Commercial bridging finance is a method that has been used by many entities, organizations and entrepreneurs to aid their asset acquisitions which are transacted for purposes of business. Oftentimes the said assets are used as office spaces, an expansion store or a branch. How does this financing method aid in the accomplishment of the entity’s objectives then particularly its going concern? Take a look at the reasons below.
But first what is commercial bridging finance? It is a short term loan and cash gap method that helps asset buyers, in this case businesses and companies, in ensuring that the property they wish to acquire to aid in their operations gets done so even if the arrival or availability of their permanent source of funding has been delayed.
Because commercial assets aren’t anywhere near cheap the funds or cash to be used for their purchase will either have to come from a restricted part of retained earnings or business savings, from proceeds of a large sale and from a bank loan. We all know that the aforementioned sources although possible to acquire may take time. Plus, you can never predict when a good deal on a prime property pops out. You cannot sit back and relax and wait because for sure other entities will want to get hold of the said properties too. After all, everyone is a businessman and each will seek to better their own corporate endeavors.
What commercial bridging finance provides is a fund which the entity may use to pay for upfront costs which in most cases are the down payment and the first monthly installments or a partial payment for a lump sum purchase agreement. The said short term loan is then closed once the permanent source of funding is available.
What does this have to do with going concern then? The answer is pretty simple. The assets that commercial bridging finance helps to acquire are for use in the operations of the entity. The timeliness of its acquisition aids in continuity, smoothness and fluidity of the day to day operations of the organization. Should the property be for purposes of a satellite branch or office then it allows the business to go on as planned. No one wants any halts, delays and glitches in their operations as it can pose serious risks and consequences to business. Remember that commercial properties will always be necessary because where else will you house your team?
Looking for a trusted and reputable provider or financial institution is essential when you are in search for a good bridge loan for your real estate purchases. Take it from the experts at alternativebridging.co.uk. You need the right people to provide you with what you need and not those who will rob you off of your investments. Think about it this way. If you need to get a bad tooth extracted, would you go to just about any dentist without first asking around or doing some research on who the best professional in town is? Of course, you won’t. You will ensure that you only have the best. The same goes with bridge providers. So how do you look for the best? We’ve got some tips. Let’s go!
TIP # 1: First things first. Know what you need. Do you really need a bridge loan? If there are, what other options are available to you? Before you go knocking into a provider’s office, be sure that you know very well what type of service and why you need it. Don’t barge into the situation without first assessing your strategies. After all, real estate acquisitions are a serious matter.
TIP # 2: Know the type of property you’re dealing with. In most cases, the type of asset that you are about to purchase will affect the providers you seek. This is because there are financial institutions those expertises in a certain field or type of asset such as those belonging to the residential, corporate or industrial categories. Of course, you would prefer a service that is better directed to what you need rather than one that is too generalized.
TIP # 3: Don’t hesitate to ask around. It turns out that many people have used bridge loans already to connect and fill in the cash gap between their main source of payment that is yet to be available and the property they wish to acquire. Take this advantage and ask for recommendations.
TIP # 4: No one in your posse to give any suggestion? Do not worry because the internet is abound with various forums blogs and websites where people can share their experiences both good and bad. Likewise, be sure to do some research. It helps a lot.
TIP # 5: Make contact. It is best to call up your prospect bridging loan provider. You can even meet up with them or go to their office. Inquire and ask them to orient you with their process. It pays to get to know the people you are going to get your needed service from.
When we talk about asset and property acquisitions, it is impossible not to mention the different funding methods available to prospective buyers. This includes the use of proceeds from an impending sale of a different property, long term loans such as a bank loan and a home mortgage, and short term ones such as bridge loans.
Speaking of the latter, such has gained quite the popularity all thanks to its benefits. But before anything else, here’s the thing that you should remember when it comes to any financial method: Ensure the reputation, reliability and quality of your chosen financing institution. So what characteristics should you look for then in a reputable bridge loan financing firm? We’ve got a list for you. Read on up!
Standards and Procedures – You want a company who has a good set of established rules, policies, procedures and standards. Of course, it would be such a pain to work with one who is so haphazard in the way they manage their operations. This includes clear and precise agreement contracts where clients will easily understand the terms and clauses of the service.
Good Public Standing and Image – Would you want to borrow from a lender who is known to provide bad services to its previous clients? Of course you wouldn’t. No one in their rind mind will. How do you ascertain this? A good amount of research should do the trick. The internet is a good medium so use it to your advantage. The same holds true for word of mouth. Ask people who have had the experience. Inquire about their bridge loan financers and determine if they were satisfied or not with the service received.
Professional and Competent Employees – Additionally, the components or the people that composes the organization helps define it. You would want to work with professionals who embody discipline, integrity, honesty, initiative and persistence. Since this is first and foremost a lending transaction, it is imperative to find a lending institution whose staff is aptly skilled and knowledgeable.
