Defining the Bridging Business Finance

As we understand what does the term, Bridging Finance mean, it would be possible to know the history of the term. The basic purpose of the bridging that we call as a bridge loan was to give cash for the short term to make a real estate transaction till the final finance is obtained. The Bridge loans are normally in us to bridge the cash gap while finalizing a business real estate transactions.

It is common knowledge that it is difficult to time up a sale of real property to match with purchase of yet another property, both would be two different transaction and at two different timings. The small delay is capable of creating havoc in the transactions and develops obstacles that would be impossible to overcome. While having to pay for two mortgages that could be for a residential or a commercial purpose, prolonging it for a longer period of time could create a financial devastation. Here the bridging finance would help.

The main purpose of the bridge loan is to solve this financial hang over so that a business transaction may proceed. In large number of situations, bridging finance gives further funding to a company to continue to pay for the lease on the existing business property of the company for the time period it is in the market.

There is a method to go follow for the approval of a bridge loan application. In case you have an existing good rapport and relationship with a financial or banking institution, it could be the best starting point to start the loan process. If you do not have such intimate relationship, you must start looking at it and to develop a lender with whom you feel you have a good comfort level. You should go through bridge loan prior approval process to find that for how much amount of loan you can qualify. Having a pre-approval in your hand, you could act fast for a desirable commercial property as and when it is available.

One oblivious need for getting a bridge loan is good collateral. Many applicants would be asked to give a security for the loan with any kind of important valuable collateral to back up the risks. The simple examples of collateral property are your heavy machinery, commercial equipment, process inventory, or any other commercially or residential property that you own in your name. The applicant can even provide the properties to be acquired in this process of purchase.

If there are problems with the credit history, with your business finances and your private finances, in this situation a healthy and robust relationship with the lender would always help while applying for the bridging loan. There could be situations where in bridge loans are approved only on signature and no collateral was found necessary, but that is the result of good understanding with the lender.

You might have problems in your good credit too; but you must be prepared to pay a little higher rate of interest on the short-term of bridge loan. Typically a one and half percentage or even more is possible. The maximum duration of a bridge loan is normally two years straight. The lender would like to make few dollars on this deal and this opportunity of a higher interest rate gives him that opportunity. Other things too are considered while deciding upon the rate of interest. The calculated risk perception of the applicant and the value of property being given as collateral property and duration of loan are important variables in this equation of calculating rate of interest.

Business lending organization those specialize in bridge loans, would extend help considering all the factors that are important and they would also offer their advice all the way. So there is nothing to be afraid of, you must shop around for a better interest rate and better terms to your advantage. The business lending market is always competitive you must use it to your advantage. You should choose to do your business with a lender who would work with you and not against you.

The Business Bridging Loans Brightens up your Business:

You need an office of your own, your own factory, your own industrial unit and some other business property which you need to purchase for advancement of your business interests. This demands huge funds that of course can not be borne from your own pocket and so you have to make a sale on one of your old property to raise finance. While selling an old property might take some time. You need cash during that period. The solution lies in business bridging loans.

Business bridge loans are provided for buying a business property. That is called business bridge loan as the loan is offered to bridge over the borrowers need while he is selling his existing property and plans to pay out entire loan from sale money. In the mean time the borrowed amount is used for buying the commercial property. The main feature of a business bridge loan is that the money taken as loan is immediately available to the loan seeker and also there is minimum loan burden on the borrower. This is because the borrower pays only interest till he finally pays off the loan. No monthly installments are involved.

How much can be borrowed It depends on the value of the property the borrower intends to sell. Lenders generally offer up to 65 percent of the value of property. Normally repayment period is not extending to longer period because it is assumed that the sale of the property would take only few weeks only to sell his property. The loan period extends from two week to six months as per situation of the borrower.

The Business bridging loan is passed very fast to facilitate purchase of the new property. The loan reaches the borrower within two working days of the application. The procedure of loan is also simple. You may even choose an online applying mode. All lenders are given an online loan application wherein you fill up the required information. Just upload the application to reach the lender, on his verification all information provided in the application the loan is sanctioned and disbursed.