Finding commercial finance that's quick, convenient and affordable can play a big part in running a successful business.
Here's how to compare business bridging loan deals and find the best commercial loan rates possible.
Why use a business bridging loan?
Before you start looking for a commercial bridging loan you should always take stock of your situation and decide if it's the best option.
Bridging loans are designed to bridge a short space of time before funds become available to re-pay the loan, for example to buy stock that you're confident you'll sell quickly, to help with cashflow if you're waiting for invoices to be paid, to expand or to invest in a new business that will quickly return profit.
The turnaround for business bridging loans can be very quick, less than 24 hours in some cases, so you get the finance you need when you need it.
What business asset are you using as collateral?
Business bridging loans are a secured type of borrowing, so you will need to have an asset that you can use as collateral.
Typically business bridging loans are secured against property or land owned by the company, however in some cases you may also be able to use other business assets, such as valuable stock, to secure funding.
Most bridging loan providers that offer business bridge loans won't limit the amount you're able to borrow but you need to make sure that you limit your bridge loan to the smallest amount possible.
How long will your commercial bridging loan need to last?
Before you apply you need to have a good idea just how long your bridging loan will need to be in place.
Most commercial finance deals of this nature are designed to be in place for a relatively short space of time, with some lenders offering minimum terms of just 1 day!
However, if necessary business bridging loan deals can extend anywhere up to 2 years, although this is likely to be quite costly and an unsecured business loan may be a cheaper option.
How much will the commercial bridge loan cost?
Like any private or commercial borrowing, staying on top of the costs involved is a big part of finding the best business bridging finance for your circumstances.
Business bridging loans tend to charge interest on a monthly basis and quote interest rates at a monthly level.
However, while it can be tempting to just assume the provider advertising the lowest interest rate will be your best bet, there are actually several other factors you should consider.
Most commercial bridging loans impose fees in addition to charging interest for the duration of your borrowing. These can include (but are not limited to) application and legal fees and early repayment charges. You'll also need to cover the cost of valuation fees and work done by a solicitor.
To ensure that you're getting the cheapest possible loan for your business you will need to factor in all these charges to find the total cost of your borrowing.
Like any other loan bridging loan companies will base the decision to accept or reject your application and determine the interest rate they charge you on your company's credit rating, income, stability and length of time trading.
Bridging loans for self employed individuals, limited companies, individuals wanting to invest in business and buy to let landlords looking to buy a single house or portfolio of properties are generally available from most lenders as well as bridge funding for larger, more established organisations.
Most bridge lenders that offer commercial finance will take a broad approach to the types of business and credit standing of the individuals and companies they will extend bridge loans to.
Bridge loans for bad credit companies can be made available although this is likely to be at a significant cost.
To make life a little easier our commercial bridging finance comparison table gives you an indication of the interest rates charged by the UK's major commercial bridging loans providers, so you can compare rates side by side.
However, before applying you should carefully consider whether borrowing with a bridging loan is the best and most cost effective choice for your business finances, both now and in the future.
About our bridging loans comparison
Who do we include in this comparison?
We include bridging loan lenders from our broker, Mortgages Warehouse. Here is more information about how our website works.
How do we make money from our comparison?
We have commercial agreements with some of the companies in this comparison and get paid commission if we help you take out one of their products or services. Find out more here.
You do not pay any extra and the deal you get is not affected.