Bridging loan basics

Bridging loan finance meets the needs of many individuals and businesses today. They are rapidly loaned to qualified applicants and then usually repaid within one to three months, though many are offered for terms up to a year.

Short-term bridging loans often come into play when a business has a cash flow problem or sees the need to make an investment but lacks the resources to do so. There may be a contract that will be honored in due time and payment made to the business but the money is needed now.

If the business can ensure repayment, a bank or other financial lending institution may choose to issue a bridging loan for the business’ capital investment, venture capital, stock acquisition, production, or a host of other needs. The short term bridging loan is just that: a means of moving over temporary financial needs to help the business reach the other side.

A bridging loan is also popular in the housing market. Homeowners who are selling a property can utilize a short-term bridging loan to pay for a new home while the old one is still on the market.

Living expenses can be covered while a sale is pending. The bridging loan can also be used for unexpected repairs that a buyer of the old home is requiring. Once the old home is sold the bridging loan will be paid in full.

Urgent needs for money sometimes occur.

Financial setbacks can happen to people for a variety of reasons and a short-term bridging loan can help smooth out the financial needs until the individual is back on his or her feet.

This type of finance can be extremely helpful in the short-term but it comes with a price. A bridging loan can carry high interest rates and sufficient collateral such as an automobile, home, business property, or other valuable asset will have to be put on the line. If the bridging loan isn’t repaid in the specified amount of time the collateral is subject to seizure and the borrower will be in worse financial shape than before.

Bridging loans are effective but only if repayment can be made.

If you require finance in the form of a Commercial Mortgage, Business Loan, Residential Bridging Loan or Commercial Bridging Loan, Secured Loan or Personal Unsecured Loan, please give us a call at Choose Loans on 0845 862 0524 or click Apply Now and complete our simple 30 second enquiry form and one of our experienced loan advisers will call you back to discuss your loan requirements.

Posted 13/12/2009 18:27:12