Understanding Bridging Loans

A rather common question that is asked by many who are new to the concept is, “What exactly can you use bridging loans for?”

Over time, the UK bridging industry has developed to be one of the most significant and prosperous alternative sectors seen in some time. Now valued in excess of £4 billion, more than ever before are businesses and domestic customers considering alternative financial products such as bridging loans. This is as they are a much more suitable option than their increasingly inaccessible and conventional counterparts.

What can Bridging Loans be Used For?

In the circumstance that you can comfortably qualify for a bridging loan, what exactly can the cash be used for? With an almost instant pay-out and only a few months to repay the loan, what kinds of applications are best-suited for the unique method of bridging finance?

Technically speaking, a bridging loan can be used in any legitimate financial situation. However, there are some significantly popular uses for bridging loans that stand out above the rest. Here are a few examples of what you can do with a bridging loan.

Meeting Tight Financial Deadlines

A bridging loan is handy under any circumstance where a sizable sum of cash is quickly needed, and conventional banks and lenders are of next to no use to anyone. The process of a loan transaction can often take weeks. This is worthless to those who are in need of financial support within a matter of days. By contrast, bridging loans can be paid out within 48-72 hours.

Chain Break Finance

As opposed to allowing a property sale to fall through in the event that a member of the chain withdraws, a bridging loan can allow the purchase to go ahead. This can then be repaid when a new buyer is found at a later date.

Property Auctions

If you were to bag a bargain at a property auction, you may find yourself needing the money for the property within a matter of days. Once again dismissing the need for conventional needs or a mortgage, bridging loans allow auction buyers the immediate funds they need.

Property Refurbishments

Bridging loans are also often used as a form of development finance. In most cases, mainstream lenders will not lend on properties that are in substandard condition and require renovation works. However, bridging lenders consider the potential future value in such properties. As a result, they make their services more readily available.

Property Conversions

Similar to property refurbishments, the money from a bridging loan can be used to fund property conversions and extensions. This is to improve resale or rental values.

Business Funding

From the initial costs of business establishment to unexpected shortfalls and urgent tax requirements, bridging loans are also a good lifeline for professionals, no matter the level of business.

Make the Right Decision

Regardless of the available options for a bridging loan, it is important that you are sure it is the right financial step for your small business. It is a good idea to have a professional accountant by your side to ensure you are making the best decision for a successful business future. Our team at Steven Glicher offer accounting support that stands out from the rest. The service we offer is comprehensive, with a wealth of knowledge and expertise to ensure that you are in safe hands. Get in touch to see how we can help your small business grow.

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