We want this experience to be as fast and as simple as possible, so we can fund you ASAP. As we do this every day, we thought we should share some tips with you, and highlight the common mistakes that get made. Please take a moment to watch as there is sure to be something in this short video that will be of assistance to you.
It’s our aim to help as many small and medium-sized businesses as possible, and we have been successfully doing just that for years, so let me assure you, you’ve come to the right place.
Now, whilst Ive got you, there are a couple of important things you need to know. Firstly, we are all about speed, honesty and transparency, and one of my fantastic team members will be in touch with you very soon, during business hours, to have a quick, No Obligation chat with you to discuss your application. It should take no more than a few minutes.
Secondly, we ask that you DON’T apply with any other lenders until we can chat with you. Now I don’t say this so we can do a hard sell on you. No, it’s simply because… unlike us, most other lenders will automatically do a credit check on you as soon as you apply.
Sadly, the more hits on your credit file, the lower it will make your credit score. So, hold tight for one of the friendly Homesec team members to call. If we can help, we will.
If for some reason we can’t, we will go the extra mile and point you in the right direction.
Suppose you set up a long-term loan for your company’s expansion project, which will only start at the beginning of next year. In the meantime, the project needs additional funds. If you choose the best bridging loan, you are taking out a short-term loan that matures at the start of your long-term loan like 2nd mortgage loan. This way, you will have access to funds to start your project while waiting for permanent funding. You can then pay off the best bridging loan with the proceeds of the long-term loan. Of course, this is just one example. Bridging loans come with all sorts of terms and other considerations. In this post, we will review everything you need to know about bridging loans, and you can decide if they are perfect for your business.
Short-term bridging loans, becoming increasingly popular in Australia, are available from various lenders. Bridging loans in the past were only used to bridge the gap between buying a new home and selling your current home. There are now other situations in which you can consider short-term bridging loans, which we will discuss later.
These loans are short-term, typically lasting 1 to 12 months, ranging from $20,000 to $5,000,000, depending on the lender and circumstances. In Australia, you can often apply for the best bridging loan online. Private business loan lenders, in particular, are known for offering easy application processes, minimal paperwork, and fast funding (usually within one to two days of application).
Bridging loan terms and application procedures vary greatly depending on the type of borrower and lender. For example, let us say you are a residential property developer who wants to buy a vacant lot and build a house to sell later. You are planning to get a construction loan, but in the meantime, you need funds to cover the property’s purchase price. So, you can get this type of loan to fill the gap. In this case, you will need to work with a lender who offers a land-bridging loan.
Some lenders offer bridging loans to start-ups in need of cash , these type of private business loans need to be secured. In these scenarios, individual lenders have specific application requirements and conditions for bridging loans. However, these loans generally tend to have higher interest rates (compared to other loans), shorter terms, and stricter collateral requirements. The application process is typically similar to a short term business loan. The lender expects the following information during the application process:
Finally, the repayment of your 2nd mortgage loan depends on the loan amount and term you require. In most cases, bridging loans accepts a lump sum payment at the end of the term. However, if you use this loan for real estate, the lender will structure it so you can pay it with the proceeds of the real estate transaction.
The best use of short-term best bridging loans is to complete the tricky juggling act of buying a new home before your current one is sold. Timing is everything in this case, and getting it wrong can mean you miss out on buying your next property or are forced to sell your current home in a hurry. The best bridging loan can be a great solution if you need short-term funding to start your project quickly before securing permanent funds. However, there are two scenarios where a bridging loan is most suitable.
Bridging loans are mostly used in real estate transactions. As mentioned earlier, they are often helpful for developers and builders. However, other potential real estate scenarios are suitable for bridging financing. Whenever you buy a property and sell another one simultaneously, you can use a bridging loan to help cover closing and other costs. Commercial investors often use bridging loans, when they want to buy a new property before selling their current one.
Bridging finance can be a powerful tool for business start-ups. Bridging loans allow start-ups to meet liquidity needs between funding milestones at any stage. For example, let us say your start-up has raised $1,000,000 in funding round one. Also, assume that your next funding round depends on whether your business is profitable. Eventually, you realize this is the problem because you need more private business loans to make a profit.
In this scenario, a bridging loan could provide short-term funding to generate income. Then, repay the bridging loan as soon as you secure your next round of funding from traditional sources.
Bridging funds come with some benefits, which are:
You do not have to see your next commercial investment pass by while trying to sell your current property.
