Why businesses use bridging finance

One of the things that makes the business world so challenging and also so exciting is that opportunities may arise quickly and often present themselves only one time. Any business owner who has been around for an extended period of time can tell you that, if you are going to be in a position to take advantage of these opportunities, you need to have the cash flow on hand right away. For many businesses this is a challenge because their cash flow is tied up in sales that come at the end of the month, or a situation of this nature. So what are these business people to do?

There are some options out there for those in such positions. Bridging finance options exist for this very reason, and they are a key component to the success of many companies. So why are businesses making use of bridging loans? It really comes down to a number of different factors. The first of those is the immediacy of these loans. When we talk about most conventional business loans, we are talking about a long, drawn out process. The key to bridging finance is that the loans are available quickly, so that you can move on something that is necessary and immediate. For instance, if a business owner has the opportunity to acquire stock at a greatly reduced rate, but has no ready cash available, obtaining bridging finance would be a viable solution.
There are other reasons why companies are using bridging finance to help make it in these difficult financial times. One of those is that the interest rates are so low that it makes good sense to do so. Because closed bridging finance has very little risk for the lender, you can typically get a loan at a rate much lower than the going average. Banks are out there looking for ways to lend money without having to go out on a limb. Lending money to a business that has a set, short term date for paying it back is about as low-risk as the lending business gets. That is obviously positive on the bank side, but the borrower also benefits with low interest rate loans.

Ultimately, businesses are using the many bridging loan options because they can’t afford not to. Many business owners prefer to play it safe and not step out on new, exciting opportunities, but those are the people who are leaving potential growth and revenue out on the table. There are many, many times in the business world when cash flow is necessary and you just don’t have it. This sort of convenient, low cost bridging loans can make short-term liquidity a reality, and help you to pursue excellent opportunities.