Factoring Insights

How will Bridging Finance help me?

Bridging finance is ideal for the periods where business is slow and business owners struggle to keep organisations afloat without any revenue.

As the name suggests, bridging finance serves as a ‘bridge’ when a company is anticipating a future cash flow but has current financial obligations to attend to. Bridging finance solutions are a smart alternative to more traditional lenders who have slower turnaround times or are too rigid.

Bridging finance solutions offer an organisation more flexibility to take advantage of new opportunities more quickly, and at a time where funds are possibly limited.

Here are 5 Ways Bridging Finance Can Help You

1. Bridging finance solutions are fast

Unlike traditional lenders, the turnaround period for a bridging finance is much shorter. This allows you to close a potential deal in a timely fashion.

We all know a good deal does not last for long, so time is of the essence when securing a potentially profitable opportunity. Bridging finance allows investors to grab a fleeting opportunity before another investor snatches it up.

2. They give you time

As well as being faster to get than a bank loan, bridging finance solutions can help you stay afloat if you need to sell your investment property as soon as possible, but know it will take a few months to sell. Bridging finance is a great option for the interim period.

3. You can buy out a difficult partner or family member

Investing with family members or business partners can be tricky. Bridging finance solutions can help buy out a partner or family member to allow more freedom and flexibility in your business. If one of your investment partners no longer seems interested in the investment or partnership, bridging finance can have long-term benefits.

4. Flexibility on payback

Depending on your provider, you may have the option of flexible payback. One requirement any borrower must meet in order to receive bridging finance is to prove adequate income to repay the debt.

Bridging Finance for seasonal businesses

Many retail companies have a strong seasonal component and see the majority of their profits generated in one or two seasons of the year. Seasonal businesses may require bridging finance to purchase additional inventory to avoid running out of stock mid-season which could affect their profits drastically.

    Seasons, in this context, include:
  • Seasons of the year and their weather-related changes
  • Holidays such as Christmas and Easter
  • Back to school specials
  • World Cup and other major sporting events

When is bridging finance a good idea for my business?

A common problem for many businesses is customers not paying on time. This can put a business under severe financial strain which could affect its ability to buy inventory, fix or buy new equipment or even pay their employees.

    There are a number of occasions where bridging finance is a much better option than other, more traditional financial products:
  • If you need some additional working capital but don’t want an equity partner
  • If your business needs to purchase new equipment
  • If you need money quickly for a down payment
  • To keep your business cash flow positive
  • Buying a property at auction
  • Refurbishing or converting property
  • Developing a property for a quick resale

Apply for Bridging Finance solutions at Merchant Factors today

Merchant Factors' bridging finance solutions help you to access funds when your current cash flow is tight. Merchant Factors can tailor a bridging finance transaction to suit your unique situation. Contact us today.