To make a difference means to spark significant change and such has been the case thanks to commercial bridging loans. This interim financing method has allowed opportunities to be grabbed, emergencies to be solved and needs to be provided for. It’s one of those financing methods that we’re glad came into existence.
But what really makes bridging loans quite a monumental and groundbreaking innovation? We asked five entrepreneurs on how it made a difference for them and here’s what they had to say.
“The factory was busy trying to reach the day’s quota to meet production needs when one of the machines broke down. We had to either purchase a number of parts to fix it or buy a new one. The company has been retaining part of our earnings for new equipment but it’s not yet enough, at least not until we finish this order. The equipments at the factory are worn out and have exceeded their useful lives and if we were to be practical, it would make more sense to get new and better ones. Getting a bridge loan saved us that week. It provided us enough cash to complete the down payment for the new machines and we were back on track.” — Ben, Leather Goods Manufacturer
“We were waiting for our mortgage when another buyer came to look at the commercial space we wanted to purchase. Since we didn’t have the cash to make a down payment yet or even a security deposit, we were on edge that someone would get to buy our dream location. After all, we can’t blame them since it was a great deal and location was spot on. Through a bridge, we managed to get enough funding for a security deposit which bought us enough time until our mortgage arrived. ” — Toni, Restaurant Owner
“Bridging loans helped us a good lot. Since most financing options are out of our reach during the initial stages of business, we couldn’t get our hands on any funds to help us purchase necessary assets. When we finally did, so much time has passed and we were losing opportunities. That and we still had to wait further for the scheduled cash release. Luckily, a friend advised us about bridging loans and how it can help us fund for short-term liquidity needs and it did.”— Troy, Startup Founder
When it comes to choosing a type of financing, one has to carefully screen and scrutinize each option to determine which one best complements one’s needs and which is a better fit for a certain scenario. We can’t just pick in random or else we’d be in trouble for sure. That said we’re here to help you understand said options better starting off with bridging loans.
Now to most people, the term bridging loans may sound a little foreign or new. They’ve been around for a while now but not many are aware of the possibilities and opportunities they bring. To begin with, they are a type of interim financing that provides for a temporary borrowing to fulfill short term liquidity needs. In other words, bridging loans are taken out pending the arrangement of a long term and often bigger fun line such as but are not limited to bank loans, mortgages, proceeds from sale and salary to name a few.
They are taken out in order to provide for pre-purchase costs or requirements that are necessary for the fulfillment of a particular transaction, for instance the acquisition of equipment or real estate. The most common examples would be down payment, security deposit, research costs and professional fees. Sometimes a bridge may also be utilized to pay for the first few initial installments of a purchase.
What’s great about this interim financing option is that it is not only faster to process but it is also nonrestrictive in nature. This means that providers, at least a good majority of them, allow users or borrowers to utilize and allocate the funds from the bridging loan in whichever way they deem fit. Users get the liberty when it comes to the budget and the use of such resources.
Moreover, its short term nature allows for its effectivity because the period, often between two weeks to three years at most, allows leaser risks and strain when we talk about the burden of payment. Most providers and forms of bridging loans also allow users to choose between two payment options. The first is where borrowers get to pay off the bridge prior to its maturity thus saving up on interest costs while the second allows payment at maturity date which is likewise the time by which one’s long term financing or source of funds has come through and shall therefore be used in part to close the interim loan.
Check out http://www.alternativebridging.co.uk/development/
Don’t we all just love perks? Who doesn’t anyway? It’s no surprise that people would always gravitate to things that would add value to their plate. It’s a primal instinct. We do away with danger and cling to what’s comfortable and advantageous. The same is true when it comes to the business of real estate. Whether you’re in it for the profit or for personal reasons, it’s something we’re bound to come across at least once in our lifetime. Speaking of which, have you ever wondered who benefits from bridging loans?
Also known as bridging loans, this form of short term finance acts on the interim. This means that it serves as a connection between immediate needs and the main means of funding. In majority of cases, it is used to provide for pre-purchase costs necessary to make the acquisition possible such as research expenses, professional fees, security deposit and down payment to name a few.
Because real estate purchases cost quite a lot, investors need ample time to gather their financial resources. But because the market is highly competitive, it puts a lot of people at a disadvantage especially when their main source is not yet ready and the asset they’re eyeing on is also of interest to others. By now, we all probably know that the first buyer who drops the security deposit and down payment almost always gets the property. Now with such type of financing, who gets the most benefit?
Investors/Landlords – For the business-minded who engage in the trade and/or leasing of properties, it becomes a stepping stone. Investors and landlords would want to expand and improve their investment portfolios and this is a tool used in its accomplishment. Surely they’d want the best assets but the prime ones are always at a competitive edge with everyone wanting to grab hold. With property bridging finance, investors and landlords get the chance to reach the finish line first even if their credit application or resource pooling is still being processed.
Residents – A lot of individuals and families buy their homes by putting the current up for sale or applying for some type of credit like a bank loan or a mortgage. Both instances take a lot of time which can hamper the moving process and become a disadvantage. To hasten things up and be able to provide for the upfront costs, bridging loans are used. Once the sale of the current asset is closed or the credit has been approved, they are then used to pay for the bridge as well as the remaining balance of the property.
Businesses – Others make use of a bridging loan to acquire assets for their business operations. Such is the case for a good majority of companies. Because time is of the essence and waiting isn’t exactly an option, it becomes a means to quicken the pace. More on loans at http://www.alternativebridging.co.uk.