Sometimes, you need an injection of finance. It may be that your business has a golden opportunity and needs a decent sum of money in a short time to take full advantage, or perhaps you’re looking at a new office space and feel a bridging loan is the fastest route to making it happen. Whatever the reason, bridging finance has become hugely popular over the last half-decade. 

If you’re seeking a bridging loan, read on for our tips to help you make sure your ducks are in a row before applying.

How Much?

This is an obvious, but vital, step in determining the bridge loan deal you seek. Depending on what you are seeking a bridge loan for, the sums can vary dramatically, and you need a very clear picture of how much you need before approaching a bridging finance lender.

But this isn’t just about what you’re going to borrow, it’s also about how much you’re going to pay back. You need to consider the collateral you will be putting up against the loan. For businesses, this could be property such as the office premises – including on -site equipment. You may also use the business itself as collateral, or client sales and invoices.

It’s vitally important to know that you will have to pay off the loan and interest in its entirety and ensure that you will be able to do this. If not, your collateral is at risk and if that includes the business itself, the bridging loan will be for naught.

Open or Closed Loan?

It’s also important to know the type of structure your bridging loan will take, and which one is right for your situation.

Open bridging loans offer more flexibility to your business as there isn’t a fixed repayment date. The repayment date will likely be less than 12 months from the date of the loan, but there’s no mandatory date for repayment in place.

A closed loan, as you might expect, has a specific date when repayment is expected by the lender. This is a good option when you have a clear idea of future finances and how the bridging loan is going to facilitate opportunities for the business.

Exit Fees

It’s also important to know the exit fees involved when taking out a bridging loan for your business. Most lenders will charge one month’s interest as an exit fee and this will usually apply whether the loan has run its full course or you are repaying the balance early.

It’s important to know this if you are in a position to repay the bridging loan earlier than the scheduled date. Many businesses can forget about exit fees and not plan accordingly. Know the terms and have it nailed down when sizing up potential bridging lenders.

If your business is seeking short-term, bridging solutions for its financing needs, contact  GIC Capital today for a comprehensive, professional and informed service.