Bridging Finance Explained: A Short Guide

When it comes to running a business, or completing a development project, speed matters. Especially if you’re working on short term projects, properties or business transactions with a fast turnaround.

Traditional bank lending routes can often fall short when covering cash flow - that’s where bridging loans step in. Bridging loans can offer speed and flexibility as a short term finance solution when used wisely.

What is bridging finance?

Bridging finance is a short term finance loan used to be able to ‘bridge the gap’ until longer term funding can be in place. Bridging loans are designed to fill urgent funding gaps, unlike traditional bank loans that are not typically as quick in their turnaround. In most cases bridging loans are secured against property or land which makes approval quicker. 

When is bridging finance used?

Bridging finance is frequently used for individuals or companies requiring "fast" finance to facilitate a property purchase, business cash flow, development or refinance. The option of bridging finance could be a good choice if you require funds faster than a typical lender but you also have a clear plan in place, are aware of the costs and are comfortable with short-term borrowing.

The importance of having specialist lawyers

Individuals or companies who require bridging finance usually require the funds quickly. This means having expert lawyers who regularly deal with bridging finance is imperative to ensure that it is carried out efficiently and in a timely manner. Having a specialist lawyer also helps you to obtain the funds quickly for the end goal. Also, bridging finance doesn't come without risks. A specialist lawyer will be able to make you aware of the risks, understand the terms and have a realistic exit plan.

Overall, bridging finance can be a useful tool if you require flexibility and speed, but the key is to ensure you have a clear strategy and full understanding of the responsibilities and costs involved. 

Sara Parry and Andrew Foley Jones directors of Mackenzie Jones deal with these matters on a daily basis and can ensure that the process is followed diligently and efficiently to ensure a fast turnaround for our clients.
 
Call us today for any advice needed on your Bridging finance for residential, commercial properties or development needs.

This information reflects our current understanding of the proposed changes, which could be subject to change. This does not constitute legal advice.