It’s apparent that businesses need to access finance but does the banks’ cautious lending approach, for whatever reasons, make businesses ‘take what they can get’.

The number of bridging loan providers has increased sharply and published statistics suggest that there has been an increase of 27% in the number of bridging loans taken out in the past twelve months. 

Our question is - is this necessarily good news?

By their very nature bridging loans are more expensive and provide lower loan to value ratios; the key feature of bridging loans is of course that there has to be a clear “exit strategy” in place, in other words both the borrower and the lender need to know exactly how the bridging loan is being repaid. In addition bridging loans are more expensive –interest rates of over 24% are not uncommon.

If a bridging loan is taken out, only to be renewed again and again it is a pretty expensive way of arranging business finance. On the other hand, bridging loans can be very flexible and very often there are fewer underwriting hoops to jump through. So clearly there is a market for this sort of finance but how big is this market – is it really so substantial?

Whether the market expansion is a function of real demand for bridging finance, or because bridging loans are used because the traditional business finance providers apply very restrictive underwriting criteria, we don’t know.

We are not against bridging loans per se, we know that very often there are better finance deals on the market – put simply if you approach the right lender with the right proposal and the right presentation: you can obtain the right finance for your business (right in every respect including loan to value ratios and interest rates)

If you are looking to assess all your options - get in touch. Our commercial finance partners have over 40 years’ experience in the market and have a strong panel of lenders waiting to assess your clients finance application. Don’t settle for second best - let us get the right finance for your business.

Whether your need is relatively straightforward or niche, perhaps even rather leftfield give us a call or drop an email to info@moneysolutionsuk.com outlining the details of your enquiry and we’ll do our best to find an appropriate solution or visit the dedicated commercial finance section on our website moneysolutionsuk.com/business