As a limited company, one of the many challenges you might experience is getting your business off the ground and sourcing its very own establishment. You have the right business skills and right product or service but need to secure your premises to make it a fully functioning company. On the other hand, you might have successfully established your limited company and now you’re ready to expand your operations. A bridging loans could be the right solution for you.

What is a Bridging Loan?

A bridging loan is a short term financing solution for a property purchase. In many instances you won’t be able to secure an ‘ordinary mortgage’ until you sell your current premises. However, as a loan, you will be able to secure this before a sale in order so that you can purchase your ideal property.

Naturally, with any short term financing solution, the interest rates are expected to be higher. With this in mind, it may still be a very viable option for a limited company, whilst awaiting a more long term financing solution to come into place.

What are the benefits?

Like with any financing solution, there will be pros and cons depending and the kind of option you go for. Your financing advisor should always make you aware of these so that you can understand which is right for your company.

One of the most distinguishable characteristics of this loan is speed of application. Unlike a mortgage which is has become a much lengthier process (due to the new Mortgage Market Review rules introduced in April 2014), a bridging loan can be a much shorter process. This might be highly welcomed in times of urgency such as when property is purchased at auction.

The very nature of buying and selling property creates a chain process. One seller can’t purchase until their own property has been purchased and thus creates a lengthy waiting game for all. Bridging loans speed up the chain by allowing a buyer to proceed with a purchase of a property before theirs has sold, allowing others to benefit also.