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Bridging Finance

Our team of bridging finance specialists have been in the industry for many years and we will be able to help with your financing needs.

Not all projects can rely on conventional loan options and traditional lenders if they need a constant stream of funding. Moving to a new building, upgrading your existing property or buying some new property can all become difficult if you have a short-term gap in your finances.

A bridging loan can solve this problem and make it much easier to support a major project or change without having to stockpile emergency funds months in advance.

Whether it is a business property purchase or a major overhaul of your business, we can offer a bridging loan that suits your exact needs.

Our expert team can get a bridging loan arrangement that is perfect for your situation - one that you can rely on if you are planning out a strict timeline.

If you need to borrow money for short-term use during a finance gap, then contact us to get a full overview of all our bridge finance options.

Bridge Loans

Bridge loans can be a great solution for any gap in your working capital or cash flow finances.

As a short-term loan option, they can cover periods of time when you do not have any other income available and can help you pay for important items, such as a property purchase.

There are many situations where a bridging loan could be useful. Once you understand the basic idea behind these loans, they can become a very appealing option in a huge variety of situations.

What is a Bridging Loan?

There are two types of bridging loans: open bridging loans and closed bridging loans.

Like other types of loans, these influence the way that you repay the loan - with each one being more useful in certain situations compared to others.

Bridging loans are also known as auction finance because they are often uses for auction purchases.

Open Bridging Loans

An open bridging loan has no fixed repayment date but is meant to be repaid in about a year.

This means that you have a loose, flexible amount of time to pay back whatever the loan covers, along with any interest from the current interest rate.

This allows you to come up with your own repayment and exit strategy, such as selling assets or taking out a mortgage.

The only requirement is that the lender sees proof that you are paying off the loan amount and interest costs, such as documents proving that you are selling assets.

As with all loan types, it is important to have a backup strategy, just in case something goes wrong and you can't keep the loans secured.

Closed Bridging Loans

A closed bridging loan has a fixed repayment date, like a more conventional loan type.

This is the more common option if you are already working on raising the money that you can use the cover the loan.

A closed loan is usually a secured loan - one that you have secured loan repayment options and strategies for.

This makes them a more reliable choice for any situation where you know you can repay the loan in a given amount of time.

This closed loan is more structured, but this is not a bad thing. Still, it can be important to have a strong backup plan, just in case you run into issues with repaying the closed loan.

Bridge Lending

Bridge lending is the process of getting a bridging loan itself. We offer bridging finance for a range of business industries.

As a bridging lender, we are able to tailor each bridging loan to each client's needs.

The specifics of lending each bridging loan depend on who you are, your current credit score and financial status, and what kind of loan you actually need.

The purpose of the loan and the reason for the finance gap are also sometimes important - each of our clients needs something different.

If you want to know more about the specifics of our bridge lending or are interested in getting a loan of your own, then get in touch with our experts.

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How do Bridge Loans Work?

When you take out a bridging loan, it is treated as a 'charge' loan.

This 'charge' is a legal agreement that puts the bridge loan as a high priority, meaning that the loan is always repaid before any outstanding minor loans that you might have.

Like a regular loan, bridging loans are centred around monthly repayments.

You are given the bridging loan as a lump sum and are expected to use monthly payments to repay the loan amount, along with any interest that might be added on.

Outside of open and closed loans, there are also two secondary types of loans - second charge and first charge.

If you are wondering 'how does a bridging loan work', get in touch and our specialist finance team will be happy to run through this with you.

Second Charge Loan

A second charge loan happens when you are still paying off commercial mortgages. This means that the bridging loan is secondary to the existing loan.

If you fail to pay it off - instead of putting money towards the bridging loan, it will go to your home's mortgage instead.

A second charge bridging loan is important for making sure that your property is paid off first.

First Charge Loan

A first charge loan is an option that you will get if you own your property in full.

If you fail to repay loans, the bridging loan will come first since there is no existing mortgage to prioritize - any recovered money would go towards your first charge bridging loan cost.

If you already own your property, then this is the bridging loan type that you will be given.

All this means is that you will pay off your bridging finance loan if you fail to keep up all outstanding payments - the loan itself is effectively the same.

Fast Bridging Loans

A bridging loan can be a fast solution to a finance gap that catches you off guard.

Bridging loans tend to be very popular for professional property developers that need property development finance options, there can be a lot of uses for a bridging loan in the short term.

One of the core benefits of bridging loans is the fact that they are quick.

Unlike some other loans, bridging loans are meant to be used short-term and can be quickly set up to cover an unexpected gap or a delay in cash flow.

Remember that our fast bridging loans have a defined use and that they are not all-purpose loan options.

Bridging loans are meant to 'bridge the gap' between the time you need money and the time that you can get it, so most fast bridging loans are meant as a short-term and temporary option.

