Many business owners unfamiliar with the various types of loans out there will ask the question what is a bridging loan? Here is a brief guide to bridging loans and how they can be used to help your business.
The best way to think about a bridging loan is to imagine a bridge that allows you to get from one place to another. The main reason bridging loans are used widely by businesses is to get themselves from point A to point B. The finance provided by the bridging loan is the bridge they then step on to get to the other side.
The loan is intended to allow your business to get to the next stage of growth until you can then secure a longer term form of finance to help you reach your business goals.
Bridging loans can be secured much faster than standard loans which means they are great for those businesses that need immediate cash and don’t have the time to wait around too long for decisions.
Bridging loans can be used by property development or other commercial operations as long as there is an exit strategy in place. Another drawback with a bridging loan is the higher interest rates charged on the amount borrowed.