With some leeway, you can avoid potential losses from a hasty or forced sale of your current commercial investment.
Some lenders charge higher interest rates for bridging loans, but the good news is that many lenders charge competitive rates for these types of loans.
By repaying the loan in a lump sum when the property sells you can free up cash flow for your business or next commercial investment.
Unfortunately, there is no formula for determining whether a bridging loan is a suitable financing option. As with any additional working capital, there are pros and cons when looking for the best bridging loan. Analyze your situation well before making any decision.
If you are a business owner, you will know that cash flow is the only thing that reflects your business’s operating performance and success. However, due to changing market dynamics, unprecedented events or reasons, you can have trouble with inadequate cash flow. It again leads to mismanagement and business failure.
If you are a small business owner, the result will be more devastating as you might have to face sudden changes. So, you might be wondering how you can mitigate such business risks. To diminish these threats, the best solution could be a short-term bridging loan or business loan.
The short term private business loans can be versatile to help you cover the cash flow deficiencies when times get rough. Not only this, but it also enables you to maintain the cash flow in your enterprise.
Cash flow is the total cash amount that a company transfers and receives during a specific period. In this time, all the cash outflows and inflows are considered for different business activities. The stakeholder’s value increases in a company by the sufficient cash flow or by optimizing the FCF (Free Cash Flow) in the long term.
The cash flow statement is one of the significant accountant statements describing the cash equivalents or the cash a business has. The cash flow indicates how a company has efficiently handled its cash position and has raised enough capital to cover all the operational costs and the liabilities.
Cash flow= operating activities- cash from the investment activities + cash from financing activities
Forecast of cash flow=projected inflows+ beginning cash-projected outflows
Operating cash flows=non cash expenditures+ Net income- enhancement in the working capital
But as a business professional, you might consider enhancing your business’s cash flow is a big undertaking. However, the task is simple if you take out a short term bridging loan. So, to boost the cash flow from these types of loans, go through the below points. These tips will help you to cover your cash flow shortages efficiently.
To wrap up, we can say that these are the ways to improve your cash flow if you take out a private business loan. Since you will have sufficient cash, you can use the money for your dream venture expansion. Therefore, if you face cash flow shortages rapidly, opt for these types of financing and cover the deficiencies.
With different financial alternatives to select from, sometimes it becomes trickier for the business owners to identify which financial option will be perfect for their company’s benefit. But nowadays, one financial product is gaining rapid popularity, which is bridging finance. It is a type of short-term financing loan for business purposes. The primary purpose of applying for a bridging loan is provide a short term solutions for businesses and efficiently support the business whilst they look for a longer term permanent financial solution.
In the past bridging loans were only approved for property purchase, developments, and auction buying when you would use the loan to purchase another property whilst you waited for the existing house to sell. However, now a borrower can utilize bridging loan finance for other business-related purposes, which might not be necessarily related to the property purchase. Due to the short term nature of the bridging loans, the interest rate is a bit higher, but borrowers find it convenient due to the flexible terms and conditions.
It is time to check out the undeniable advantages of bridging loans which are as follows.
When you seek help from a bank or any other financial institution for a large amount of money, they either take months to get approved and require extensive financial information. But in the case of bridging business loans in New Zealand, the business owner can get the funds needed within two days of approval and the funds go straight into their bank accounts.
You can get bridging funding against your flat, shop, commercial unit, farm, development land, house, office, or vacant land. A borrower can also use properties already for sale, which makes the process much easier also.
Most of the traditional banks offer loans against a standard residential property. Bridging loan lenders, however, can use any type of property to secure the funding.
Bridging loans can be used for any worthwhile business purpose, they are also perfect for start up businesses who do not have the financial information to support a traditional bank loan.
Numerous bridging loan providers offer funding as per their criteria. Usually, the lenders do not get concerned about the credit history, income, and affordability. They only want to know the property value that the borrower will use as security and what is currently owing on the property to ensure there is sufficient equity available.
You can submit more than one property to a for bridging finance as collateral and security. It can be a first or second mortgage or an amalgamation of both. The more equity that you can utilise in property the higher the Bridging loan that can be approved.
If you have the support of bridging finance, you can negotiate with the seller of a property with the confidence of knowing that funding is approved and available.
A borrower can use bridging business loans in New Zealand for different reasons, which are as follows.
