Bridging Loan

This is a short-term facility specially designed to tide a business over until permanent long-term financing is put in place. It is best suited to the company that has a good competitive position and has an opportunity to do profitable business provided it can produce a sizable amount of money quickly. Traditionally available in the property markets only, bridging finance can be used in many different business situations, some examples of which are as follows:

• Tax Liabilities – when a tax demand is made it is often for an amount that a company cannot access immediately, or within the required time period. This is a perfect opportunity for a bridging loan, normally secured on company or other property with funds rapidly available.
• Corporate Recovery – through offering products such as payment holidays or staged capital repayments a bridging loan can ease difficult financial situations thus reducing pressure on the company and allowing the focus to be on recovery.
• Inheritance tax payment – as inheritance tax must be paid prior to probate this can lead to the property having to be sold a a disadvantageous time. Bridging finance can be used to pay the tax bill, thus allowing the property to be sold at a more advantageous time.
• MBO/MBI – bridging finance is ideal in such situations due to the frequently short time frames to complete the transaction. Bridging finance can be put in place rapidly covering the interim period prior to more traditional methods of finance being put in place.

Bridging finance will always be secured on property, and can be for as high as 85% of the property value although 70% is more normal. The arrangement process can be very straightforward, with decisions in principle available rapidly.

Bridging finance should be arranged as far as possible in advance of use to ensure the funds are available exactly when needed.