Bridge Fnance
23 Feb

Bridge Finance UK - What to Know Before Approaching Bridge Finance?

Bridge finance UK has become very popular in the market now, and it’s not hard to see why. Bridge finance UK provides you with the funds that you need to facilitate the purchase of a new property or to renovate your existing property if you already own one. However, if you’re approaching bridge finance, there are some things that you should know about it before you apply for it. 

 

This blog will give you some insight into what bridge finance is and what it involves so that you can be sure that it’s the right financial decision for your circumstances.

 

What is Bridge Finance?

 

In layman's terms, bridge finance is like a business loan that is given to a company in need of bridging cash. In the age of technology, it is easier to use a finance product to get back on track and never miss another deadline. 

Bridge Finance is true power alright. And it is truly potent, having an influence on all prevailing economic operations. This is because Bridge Finance has been coined for anyone who wants to borrow money for their business, and pay off the borrowed amount when due with interest. 

How Does Bridge Finance Work?

Bridge finance works by providing a short-term solution for business owners in need of funding. It can help you buy time before you secure a more permanent source of finance, or it can bridge you between one business funding round and another. 

Bridge financing has become increasingly popular as businesses look for alternative sources of funding that give them more control over their cash flow and investment strategy. If a bank won’t lend you money, then bridge finance could be an option for bridging your funding gaps! ​ 

Bridge loans are not just used for small start-up companies either; bridge lenders will consider most types of businesses that have been trading for at least two years. As long as they see clear growth potential they should be willing to lend on sensible terms. 

This means that if you want access to cheaper borrowing rates and complete flexibility over how you use your funds, bridge lending is well worth looking into. ​

What Are The Advantages Of Bridge Finance?

Bridge finance may seem like a catch-all term, but it’s actually an excellent solution for startups and other companies in which there is a period of time before they’re able to secure long-term financing. 

Bridge financing helps companies grow without taking on debt and burdensome interest payments, as well as helping them avoid major shifts in ownership or control. As an entrepreneur or business owner, you might be wondering what makes bridge finance different from more traditional loans. 

Here are some things to know about bridge funding so that you can decide if it’s right for your company.

Bridge Financing Allows You Time To Solidify Your Plans

In many cases, businesses need capital investment early on so that they can put together a sound plan of action. Bankers or other financiers typically aren’t willing to take risks until businesses have had time to solidify their business plans with careful research and planning. Bridge financing allows entrepreneurs to build out their idea without having to rely on large sums of money – and potentially big investments down the line. 

Bridge Financing Helps Keep More Control Of Business Operations

It can often take weeks or months for banks or lenders to approve larger forms of funding because they want to ensure that business owners don’t rely too heavily on debt payment systems. Bridge financing works quickly (often within one week) while also keeping business operations under their own control. 

Bridge Financing Is More Cost-Effective Than Larger Loans

A common misconception surrounding bridge financing is that it carries just as much risk and cost as longer-term loan solutions do. This simply isn’t true; bridge loans tend to be far less expensive than most long-term loans and sometimes even grant access to resources that larger firms wouldn’t otherwise offer. 

Bridge Loans Aren’t Permanent Fix

Because bridge loans exist as a bridge between A and B, they come with specific terms and expiration dates. Depending on how you structure your deal, bridge lending options will either charge higher interest rates or require mandatory repayment after a certain amount of time has passed.

Who Should Consider Bridge Finance As An Option?

Bridge finance is meant for businesses with a clear path toward growth, but who have been unable to secure traditional financing from banks or other lenders. Bridge financing can also be ideal for small businesses and startups that are experiencing cash flow problems, but who have adequate collateral (equipment, inventory, property, etc.) and strong credit. 

Bridge loans typically have short repayment terms of one year or less. Bridge loans are considered nonrecourse lending—meaning that if you default on your loan, creditors can go after your business’s assets as compensation—but they don’t involve personal guarantees. Bridge loans are secured by whatever collateral you put up for collateral. 

If, however, you want an unsecured bridge loan, expect to pay an interest rate that’s about 100 basis points higher than what you would get on a secured bridge loan. For many investors and commercial lenders, it makes sense to use unsecured bridge finance because there’s a lower risk involved.

Conclusion – How To Get Started With Bridge Financing In The United Kingdom?

In conclusion, bridge financing can be a great option for any business owner looking to finance an expansion, restructure or make major purchases in their business. Bridge financing is typically provided at rates and fees that are lower than those of traditional commercial loans. 

Finance Hub is a leading business loan providing platform that also provides bridge Financing in the UK provides business owners with a secured lending platform that allows them to connect with investors seeking higher risk-adjusted returns while they are on waiting lists for traditional loans approvals. 

Finance Hub offers funding solutions up to £20m without collateral. Larger amounts are considered but involve increased due diligence processes based on company credit ratings and payback history. Interested parties should apply now by providing basic information about their company so Finance Hub has sufficient information regarding all applications received in order to provide funding recommendations.