With so many options to choose from when financing a home, it comes as no surprise that consumers are often confused about the merits of one financial product over another. One of the products growing in popularity amongst many businesses today is a bridging loan. A buyer may take a bridge loan to pay for a home before selling their existing premises to raise the finances needed for a down payment. Although bridge loans have a high risk, they are very popular with users in real estate market deals.
A bridge loan is a short-term loan taken by businesses when they want to quickly finance the purchase of a property. The main reason to take a bridge loan is to narrow the gap between finances, allowing a financial transaction to take place smoothly.
The bridge loan is repaid once the firm finds a more permanent form of financing. In essence, the loan acts as a bridge to get you from one place to another.
You can secure a bridge loan by using your existing property; businesses may use this loan for a range of purposes other than purchasing a new property. Because bridge loans are short-term loans, they may have high-interest rates, but you can speak to different lenders for flexible repayment plans.
The following reasons describe why a business may opt for a bridging loan:
Immediate Access To Cash:
One of the benefits of a bridging loan is that it’s arranged faster than other traditional forms of finance. A bridging loan can allow you to have access to cash in as little as 24-48 hours, allowing you to make emergency purchases.
It’s Easy To Borrow:
Bridge loans are a form of asset-based lending, which means you won’t have to go through the typical method of providing your credit score, lending history, financial documents, and more to get it approved. Instead, the loan is secured against a valuable asset, usually a property.
There Are No Hidden Fees:
While bridge financing has high interest rates, you can control the impact it has on your financial position since you’ll be expected to pay it back in a few weeks or months. Moreover, the loan is designed to be accessible and affordable, with most lenders giving you flexible repayment options.
It Has A Lot Of Potential:
Historically, bridge loans were used for property purchases. Still, today they can be used for renovation projects, auction buying, solving short-term cash flow issues, preventing repossession of property, and much more.
Looking for alternative financing options for your business? Global Capital Partners Fund is an asset-based lending firm specializing in various lending programs to help you and your growing business. Visit their website to learn more.