When the buying of a property in a company name gets funded from the proceeds of another property sale, sometimes it cannot get completed even before or after the purchase. In this case short-term funding is necessary for bridging the gap for the purchase. After the deal gets complete, the borrower repays the bridging funds from the sale of the property.
Bridging loans can also replace the current funding, which is approaching its term-end. It is one of the best alternatives for extending the loan term or releasing additional funds.
The problems of cash flow can reduce productivity while running a company. For instance, a traditional bank may consider an overdraft facility, which will take time. The business owners will run late in paying the wages and invoices. But with the help of bridging finance, there is no such problem as this type of loan gets approved with ease and solves the cash flow problem within the company.
It is now clear that although bridging funding was previously primarily used for property purchase, it also assists in various other purposes. It is now widely used for an worthwhile business purpose providing you have sufficient equity in real estate.
Bridging finance has been in the market since the early 1960s. Back then it was only offered as a way to buy and sell property and bridge the gap between when one property was being purchased and another one sold.
However things have changed, bridging finance has evolved and has been made available to business owners across all types of industries, such as automotive, medical and dental, even in accounting and law. Nowadays, even small business lenders already offer business bridging loans to customers who would prefer them to other types of business loans available.
So how do business bridging loans work for the business owner?
A business bridging loan is a type of short-term business loan that helps “bridge” the funding needed by the business owner until he or she finds a more permanent source of funding.
What are some of the instances when your business might need bridging finance?
A business bridging loan is normally secured against a fixed asset which is usually the real property owned by the business or the business owner. Interest rates for business bridging loans are also higher compared to other loans and are capitalised and paid when the loan reaches its maturity. What is good about availing of a business bridging loan is that it is quick and easy to apply for it.
So why would a small business want to avail of a business bridging loan if there will be a bigger impact on the financial capabilities of a business due to high-interest rates?
Business bridging loans are quick and easy to apply for. Online facilities have been made available to business owners to lodge their loan applications and with very minimal documentary requirements, approval is easy and the loan proceeds are transferred to your bank account within a day.
Another good thing about business bridging loans for business owners is the fact that credit ratings and scores are not the sole basis of assessing a loan application. With most banks and lending institutions, they investigate and create hits on your credit score ratings and whenever this happens, the credit score readily goes down further. Loans are not usually granted when the credit score takes one hit after the other in the hopes of being granted a loan for the business. A business owner or borrower may be able to get a business bridging loan even when his or her credit rating is not so great. The collateral security will supplement any unfavourable credit score of the business or the business owner.
There are two kinds of business bridging loans that can help the business owner in filling immediate financial gaps in its business operations. Bridging business loans are those that have a specific end date that is agreed between the small business lender and the business. It could be one month to six months or even up to a full year, depending on the terms and conditions of the small business lender who granted the loan.
Business bridging loans are not meant to be structured over a long-term repayment schedules because it is likely that the monthly interest rates for the duration of the business bridging loan can not be sustained for a long period of time. They are designed to allow access to cash quickly for the business but to be repaid within a very short period of time, this is known as an exit strategy. The exit can be from sale of an asset or a refinance as an example.
Bridging finance will buy the business owner some time to look for a more permanent source of funding. Although there may be lending companies that are flexible enough to extend repayment terms, the business owner should be mindful of the impact to business’s cash flow if extended for too long. Business bridging loans are available for the business’s interim cash needs, and this should not be the main source of the business operations’ funding in the long term.
Taking out business bridging loans are best suited for those cash flow interruptions that are merely temporary and are short-term in nature. The business owner should still plan and effectively strategize the financial needs of the business and make necessary adjustments to the business operations after the business bridging loan has been repaid. As mentioned earlier, business bridging loans buy the business owner time to look for more permanent sources of funding.
When used wisely, business bridging loans are extremely helpful to the business owner and its business operations. Aside from it being one of the quickest ways to address the business’s financial concerns, small business lenders will not require financials of your business and that of the business owner. Small business lenders have made it more convenient for business owners to do quick fixes on the business’s short-term cash flow concerns by making business bridging loans available for their use. Business owners are fortunate to have these business bridging loans available to them, and they should always be considered for their business’s immediate funding needs.
152 Fanshawe St,
Auckland, 1010, New Zealand
09 888 6550
Business Hours
9am to 7pm
Monday to Friday (excl Public Holidays)
HomeSec Business Finance Limited
NZBN: 9429047936010