We aim to keep the bridging loan process fast and convenient for our customers. If you need more commercial property finance our short-period bridging loans can be the perfect safety net.

Pros and Cons of Bridging Loans

Bridging loans are not perfect for every situation. While we can tailor each of our bridging loan options to each customer or client that we get, it is still important that you understand the limitations of what a bridging loan can do and who it can be used by.

When choosing a financial provider, make sure they are authorised and regulated by the Financial Conduct Authority and have a fully registered office registered in England & Wales.

It is important to make sure that everything they offer is legal and above board.

Pros

Flexibility - A bridging loan allows you to be more flexible at times when you might not have as much cash flow. The extra funding means that you can still keep you business running and purchase necessary items.
Rates - Most bridging loans allow you to choose between fixed and variable rates, with each being useful depending on your current situation and how much money you are able to bring in. For example, a variable rate might be more useful for your current gap -and we can provide it.
Funding - A bridging loan allows you to raise extra funding without having to rush a sale or find other ways to gather up the money. This can be important for purchases that only have a limited window, like a property that is up for auction or new equipment that could be bought if you are fast enough.
Legitimacy - All of our bridging loan options are a legitimate way to raise capital as a short term finance solution, regardless of the loan amount. We can promise that every loan you take is protected, legal, and does not come with hidden terms or questionable additions. Make sure you choose a company who is registered by the Financial Conduct Authority (FCA) in England and Wales.

Short-Term Loan - A bridging finance loan is great for all short-term situations and can cover emergencies that regular loans are too long-term to deal with. This makes them a good commercial finance option for many different businesses.
Credit History - Bridging finance does not rely on credit rating nearly as much as regular loans. This is because the loans have a core focus on the development or profit rather than the actual finances of the person receiving the loan. For example, using bridging finance as property development finance is possible even if you have a poor credit history, as long as you still have the potential to pay the loans back later on. This means that it can be used in situations where no other reliable loans are available.
More Control - A bridging finance loan will not have as many added fees or limitations. This means that early exit fees (redemption fee), arrangement fees, legal fees and finance broker fees sometimes are not even applicable, meaning that you can get the full loan lump sum amount faster and with less hassle getting the loan approved.

Cons

Long-Term Use - A bridging finance loan is not meant for the long-term, especially not as a regular loan that you take out repeatedly. Each time we offer bridging finance options, we do so to make sure that clients can get the emergency funds that they need - but it is not a longer-term source of emergency income.
Interest Rates - The interest rate on bridging finance loans are higher than traditional loans, mostly because they are meant to be shorter-term. Proper management of your finances can make these interest rates a lot less of a problem, so being prepared is the most important step in paying one back.
Regulation - A lot of these loans are unregulated bridging loans. This can mean different things to different people, but in general, it means that the property is your loan security. If you are not sure what this means, get in touch with us, and we can offer a more in-depth explanation of secured loans.
Variation - While bridging finance is very flexible, it also means that each individual bridging loan is unique. Even when used for commercial finance, there is a lot of variation, so there is no guarantee that one person's loan will be the same as another's.

What can I use a Bridge Loan for?

Bridging loans are useful for a lot of projects, as long as you understand when to use them correctly.

While there are countless reasons that you might find one helpful, some are much more common than others. Here are a few of the most notable ways that our bridge loans often get used.

Buying Property - If a property goes up for auction, finance like this can help you buy it before somebody else does. Not only can this be better than relying on a commercial mortgage for some businesses, but it also bridges the financial gap if you are not able to come up with the funds straight away. For example, if you are selling your current business building but the sale has not gone through yet, however, you know it will go through soon.
Renovation Work - Renovation work can sometimes be necessary to fix or repair an unusable part of a property. Bridging finance allows you to afford the work if other options are not available yet.
Purchasing Land - When you are buying land for future development, finance can be important. The land is always the first step for property developers, and you can't do anything if you do not own the land. Before you can start development, finance options are a good way to secure the land ahead of time.

Restoring Uninhabitable Buildings - Any property that can't be lived in at all will need a lot of work. Having a bridging option that can get you started might make it easier to turn it into a usable property.
Emergency Work - In any situation where you need urgent work done (including work that you forgot to plan for), having a bridging option available can be very helpful. For example, you might buy a property, only to notice that it needs repairs - bridging allows you to make those repairs without needing to wait for more income.
Shifting Costs - In general, one of the benefits of bridging finance is being able to shift costs to a later date. While you will still need to pay the interest, using one of our loans can help you delay the costs of crucial renovation work or unexpected repairs that you can't afford until the next payday.
Investment - Many property investors use bridging as a way to afford a new property earlier than they otherwise would be able to, which they can use for their own purposes or future investments. This investment property could turn a profit that they use to pay back the loan.

