Bridge loans have long been a great option to business looking to temporarily free equity that is held in existing property or assets. By utilizing a bridge loan, many business are able to buy additional property quickly, without having to worry about selling their existing property. Borrowers will use bridging finance like this to fulfill the temporary financial gaps, such as when they are awaiting large invoices to be paid, or awaiting longer term finance options like a bank loan or mortgage.
Commercial bridge loans are a short-term finance solution, which as the name suggests, are used to ‘bridge the gap’ before a more secure, longer-term means of finance can be finalized. These types of bridge loans were used in property purchases that were time critical and involved a chain, meaning that an existing property needed to be sold to fund the acquisition of the new one. By taking out a bridging loan, the borrower could secure the funds temporarily against the capital held in the existing property allowing them to complete the new sale and await a buyer for the existing property. This also meant that the borrower could hold off on the sale until reasonable off came in, as opposed to having to lower their asking price or accept below market offers.
The success of any good business will depend on how they look to expand their services. Most entrepreneurs or businesses will always be looking for the next new project or service to bolster their business. Having the liquid funds available is a critical part of this process, as without the funds to jump at an opportunity, the next success story of the business could be missed. By making use of commercial bridge loans you can launch new services, stay one step ahead of the competition and take your business into the next level.
Private Bridge Loans are a short-term and temporary funding option. These are intended to be used to as a temporary gap where a debt is due and used when purchasing the property. This is where the term ‘bridge’ comes from, as the loan is effectively ‘bridging’ the gap in finance for a short period until a main line of credit is available. They can also act as a short term stop gap for general loans as well, generally where pressing circumstances occur.