Business Finance

Businesses need access to fast, flexible finance solutions, and bridging finance is an exceptionally good fit to meet the needs of modern commerce

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In the modern world of business finance it’s become more important than ever for companies to be able to react quickly to changing circumstances. Ongoing globalisation and the increasingly pervasive role of digital technology throughout the world has meant that businesses must be able to think globally and react instantly. In order to do so, businesses need to have a stable and secure source of finance which can be quickly used to meet a wide variety of needs, and bridging finance is a highly attractive way of fulfilling these tough requirements.

In this article we’ll cover the basic needs of businesses and why bridging finance is so often the right choice. In addition, we’ll highlight what businesses can do to expand using bridging loans, and how a flexible financial solution can enable commerce to thrive and grow quickly and responsibly. Bridging finance can be a powerful tool, but it’s important to understand precisely what the potential implications of this form of finance can be; anyone considering bridging finance for their business should first consult their financial advisor.

What are the needs of Business Finance?

Before we begin discussing how bridging loans can be used to empower developing businesses, we should first take a look at what exactly business finance is. In essence, business finance is a form of funding which is designed to provide a lump sum of capital, which can be used for a variety of purposes. For those used to thinking of loans as a way of meeting sudden unexpected costs, such as personal consumer loans, this form of finance might seem somewhat tough to appreciate: however, business finance is one of the most vital cogs in the economic engine, and the prosperity of almost every business in the world depends upon it.

Generally speaking, a business will need a significant chunk of capital in order to expand. Whether they’re buying up new premises, upgrading their equipment, funding an advertising campaign or training new staff, a business is going to need access to substantial capital in order to pay their way. However, businesses which are expanding rapidly are rarely in a position to put a lot of capital aside for the future; growing companies are continually reinvesting their profits in order to keep up momentum, and simply cannot afford to have money sitting in the bank doing nothing. This means that if an opportunity comes along that requires a large cash investment, a growing business must either pass it up or turn to a business financier.

In most cases, a business will want to take out a long-term financial policy with a mainstream lender. However, although these policies are generally fairly affordable, they are also difficult to put in place and are subject to a lengthy application and validation process. For many businesses, the time it takes to complete this application is too long; by the time funds are made available it’s often too late, and the business has suffered as a consequence. Instead, a short-term solution is necessary to help “bridge the gap” until long-term finances can be arranged, which is where bridging finance comes in.

Bridging Loans for Business Finance

Bridging loans are high-value, short-term loans secured against a borrower’s assets; they serve to enable businesses to seize opportunities quickly without having to wait for mortgages (or other long-term finances) to come online. Because bridging loans are often extremely fast to put in place, with some lenders offering completion times as low as 7 days, they can be used to secure an opportunity almost immediately. The borrower then gets the best of both worlds; they can make their initial purchase straight away, and once they’ve arranged a cheaper long-term solution they can repay their bridging loan.

Bridging loan is particularly well-suited to business finance because it is an extremely flexible form of loan; almost any combination of size and length can be obtained, and bridging lenders are able to negotiate with their clients to come to an agreement that suits both parties. This contrasts with the rigid structure inherent to most mainstream lenders that requires borrowers to fit within a strict “check-box”, and forces borrowers to adapt to the lender’s needs. Bridging providers are often able to be so flexible because they are made up of a small team of highly professional experts, meaning that lines of communication are kept short and borrowers can always speak directly to a decision maker - red tape is kept to a minimum.

Uses of Business Finance

Bridging loans are commonly used to purchase property, as they provide a perfect solution for a common problem. Very often, a mortgage might not be an appropriate solution for purchasing a property - it might take too long, or the property might not be mortgageable. In either case, a bridging loan is commonly used to purchase the rights to the property so that work can begin, and a mortgage is then sought afterwards. However, this is not the only use to which bridging finance can be put, and there are many other situations in which it can prove indispensable.

The quick access to capital that a bridging loan provides can also be used to fund the purchase of plant machinery or equipment or to help with the running costs of a business. By giving a company breathing room in their balance sheet a bridging loan can make the difference between success and failure for a growing business, and some specialist providers also offer innovative financial products like invoice discounting and revolving trade facilities, which give borrowers a scalable source of funding that matches their needs.

Another common use of bridging finance is to help clear a business’s tax bill. Many fast-growing companies will incur significant tax bills over the course of several years of trading, and the use of a bridging loan to quickly and easily clear these off can be extremely useful. Although a bridging loan itself will need to be repaid with interest, the ability to clear off a large tax bill at short notice is often a useful option for businesses that have undergone significant growth.

Common Uses Of Business Finance

  • Overview

    Businesses need access to fast, flexible finance solutions, and bridging finance is an exceptionally good fit to meet the needs of modern commerce

  • Business Loans for SMEs

    SME's require a stable, flexible source of finance in order to meet deadlines and even out cash flow, and bridging finance provides an excellent solution

  • Capital Financing

    Bridging lenders provide fast, flexible finance that can be used to create capital for many different uses, enabling businesses to expand and invest confidently

  • Cash Flow Finance

    Businesses succeed or fail on the strength of their cash flow, and bridging finance can be an excellent way to maintain a cash flow’s resilience in tough times.

  • Debt Refinance

    Debt is part and parcel of modern commerce, but businesses must remain adaptable when handling debt; bridging loans can help enable this financial flexibility.

  • Farm Finance

    Farming is a difficult business, and farmers need to have a finance plan in place that enables them to expand and invest easily from year to year

  • New Business Finance

    Bridging finance provide a flexible way for new business owners to source essential extra capital, helping their commercial ventures get off on the right foot

  • Nursing and Care Home Finance

    Nursing and care homes are a unique blend of commercial and property investment, and require the careful touch of specialised, experienced bridging lenders.

  • Pub Freehold Finance

    Financing the purchase of a pub freehold or long leasehold requires the flexible, adaptable solutions that can be arranged with specialist bridging lenders.

  • Revolving Trade Finance

    A revolving trading finance facility is a form of funding that offers a highly flexible financial solution for businesses that need to meet fluctuating costs.

  • Short Term Cash Flow

    Temporary bridging loans are an ideal way to meet a business’s ongoing operating expenses, helping to maintain their cash flow whilst meeting unexpected costs.

  • Turnaround Finance

    Turnaround finance is a method of restoring a business in temporary difficulties, and can be used to save otherwise viable companies from bankruptcy.

  • Unsecured Business Loans

    Unsecured business loans enable small businesses to be flexible, meet expenses and expand without resorting to cumbersome long-term financial solutions

  • Working Capital Finance

    Bridging finance can provide essential working capital for businesses at short notice, and is a highly flexible way of creating funds for a variety of needs

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