Bridging Loan (SME)
A type of short-term loan or known as interim financing, typically taken out for a period of 2 weeks to 3 years while pending the arrangement of larger or longer-term financing.
Bridge loans are mostly used to allow borrower to immediate cash while waiting for the disbursement from a longer-term loan.
Let's talk benefits
Short or no waiting time
We know time is precious to you, so you get to enjoy immediate service.
Flexibility to repayment - borrowers can choose to repay the bridge loan before the permanent financing is secure or after.
How do they compare to regular term loans?
In theory, they differ because they are for a specific short-term purpose, whereas term loans often have more general commercial purposes. In real life, the speed of getting the cash in your account is the main difference. It can take weeks for some lenders to complete a term loan, but a bridging loan can be approved faster.
What can I use bridging finance for?
Like a consumer payday loan, a business bridging loan can help you get cash fast to meet urgent expenses.
Bridging loans are available to businesses looking to utilize a temporary loan while waiting for more long-term capital to fund their next move. Without a bridging loan, it can be difficult to progress and grow as a company.
You can also use bridging finance for other short-term commercial purposes if you have a clear exit in place — although it depends what appetite the lender has for your plans. Exit here meant how you are going to either clear the bridging loan in full (with the interest costs) or move it onto a more permanent type of finance, like a term mortgage.
Bridging loans can sometimes be used in other commercial areas where a short-term temporary loan may be required. This is providing there is a clear 'exit' from the loan.
Is a bridge loan right for you?
There is much to consider before deciding whether to secure a bridge loan. Typically, the company is expected to have great credit, a low debt-to-income ratio and equity of at least 20%.
Look out for any early payment penalties and hidden fees and consider the payoff time offered to you. Some lenders allow more flexibility while others demand immediate payment. For instance, you might be required to make monthly payments, or to pay up-front or back-end lump sum interest payments.
You will want to consider the risks at every angle. If your plan of refinancing is not secure or has the potential to fall through, you might want to check out for more traditional loans, like personal or other business loans.
Finally, only you know what is right for your business and what level of risks you are comfortable. If you think a bridge loan is right for you, contact BizBridge and prepare to apply the loan.