There are many scenarios where you might face a short-term gap between needing to make a payment and receiving funding from another source – which could be a loan or income from selling stock or other assets.
In the lifecycle of your SME this might happen during:
Bridging finance (also known as gap funding) may be ideal as it’s often quicker and simpler to arrange than a bank loan and usually for a shorter term. Typically, funding will be from one to 18 months, so you’re not tied in for a long time.
However, interest rates can be higher than other loans, so we will always advise if other options could work for you such as invoice financing, asset finance or a commercial mortgage.
Funding needs to be secured against assets such as:
There are three main ways of repaying a bridging loan. The options will depend on what you secure the loan against and how you will repay it (e.g. with another loan or by selling stock, services or assets).
In the aftermath of the pandemic, a bridging loan could be very useful to help you respond to rapid change and opportunities.
Bridging loans themselves are not regulated in the same way as other loans, so as a regulated adviser, we take great care to make sure you face no hidden traps or charges. We clearly explain any arrangement, valuation or admin fees.
That means you can make a quick decision and get back to running your business.