to cover both repaying the money borrowed and the interest charged.
Because Bridging Loan lenders offer three repayment options.
"It gave us fast access to funds when the timing was critical for our project." - CFO
"The process was quick and flexible, perfect for our short-term needs." - Property investor
"Bridging finance helped us secure a larger site while selling our old one, futureproofing our operations." - CEO
“Tony was very helpful and polite from day one. We did a bridge loan and everything went very smoothly, especially with great communication in these difficult COVID-19 times. Great pleasure working with him and I'll always recommend him in the future.”
At Risecap, we know exactly what lenders look for when assessing your business for bridging finance. We’ll help present a clear picture of your financial situation and property portfolio that meets lenders’ criteria. Plus, we’ll ensure you apply for the optimal amount, terms, and interest rates for your needs.
Although requirements vary between bridging loan companies, some of the documentation lenders will expect will include:
At Risecap, our mission is to help UK businesses raise the funds they need to rise and achieve more than they thought possible!
We aim to support your vision and financial goals by taking the time to really understand you, and tailoring business funding around your specific needs. We prioritise your financial empowerment over selling financing, providing free unbiased guidance and bespoke financing options that you can’t find on the high street.
So whether you want to apply for Bridging Finance or explore other business funding options, speak with one of our expert team members today!
25 Green Street, Mayfair, London, W1K 7AX
Risecap Ltd (Company no. 11203916) Data Protection Number ZA553906. The registered address is 3rd Floor, 86-90 Paul Street, London EC2A 4NE. Risecap is a credit broker and not a lender.
We will receive commission from lenders. Different lenders pay different amounts depending on different commission models. For transparency we work with the following commission models: fixed fee, fixed rate of commission, percentage of the amount you borrow. In some circumstances, we do not receive any commission or fee from the lender, we will detail the commission or fee scenario throughout your customer journey
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25 Green Street London W1K 7AX
Risecap Ltd Data Protection Number ZA553906. The registered address is 85 Great Portland Street, London, England, W1W 7LT. Risecap is a credit broker and not a lender.
Copyright © 2022 Risecap. All rights reserved.
