In an article produced for BusinessMoneyFacts, we discuss how bridging finance can be a solution for businesses wanting to bounce back and take advantage of new opportunities.
When the country went into a sudden lockdown during March 2020, it felt like almost everything stopped overnight. There was a huge change for businesses and a new way of operating and working posed a great deal of uncertainty. Many businesses have struggled greatly in the last year, some not surviving the storm.
Businesses had to respond quickly and discover new ways of working last year. However, as lockdown restrictions ease throughout the country and businesses are starting to return to normal, there are a significant number of business owners who are looking for opportunities to bounce back.
Subsequently, many businesses are turning to bridging finance as a solution. So, what is a bridging loan? A bridging loan is a type of short-term finance, which enables a borrower to access cash extremely quickly. Looking at the sudden onset of events following the Covid-19 crisis and various lockdown periods, it has become more important than ever for businesses to react quickly to the changing circumstances.
Not only does bridging finance enable borrowers to access finance rapidly, it also has many other advantages including, customised solutions, because each loan is evaluated on its individual merits, i.e. a personalised solution can be found. In addition, bridging loans also provide flexibility, as most bridging lenders are not bound by the restrictive loan conditions other traditional finance options are tied to.
Owing to this, the demand for bridging finance secured on commercial property has increased significantly over the last few months, with recent studies showing there has already been a 10% to 14% increase in the first quarter of 2021.
Aimed at small and medium businesses, bridging finance is a fast and flexible way to bridge the gap to raising funds quickly and can be used for a range of purposes. These include the finance needed to expand or purchase a new premises, or additional cash flow needed for debt and bill repayments. In addition, a bridging loan can provide the ideal solution for those who require funding needed to support business activities to enable business growth. This is particularly important during a challenging time, where businesses are looking to recover and flourish.
It could also be that a business owner seeks to purchase a new commercial premises at auction. While property auctions can be a great place to seek a bargain, an auction purchase requires the buyer to have a significant amount of ready capital to hand in order to complete the purchase within the requisite 28-day time frame. As a result, funds to purchase, and often renovate, are needed extremely quickly, which is why bridging finance is a perfect solution.
Looking at how bridging finance can help with cash flow, particularly this has certainly been a challenge for many businesses, owing to the ongoing effects of the Covid-19 pandemic and various lockdowns. Within this scenario, a business owner may need to access additional funding extremely quickly, to minimise the adverse short-term effects on their business. Bridging finance can provide a solution for this, as it can be used to raise short-term funding quickly and efficiently, which can temporarily resolve the issue until a more permanent solution is available.
This is of particular relevance when comparing to traditional options, such as commercial mortgages, as it may be more favourable for a business to opt for a bridging loan to quickly fix an imminent cash flow matter, as bridging lenders can be more flexible and will lend in situations where traditional banks are unable to. Typically, commercial mortgages usually have qualified restrictions, whereas bridging loans are more flexible with less barriers to overcome.
Ultimately, there is no doubt the demand for short-term finance is growing. Bridging loans secured on commercial property are becoming a first-choice product solution for borrowers when the circumstances are right.
A good bridging lender will understand the varying needs and aims the borrower is trying to achieve and will work closely with the client, broker and other parties to provide a fast, flexible and tailored solution for a range of commercial borrowers.
To support the demand for commercial bridging finance, Hope Capital has recently launched a brand-new set of highly competitive rates and LTV’s, enabling brokers and borrowers to be ideally positioned to take advantage of new commercial opportunities as the economy begins to recover.
The Capital Collection provides rates from just 0.82% and up to 65% LTV for commercial properties. Hope Capital has a significant amount of experience in supporting brokers and their clients with achieving their business ambitions and can deliver solutions when needed and work with them to support their individual time constraints. Hope Capital is renowned for being a highly flexible lender and is dedicated to providing superior service and support to brokers and their clients from initial enquiry stage through to completion.