What is Bridging Finance?
Bridging loans are short term loans that are offered to borrowers to help them purchase new real estate properties without selling the existing ones. The duration of bridge loans usually ranges between 2 weeks to 3 years.
Bridging finance is fast and of short duration that is secured on real estate properties. Several companies offer only-interest repayment followed by a final payment of principal and interest. The access to bridging finance comes with the extremely high rate of interest.
This is beneficial for people who are willing to sell their properties after quick renovations or at the time of auction.
As the name suggests, bridge loans act as the bridge between the individual and financial issues related to personal and professional uses. These loans are exhaustively used in the real estate markets where borrowers do not require selling their existing properties when new projects are purchased. It also covers financial gaps in businesses that are facing cash flow issues and are unable to cover its costs.
Being an owner of a small or a medium type enterprise has its own pros and cons. Cash flow issues occur when outflow cash exceeds the inflow cash. Some problems associated with the cash flow issues are late payment of bills, bad credit, the sale of products and services in a particular season, the non-realistic financial structure of the business and early payment of bills.
Opting a loan from financial institutions and various banks have long application procedure and lots of paperwork. Bad credit considering, credit history, collaterals and availability of the particular loan are some hindrances that startups and small and medium business owners face. Bridge financing comes into action and is best suited for people who belong to small and medium enterprises. Any business in its infancy has negative cash flow, which gradually decreases after 3 years. For those three years, taking a bridge loan is one of the safest and fastest options which can provide liquidity to the existing business without any collateral or sell existing properties.
Bridge loans versus traditional loans
At Discovery Credit, we make the process faster than banks. The traditional lenders take time to process as they have tedious and exhaustive procedures. But keep the process short. The best advantage is the interest rate. Unlike traditional loans, bridging loans interest rates are high due to short durations. The interest rate can go up to 18% a year.
Conventionally speaking, bridging finance is for people who are amateurs in the world of Indian finance and also to wealthy rich people who straightforward lending on properties for residential purposes.
Bridging finance has grasped its popularity primarily because of longer time duration taken by private banks for home loans. The exhaustive application procedure of private banks pulls the borrowers towards bridging finance.
But bridge finance comes with its pros and cons.
Benefits of Bridging Finance
- Easy procedure.
- The short duration of loans.
- Purchasing new property without selling the existing one.
Cons Bridging Finance
- Not everyone is eligible for bridging finance.
- Higher interest rates for short duration
- Risks of losing the property if the exit plan is not full proof.
Get Bridging Loans from Discovery Credit
Many small business owners find it hard to get a business loan approved from normal banks. They often find the process time taking. Bridge loan comes handy when there is an urgent need of cash in a business. The cash needed can be for expanding office complex or for employees salaries. When the business is in need of urgent fund; lengthy and tedious process does not work. Start ups especially cannot keep their business on hold for that long duration.
Before the bridge loan is sanctioned, it is important to have an exit strategy first before seeking such loans. For example, how the money will be arranged to repay the loan and extra funds for the smooth functioning of the business. If your business necessitates quick down payment or funds to purchase new equipment; don’t panic! We are here to support you with additional working capital.
Filling the Pre-Approval Form on the right, to receive a no-obligation, free quote for a bridge loan for your businesses from Discovery Credit. Our representatives would be more than happy to serve you.
If you ever try to go for bridge loans, always go to authentic, trusted and regulated broker for the same. They will recommend what is ideal to you according to your present situation.
We understand the pain of being on the hunt for money. We take every necessary measure to keep things simple for you.
Discovery Credit Can Assist With Your Bridging Loan
There are finance lenders with a very conservative approach and the criteria set are at times firm. We have designed packages, keeping in mind the client requirement.
If you are still looking for a short-term loan to meet an extreme situation; you may go for bridge loans. This loan is exceedingly helpful in facilitating a property purchase that else would not have been achievable. This loan can be, however, considerably more costly than a 'normal' loan. This is the best alternative financing options as compared to those offered by conventional lenders. The funds offered may be used for restructuring existing debt, working capital for growth, as well as supporting capital expenditures, inventory purchases, and acquisitions/buyouts.
- Instant finance solution
- Give good advice
- Affordable rate
- No hidden costs
Enjoy fast, hassle- free funding! Please don’t hesitate to contact us directly!