Business Loans for SME's

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

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While big corporations may make the headlines with enormous deals and multi-million pound transactions, the real bulk of the UK market is made up of much smaller businesses. Companies ranging in size from small back-room operations to larger enterprises with up to 250 people fall into the wide-ranging definition of small and medium-sized enterprises, and within this sector of the economy the most competitive businesses can be found. Within the SME sector there are thousands upon thousands of commercial enterprises all vying to keep their share of the market, and unlike their larger counterparts SME's are rarely able to take on large-scale financial resources. In order to remain flexible and competitive SME's must make use of highly adaptable business loans, exploiting bridging finance as an essential tool for developing and expanding their operations.

While bridging finance makes an ideal tool for SME's in need of financial agility it still comes with a cost, and the nature of bridging finance makes it well-suited to short-term projects. It’s still possible to arrange for longer-term solutions but business owners must bear in mind that bridging finance can quickly become expensive if not properly managed. Before committing to any financial product borrowers ought to seek the advice of a qualified financial advisor, who will be able to recommend suitable terms for the loan.

Bridging Loans for SME's

A bridging loan is a type of finance that’s used to cover short-term costs while a long-term solution is put in place; it “bridges the gap”, hence the name. These loans are exceptionally useful and can be put to almost any purpose, from beginning work on a property development project to injecting cash into a business, and the flexible terms available from bridging lenders enable borrowers to construct a tailored borrowing package.

Typically bridging loans are a form of secured finance, meaning that the money is lent against one of the borrower’s assets. Most bridging lenders are highly flexible when it comes to the types of assets they’ll accept as security; while property may be the most common form of securitised asset, other high-value assets such as equipment and vehicles can also be used. Because the loan is secured against an asset, the lender is able to provide a greater level of funding than an unsecured lender could; since they have the option to reclaim their investment through repossessing the borrower’s assets, they have a safety net if the loan isn’t repaid on time.

While this might sound worrying, it actually makes bridging a much more secure option than many other borrowing solutions, and because bridging lenders have a much freer hand than mainstream banks do when creating their lending packages, borrowers stand to benefit from increased flexibility. This flexibility enables borrowing in situations where high street lenders simply can’t help, and allows SME's to get the cash they need when they need it.

How can bridging lenders help SME's?

A common use for bridging finance in the SME sector is to help smooth out fluctuations in cash flow. Unlike major corporations, SME's are unlikely to have significant reserves of capital (or at least the option to borrow freely if they suffer losses), which makes them highly dependent upon their monthly cash flow. If their income dips, or if a sudden expense comes along, an SME can suffer significantly. Let’s examine two different situations in which an SME business loan can prove useful:

  • Meeting Overheads: Many businesses in the UK suffer “invoice lag”, whereby their customers don’t pay for goods immediately upon receipt. It’s common for businesses to leave invoices unpaid until the full 30-day term expires, or at least for a significant portion of it, which can prove disruptive to the supplier - if a business puts a great deal of capital into supplying goods it puts them in a precarious position until these goods are paid for, because wages still need paying and overheads (mortgage payments, energy bills, etc.) must be taken care of. Let’s say our business has just finished off a large contract for one of their clients, and has successfully shipped it. They may now have to wait for up to a month before the client pays, in which time they still have to subsidise all the monthly running costs - in order to release the pressure on their cash flow, this business can simply take out a business loan to cover their costs.
  • Acquiring New Business: Winning a big contract is the goal of most SME's who want to expand, but stepping up to the next level of production is often easier said than done. Investing in new machinery, new premises and new vehicles can be prohibitively expensive, leading many SME's to simply pass up opportunities as impossible to achieve, but with the right source of finance a business can quickly secure the funds it needs to take on bigger, more profitable contracts. In this instance, our business has just won a contract with a major high street store and needs to purchase more equipment to meet manufacturing deadlines. With the use of a bridging loan, they can quickly raise the funds they need in a short space of time and meet their customer’s requirements.

Why choose bridging finance for SME loans?

Bridging loans are ideal solutions to the problems that confront SME's. They can be provided in large quantities (loans typically range from £50,000 to several million), and bridging lenders work to exceptionally short deadlines; while a bank might take several months to agree to a loan, an application to a bridging lender is typically completed in under a week (sometimes even faster, if necessary). In addition, bridging lenders can provide terms that banks simply cannot agree to, and allow borrowers to make use of valuable options such as deferring the entire cost of a loan until the final repayment; in the examples above, this would enable our businesses to keep their monthly costs at rock-bottom until the end of the loan. As a flexible and highly effective method of providing funding, bridging loans are an ideal solution for SME's in need of financial agility.'

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

National Association of Commercial Finance Brokers Financial Services Authority Association of Short Term Lenders Association of Bridging Professionals

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