Bridging finance used to help business honour contract

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A wholesale business used a bridging loan to enable it to meet a contract deadline to supply goods to a major high street retail store, reported in September 2017.

The business required a £40,000 loan for a short period of between two and four months to enable the purchase of enough goods to supply the contract. Traditional banks could not provide a loan because of the short period of time by which the money was required. The solution was to apply for a bridging loan, since bridging lenders are used to supplying flexible loans for short periods.

According to HFBS, which provided the loan, the borrower had a less than perfect credit record and the property he wanted to use as security for the loan was uninhabitable. These are factors that would also cause many high street banks to refuse a loan application.

Bridging finance lenders, however, are used to short-term lending and have less strict lending criteria than high street banks. They look at the value of a deal, and the worth of the asset used for security, rather than a borrower’s credit score or the condition of an asset. As long as the loan applicant has a realistic exit strategy (a plan for when and how the loan will be repaid) there is often a good chance the loan application will be approved.

If your business needs short-term finance or you are refused a loan by your bank, discuss your situation with a bridging broker. It could be that bridging finance is the solution you need to raise short-term finance.

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