The Ideal Solution When You Need To Raise Short Term Capital Quickly
In this post, we’re exploring the basics of commercial bridging finance. If you’ve heard about commercial bridging finance, but, are not entirely sure what it is, then you’ve come to the right place.
What Is Bridging Finance?
Bridging finance is also referred to as bridge loans, a swing loan, interim financing or gap financing. In all instances, it is a short-term loan (up to 12 months) which provides immediate cash-flow relief while awaiting money from another source.
When Do You Need Bridging Finance?
There are many instances when bridging finance may be the best option to suit your business needs. It is most often used in real estate. The loan provides funding to develop property in order to get it to its desired sellable point with the proceeds from the sale being expected to be used to repay the outstanding amount. It can also be used to provide the money for a deposit on a new property while waiting for payment on the sale of an existing property.
Commercial bridging finance may also be a suitable solution when you need to cover expenses for a project where the client will only pay on completion. It can also be used as interim funds until long-term funding is secured.
What are the benefits of Bridging Finance with Transaction Capital Business Solutions?
- Provides breathing space while awaiting funding or proceeds from another source.
- No monthly capital repayments are necessary. The capital loan amount may be repaid as a balloon payment by the end of the loan term.
- Flexible interest payment terms. You may choose to service interest monthly (partially or in full) or repay the capital amount and total interest accrued at the end of the term.
- The loan is structured as a short-term (6-12 months) advance and interest is charged on the amount outstanding.
- The capital loan amount is payable, in full, by the end of the loan term.
- Interest can be serviced in one of three ways:
- Monthly in full, leaving only the principal debt payable as a balloon payment at the end of the term.
- Monthly in part, with the remaining interest rolled-up with the capital amount and payable as a balloon payment at the end of the term.
- Waivered monthly, where the interest is capitalised monthly and payable with the capital loan amount at the end of the term.
- There are no early settlement fees, should the capital and outstanding interest be settled before the end of the loan’s term.
How Does Transaction Capital Business Solutions’ Commercial Bridging Finance Work?
We provide the cash you need by using residential or commercial property as security for the loan.
The process to acquire bridging financing is straight-forward. While credit and financial reports are considered in the application process, they are not the sole determining factors in credit granting.
All that you need to do is to demonstrate how you will get the funds to repay the outstanding amount by the end of the loan’s term. Perhaps the money will come from the sale of a property, or your customer will pay you for work done at the end of the project. Our commercial bridging finance moves cash that you will receive in the future to today.
Once you’ve provided us with your repayment strategy and present a residential or commercial property as security, you’re ready to go.
Minimum application criteria
- Transaction Capital Business Solutions’ bridging finance is only available to Juristic Persons.
- Credit can only be secured by a residential or commercial property.
- Transaction Capital Business Solutions must be the primary bondholder on the property (we will register a bond on the property).
- Only property valuations performed by Transaction Capital Business Solutions will be accepted.
If you would like to know more about bridging finance from Transaction Capital Business Solutions, you are invited to speak to one of our business advisors.