If you need access to fast short-term capital did you know that bridging finance could be an option?
Getting approval for loans the normal way can be a slow process and bridging finance can provide you with short-term relief until a longer-term solution is found.
So what is bridging finance?
It’s basically a loan usually up to 12 months that is backed by commercial, industrial or residential property.
Capital Bridging Finance CEO Damien Simonfi told The Adviser that it’s a useful tool to solidify your position until a longer-term strategy can be implemented such as a long-term finance or sale of a property.
To make things clearer, there are two main situations where bridging finance is particularly helpful.
The first such scenario is if you have identified an opportunity that is just too good to pass up and you don’t have the luxury of waiting several months for a bank or lender to come to the party.
The other scenario that you might consider bridging finance is if you are asset-rich and cash-poor and have urgent financial challenges.
Let’s say you have unpaid tax, bills, creditors who require upfront credit terms or a builder who has several projects running but is being slowed down by bad weather creating cascading issues with settlements.
It’s probably no surprise that bridging finance is usually more expensive than a 25-year loan but on the flipside the process is quick, the funds can be accessed within five days and there’s rarely any exit fees.
Mr Simonfi says that at Capital Bridging Finance they have one flat inspection fee, one flat interest rate and don’t penalize you for exiting early.
“The credit science behind this is that most exit strategies for bridging finance loans are by way of sale of property, refinance or business cash flow,” he told The Adviser.
“The likelihood of knowing precisely when your property will sell, or when your finance application will be approved, is extremely difficult, with banking policies always changing.”
“We don’t penalize borrowers for not knowing the specific date that their property will sell or their refinance will be approved.”