The Need to Understand Commercial Bridging Loan and What It Entails

By: Smithtaylors Financial Advisor 1 Follower


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Business and finance go hand in hand with the former being inherently dependant on the latter for growth and development. The need for cash might pop up at any given moment and some major expansion or improvement might be conditional to the investment. If only money was available that easily! However, improvement and growth wait for none and the inability to arrange for the needed finance at the nick of time might lead to the loss of not just an opportunity but pride and prestige too.

The loan explained:


Things however can be made a lot easier if applied for a loan when needed. Thankfully instant financial support is available for a start up, the purchase of a property or the completion of a project and this is where commercial bridging loan comes into the picture. Simply put, it is the form of loan that can be used for funding short-term deficits or sudden shortfalls in funds incurred by a business. It can also be viewed as the loan that almost inevitably becomes vital when the purchase of a business property is being processed while waiting for the sale of another asset.

It might be better to shed a bit more light on this description. This kind of loan is mainly needed for the purchase of properties on an urgent basis. With time, as a company grows bigger, it is normal for them to try and shift base to bigger premises so that they get more space from what their current premises allow. In most cases the old offices are put up for sale. In such situations, the bridging loan is required to arrange for funds for the purchase of a new property while the sale of the previous one is being processed, especially when the sales contracts have been exchanged.

The conditions and scopes:

For a sale that is already past the contract stage, it is generally not much likely to fall through. The lenders therefore view these situations as less risky and are therefore willing to supply funds instantly on the condition that the contract of the sale is presented to them. It must be noted that that the details of the offer that has been made on the new property might also be required. The kinds of property that are encompassed within the scope of this loan are:

i. Office buildings
ii. Hotels and leisure facilities
iii. Industrial units
iv. Retail and licensed properties
v. Other commercial developments.

The need to check quotes:

One must understand that the loan amount of a commercial building is generally calculated based on the comprehensive value of the property, not the purchase value. Commercial bridging loans, thankfully, have very convenient payment options. They, naturally, have higher rates of interest but choices are available to facilitate the decision. It is always wise to compare the quotes of various lenders online in order to make the best choice.

The reason why the commercial bridging loan is so popular is because of their timely availability. When expansion is in the cards, it often becomes impossible for businesses to arrange for the entire amount of money that is needed to make substantial commercial purchase. This loan provides a much needed assistance to businesses so that they can ensure that the purchase is completed without hassles.

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Gloria Sanders
Nice articles about Loans!...