When it comes to interim financing for commercial properties, businesses and investors seek for commercial bridging finance. This method allows users to derive immediate short term loans that connect the gap between the initial expense requirements on an asset acquisition and the permanent source of finance thus earning it the reputation of a stop gap measure.
Before one decides to take on a commercial bridge loan, there are several questions to be asked. After all, dealing with financing is something that must be done cautiously and not randomly. Below is a list of them.
Question #1: What do I know about Commercial Bridging Finance?
It is important to fully understand and comprehend how a bridge loan works. One cannot fully enjoy its benefits without first understanding how it must be utilized at best. Perform research and/or ask someone who is skilled and knowledgeable enough to explain things.
Question #2: Who do we tap to get one?
There are many commercial bridging finance providers out there. A few punches on the keyboard and the screen will flood with a long list of options. The challenge is to determine who the best is. Look for reviews. Ask for recommendations. Check the official website and social media handles. Call and talk to your prospects.
Question #3: How much cash would we borrow?
This depends on the company’s needs and will therefore vary. Careful examination, analysis and calculation must be done to make sure that the amount loaned doesn’t fall short or way over the top.
Question #4: What expenses will we use it for?
Because a bridge is borrowed for purposes of initial investment expenses, common examples of its uses would be for professional fees, taxes, survey expenses, finder’s fees, legal costs, security deposit and down payment among others. The great thing about a commercial bridging finance though is that its use is non-restrictive. In other words, users may allocate and spend them freely and as they deem fit.
Question #5: What’s our exit plan?
Because commercial bridging finance is first and foremost an interim fund, it will have to be closed out by the permanent fund line. What makes it even better is the fact that most providers allow for liberty in payment where borrowers can opt to pay for it before maturity date, as early as one obtains enough cash, or at maturity date, upon arrival of the permanent source of finance. One’s job now is to choose which method would suit best and if such choice would be feasible given the circumstances.