Strong Financials – Because a bridge loan financing firm is a type of lending and financing business, they should first and foremost have a good financial standing. They wouldn’t even mind if you ask about it. After all, how will they be able to provide you with the money you need if they themselves are in a state of distress?
Commercial bridging finance refers to the method of obtaining and using bridge loans to fund for corporate asset acquisitions. But how does it work and when do you use one?
The purchase of properties such as land with or without a structure erected on it is not as easy as buying a bag of chips to the nearest convenient store. Surely, not everyone has a wallet ready with the right amount of cash. Even businesses cannot simply withdraw their funds from their bank accounts that easily. Plus, it is a common business fact that cash can be locked up in customer invoices or may have already been restricted for certain operational expenditures taking them out of the financing options. What do businesses resort to then to acquire their needed commercial properties? That’s right, loans and asset sale.
But here’s the underlying question. We all know how long most loans can take before it gets approved. Likewise, putting up an asset for sale, say an unused and redundant delivery truck does not guarantee that someone buys it at an instant. It can take day to months depending on the asset or property being sold, the price and the market’s interest of it. This is where getting a commercial bridging finance is a good idea. What is it, you may ask?
Commercial bridging finance is a method in which companies get to bridge the gap between the purchase of the commercial property they wish to acquire and the yet to be completed main source of funds to support such acquisition (i.e. bank loan or sale of old property).
It is a kind of loan that anticipates a loan (or anticipates the closure of a sale). This is what makes it useful in the first place. We all know that many buyers await and watch out for a certain property no sale. Of course, the brokers or the owners would want to give it to someone who could give them the best price as well as provide payment. We all know about the imperative down payment and if your funds have not arrived yet then how can you pay for such and close the deal?
To put it simply, a lender like alternativebridging.co.uk provides a short term loan to be used when your fund sources have not been realized yet. It allows the company to acquire the asset it has set its eyes upon. Business is business and these assets aid operations.
Property bridging finance is not new anymore. In fact it has become quite a popular way or method for asset acquisitions for individuals, families and companies alike. But just in case you do not know what it is yet or perhaps know a little and would want to expand your knowledge on it then you’ve come to the right place.
Property bridging finance offers what we call the bridge loans. These short term loans are coined as such as they would connect or should we say bridge the gap between the purchase deal and the main line or source of funds to buy it. In most cases, people buy a home, an apartment, an office space or an entire building not with outright cash from their wallets. Most of the time they make use of a loan or mortgage or sell off an old or existing property and use the funds derived from it.
What are its pros and advantages?
First, bridge loans are a definite time saver. It allows purchasers to hasten closing of the deal and decrease any loss of a good deal. Second, they are short term so one is rest assured that it ceases being a burden after some time. Third, they allow home buyers to buy the property and use it while the mortgage or the sale of their old house is awaiting a buyer. Additionally, the said bridge loans have flexible payment methods. You may opt to pay it once it matures or you can do so earlier if you already have the resources.
How about its downsides?
Because it is supposed to be a short-term loan, using it as your main line of credit can become more expensive overtime as they often have higher interest rates. So what is one supposed to do to counter this? Use property bridging finance as they are supposed to. Pay it off once your mortgage or loan has been completed or once the sale of your old asset has been done and proceeds received, as mentioned earlier.
Should you use a property bridging finance? It really depends on your situation plus you have to weigh in the pros and the cons that could arise. Talking to an industry expert, some friends and family with experience and doing your own brand of research can help. Likewise, it would be advisable to call up a professional on the matter to get a deeper understanding.
Bridging loans have been named as such due to the fact that it connects the gap between the asking price or down payment of a property and the sale of an old property or approval of a mortgage from which the main source of funds are to be derived from.
It is a given fact that real estate properties may they be commercial, industrial or residential assets can cost quite an amount. Not everyone has an over spilling bank account waiting to burst out. Many of us, individuals, families and even businesses have to find ways in which to pool the needed resources.
In most cases where a ready bank account or check is not available, a mortgage or a bank loan is applied for. Unfortunately, we all know that these two can take quite a considerable amount of time before they are approved and made available to the borrower.
But what if you stumble upon a good deal? What if that metropolitan rental space you have been eyeing on has recently been made available? What if your dream home has been put on sale? What is the best apartment and dorm room nearest to your university only has two more spaces left? And what if at the same time your mortgage or loan has not been completed yet? Will you give up? Of course you won’t! This is where the bridge loan steps in.
Bridging loans are first and foremost short term or temporary. This means that it is a debt that only goes on for a limited period of time. It will not take years to repay so you are assured that it won’t be a burden and you will not be stumped with two loans at the same time.
Secondly, they are often repaid using the proceeds of the sale of the old asset initially put on sale or the bank loan and mortgage that has just recently arrived.
Third, because they are faster to attain they save you loads of time and allow you to close a deal before someone else grabs it from your lap. No one wants that for sure. You can finally say goodbye to opportunity losses.
Bridging loans are a good way to provide for that down payment when you need to close a good deal. It’s a good idea for many and it has worked wonders. It could be the same for you too.