Bridging Finance | Bridge Loan | Bridging Loan. Once you understand what the term, bridging finance means,
it’s easy to understand how it got its name. The purpose of a bridging
loans or a bridge loan is to provide short term cash for a real estate
transaction until permanent financing is secured. Bridge loans are commonly
used to “bridge the cash gap” when completing commercial real
estate transactions.
If not, it’s time to start looking for a lender with which you feel comfortable. Go through the bridge loan pre-approval process to see how much of a loan you qualify for. With pre-approval in hand, you can act quickly once a desirable commercial property becomes available. Secure your bridging loan with collateral security.One general requirement for obtaining a bridging loan is collateral. Most applicants will be asked to secure the loan with some sort of significant collateral. Examples of collateral include heavy machinery, business equipment, inventory, other commercial or residential properties owned by or the applicant and even properties involved in the purchasing process.Having a great credit history, for both your business and your private life, and a solid relationship with a lender always helps when applying for a bridging loan. There have even been situations where bridge loans were approved with only a signature – no collateral necessary! Even with good credit, however, expect to pay a slightly higher rate of interest for this type of short-term bridge loan. One-half of a percent or more is typical. The maximum length of a bridge loan is usually twenty-four months. The lender has to make some money on the deal and the higher interest rate is where the opportunity lies. Other factors are also involved in determining the interest rate. The applicant’s calculated credit risk, the value of the items being used as collateral and the amount of time the loan is needed all factor into the equation, too. If you think applying for a bridge loan makes sense for your situation, work with a US Commercial Lending organization that specializes in this type of loan. They’ll help with all the steps necessary and they’ll offer advice along the way. Don’t be afraid to shop around for better rates and terms! The commercial lending market is very competitive and it’s to your advantage to do business with a lender that will work with you and not against you.
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