Bridging loans are the perfect way to bridge the gap when moving a business, but is the right option for your business when buying or selling an office space? In this article, we will be giving you insight into everything that you need to know about bridging loans and how they can benefit your business should you need them.
What Are Bridging Loans
A Bridging loan is a loan that bridges the gap between selling a property and purchasing a new one. It is a short-term loan used to cover a transaction ensuring that the borrower has the money to sell the home or office that they are in the process of selling. This is beneficial for a business to use when looking to purchase a new office or for a project as this can be paid back in full within a 12-month period.
When Would You Use A Bridging Loan?
A bridging loan can be used for a number of different reasons due to the two different variations, however, they are predominantly used by a business or individual for the following reasons:
- Property development
- Buying Or Letting Property
- Investment Purchases
- Home Purchases
Though this style of loan is not the same as property development finance, it can be used to ensure that your business has the finances it needs to help to get out of a financial emergency or undergo serious changes that need to be made to an existing office space.
Closed Bridging Loans
Closed bridged loans is a bridging loan where the repayment date is discussed from the get-go to ensure there is a clear final repayment date. This style of loan could be used should you be in the middle of selling a property or waiting for finances to arrive. This is beneficial for a business during this stage as there are lower interest rates and therefore the process is much more straightforward.
Open Bridging Loans
This style of bridging loan is a short-term loan that is secured against a property and land. This style of loan differs slightly from the closed bridging loan as there is no set day for an exit strategy – because of this, you are able to pay back the loan in your own time within a 12-month period. This is more affordable for a business as you can then pay back what you can afford on a monthly basis. Though the amount to pay back will differ depending on the original amount borrowed, it is important to remember that you are in complete control when it comes to paying off debts.
Conclusion
With this in mind, there are a number of ways that a bridging loan can help to support both businesses and individuals when struggling to make ends meet when mid-way through a transaction on a brand-new office or house. Will you be choosing this option for your business should the time come?
The post Everything You Need To Know About Bridging Loans appeared first on Tweak Your Biz.
source https://tweakyourbiz.com/business/funding/bridging-loans
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