Getting Started with Bridge Financing

If you think bridge financing might be what you need, then it is important to be prepared.

Unlike some other bridging finance companies, we want our clients to get the best deal possible, especially considering the variable interest rate that can be involved in bridging.

Our financing options are meant for all kinds of work and we realise that each situation is unique.

Do I need a Bridging Finance Broker?

A bridging https://www.strategicbusinessfinance.co.uk/ is an intermediary that tries to find you the best possible bridging finance option.

For many companies, this can be incredibly important since it can be hard to look at all available options and decide which one is most suitable for your situation.

Our experts are very good at helping our clients get what they require. If you would like to speak to our team, please fill in our contact form.

Many brokers charge an arrangement fee and the broker fee will be discussed in the initial meetings with the finance provider.

Approaching Bridging Lenders

As a lender, we try and keep everything simple so that you can understand exactly what you are looking into.

This means making the fixed or variable rates clear, explaining the loan amount, and telling you how long it might take to release funds.

There is not any special trick to getting an investment purchase or https://www.strategicbusinessfinance.co.uk/commercial-loans/ - simply contact us and tell us what you need.

We can help you work out a system that is right for you and your project.

Do I Need a Bridge Loan Calculator?

While there are ways to calculate bridging loans, it is only necessary if you do not get the proper help figuring it out yourself.

We are more than happy to support you through the process, helping you calculate exactly how much the loan will cost to pay back each time.

We can also do this before the loan is even agreed on, making the total loan cost, monthly payments, valuation fees and variations (if you are using an open bridge loan) involved very clear.

Bridging Loan Rates

Bridging loan rates can either be fixed or variable, depending on the exact loan. Fixed rates are always going to stay the same, so interest rates do not change.

Variable rates change over time but could potentially go down, meaning that you are paying less in interest later on.

Which option you choose is up to you in most cases, so it is important to understand why you might want one or the other. Talk to our staff if you need advice on which one is worth choosing.

Other Services We Offer

Business Loans - https://www.strategicbusinessfinance.co.uk/
Asset Finance - https://www.strategicbusinessfinance.co.uk/asset-finance/
Commercial Business Loans - https://www.strategicbusinessfinance.co.uk/commercial-loans/
Invoice Factoring - https://www.strategicbusinessfinance.co.uk/invoice-factoring/

Frequently Asked Questions

What is Meant by Bridging Finance?

Bridging finance is any finance option that 'bridges the gap' in the short term.

It can fund all kinds of urgent or immediate projects, with the expectation that it is paid back quickly, interest rates are higher than normal, but the loans are also easier (and faster) to acquire when you need them most.

This type of loan is popular for a range of businesses but especially businesses that are buying property and waiting for their current property to sell.

Is Bridging Finance a Good Idea?

Bridging finance is a very useful finance solution for a lot of projects, but it has to be handled well.

Improper use of bridging can easily lead to you paying back more than expected, so it needs to be planned out and carefully considered by trusted advisors before you commit to any finance options.

Is Bridging Finance Risky?

There can always be a risk with loans. The higher interest rates of bridging loans can seem risky, but it depends on how prepared you are and how well you plan in the short term.

As long as you know you can pay the loan back in the loan term, it can be a great emergency or short-notice loan option.

What is Bridging Finance used for?

Bridging finance is used for a variety of projects that need an urgent source of funding in the short term - ideally one that can then turn a profit or allow you to save up and pay it back. This could be commercial properties and property conversions.

Should I use Bridging Financial Services?

Bridging is a great option for a lot of businesses. If you think it could be right for your current situation, contact us directly to get some expert assistance and advice.

The more you know about short-term development finance, the easier it becomes to understand when you can use it best.

Is Bridging Finance Legal?

Bridging loans are completely legal.

Make sure you use a company that is authorised and regulated by the Financial Conduct Authority (FCA) in England and Wales.

Company-wide adherence to the Financial Conduct Authority is also a major part of choosing a finance broker.

Making sure they comply with the FCA will mean that loans are above board and legal.

Can I get a Bridging Loan for a Buy-To-Let?

Bridge-to-let loans are available in the buy to let market for property investors. These can be used for residential or commercial properties.

What is an Unregulated Bridging Loan?

Unregulated bridging loans are short term property-backed loans that can bridge the gap in funding.

What is a Regulated Bridge Loan?

A regulated bridging loan is used for securing a loan against a property that will be occupied by the owner or family member.

Can I Buy an Unhabitable Property Using a Bridging Loan?

Yes, bridging loans can be used to purchase property that is unhabitable and needs renovation work.

Contact Us

If you are in need of support from your local financing and lending team, please get in touch.

We work with business owners, property developers and investors and will be happy to help.