Tag: commercial bridging finance

How and Where to Spend Commercial Bridging Finance

commercial bridge loanKnowing how to effectively and efficiently utilize one’s resources is one of the keys to success. It doesn’t take a genius to know that wasting one’s stash is a recipe for disaster. There’s simply no other way. But achieving such feat is a more complex and herculean task and one of the aspects to it happens to be adequate knowledge. That is why we’ve compiled this article to guide everyone on how and where to spend one’s commercial bridging finance.

But before we even proceed, what on earth is commercial bridging finance? The term refers to a specific type of temporary and interim financing used to provide for the short term liquidity needs that come with the purchase of commercial real estate assets. It is taken pending the arrangement and/or availability of a permanent fund line, one that is long term in nature and bigger in value. Unlike its long term counterparts, it runs for only two weeks to two or three years.

Now what are these short term liquidity needs? These are expenses that are immediate and pressing in nature. They are those that have to be provided for otherwise the commercial asset transaction would not be viable and would never take place. To cite a few examples, we’ve listed them down as follows:

    • Research Costs – These are the expenses that go into the activities done in the pursuit of the right investment. After all, a great isn’t one to come a-knocking.
    • Professional Fees – Experts will be taken aboard at some point. Everyone will need a lawyer or solicitor for all legal requirements while some would further need assistance from a broker or agent.
    • Survey Costs – No one should acquire an asset without first having it examined, surveyed and revalued. This does not come free. As to how much depends on the extent of the survey report.
    • Security Deposit – While one seeks to arrange their financing, buyers would often pay a security deposit to the seller to prevent the later from offering the asset to another interested party. Once the time has lapsed and the buyer does not come back to make a down payment, the deposit can no longer be reimbursed. If the buyer makes it, the deposit forms part of the total payment at selling price.

    • Down Payment – Commercial bridging finance is popularly utilized for this short term liquidity need. A down payment is composed of a portion of the total list price, often at 20% at the least, which must be paid as part of the deal. Without it, no sale shall occur.

Visit http://www.alternativebridging.co.uk/commercial for more information.




Commercial Bridging Finance Could Be Your Saving Grace

commercial bridging financeWe all know that buying any real estate property, especially a commercial one, is no joke. Not only are these assets more in demand but they tend to rake up some serious cash too. Not surprising as they are often situated in prime areas around town. Add in the factor of competition and things have blown up but not beyond any smart investor’s reach. They make use of a tool called Commercial Bridging Finance.

But what is commercial bridging finance? Simply put, it is a type of short term loan that bridges the gap between the pre-purchase costs and short term liquidity needs to the pending permanent and often bigger source of funding (e.g. mortgage, sales proceeds, bank loan, income, and etcetera). We all know that pooling a sum as huge to finance such an acquisition takes time either because the source needs to be pooled over a series of months or processing it is downright meticulous and sometimes even both.

So why not wait? Patience is a virtue but sometimes it’s not the best way to go especially when we’re talking about a commercial property that’s hot in the eyes of investors and buyers. A good asset won’t stay up for sale for a long time because people will want to grab the opportunity as quickly as they could.

If we don’t have the resources yet, how do we play the game? Do we just pass? Not necessarily because in business an opportunity lost can also mean financial losses. Since a commercial bridging finance was designed to cater to immediate and short term liquidity needs, it takes care of the pre-purchase costs or those expenses that need to be provided for to make the transaction happen.

Oftentimes, it covers the research expenses, the professional fees (e.g. lawyer, real estate agent and surveyor), the tax requirements and most importantly the security deposit and down payment which seals the deal. This way, the commercial asset is secured before anybody else.

So are we saying that a second loan must be had? Technically, a commercial bridging finance is another loan but it is short term in nature and is an interim method not a permanent and long term one. It spans only a couple of months to at most of two years until one’s permanent funding becomes available which at the same time will close and pay up for the bridge. Visit this website Alternative Bridging.