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SME Bridging loans

Raising capital as a small business can be tricky, particularly at a time when the banks are reining back their lending, retracting overdraft facilities and asking for loans to be repaid.

Below we take a look at bridging loans for small businesses and the ways in which you might utilise a bridging loan as an alternative financial solution to a bank loan.

Small business bridging loan versus bank loan

Essentially, comparing a bank loan with a bridging loan is rather like comparing apples and oranges; however, bridging loans can be useful on occasions when you might think a bank loan is the only option.

Firstly, be very clear that a bridging loan is a short-term financial product and will need to be paid off in a timeframe between six months to two years, whereas bank loans can be an ongoing facility. However, if you need an injection of cash and have a tightly structured exit strategy you can use a bridging loan to your advantage.

Benefits of a bridging loan

  • Bridging loans allow you to access funds quickly (within 24 hours in some cases)
  • Interest can be paid monthly or can be ‘rolled up’ into the loan
  • There are unlikely to be early repayment charges because the loan is over a short period
  • Bridging loans can be secured on more than one property

Uses of a bridging loan for a small business

If you have never previously come across bridging loans as a small business but you are faced with any of the following circumstances, contact our team to discuss if a bridging loan could be a useful solution for you:

  • Redevelop business premises
  • Raise capital to invest in stock
  • Buy premises for a new business
  • Consolidate debts before starting a new business
  • Fund the launch of a new part of the business
  • Increase cash flow over a short term
  • Avoid factoring invoices

Do bear in mind that all bridging loans are secured, so you must have assets available against which you can borrow, and whilst a bridging loan can be useful to manage an ad-hoc cash flow issue, it is not suitable for long term and repeated cash flow problems.

Get the best advice from our experts by calling on the numbers above or completing an enquiry.

This information should not be interpreted as financial advice. Bridging loan rates are subject to change. Speak to our advisors for a loan illustration.