Hamilton Wood & Company are a leading provider of bridging finance or 'bridging loans' by another name. We have a streamlined process to help UK business owners and directors gain access to the business finance and funding they need, quickly, and easily subject to status.
What is it?
Bridging loans are an essential form of finance to help business owners and directors ‘bridge’ the gap during the sale and acquisition of important business assets.
Another way of looking at this type of finance is as a ‘short-term loan’ but as you’d expect, with this type of finance being intended as a short-term measure only, they can attract a slightly higher APR than a traditional business loan.
This type of funding provides an essential lifeline for business owners and directors as well as up-and-coming and established property developers who may have more than one project ‘live’ at any given point.
How does it work?
It’s not unknown that when exchanging properties (which is what this type of loan is specifically designed for) that the process can carry many challenges and frustrations throughout it, especially where there is a chain of sellers that can cause the process to delay and stall.
Firstly, if your offer on the property you wish to acquire has been accepted then you need to pay for it, simple.
But wait, I’ve not sold my property yet…
Ah...now you’re getting it... That’s exactly what this type of finance is for. It provides the funds you need for a short duration of time until the funds from the sale of your property are realised and the transaction can be completed.
There are a number of situations by which this type of loan can help professional business people. Let’s say that you are a property developer, you might frequent property auctions to try and ‘steal’ a bargain property.
Admittedly, properties secured in this way that are ‘as cheap as chips’ often need considerable amounts of money spent on them to make them fit for resale, and hopefully at a hefty profit…and you’ve guessed it, this is where bridging finance can make your ‘property flip’ dreams come true.
Sadly, during the recession at the tail end of ‘the noughties,’ this saw mainstream banks including HSBC, RBS, TSB, NatWest, Santander and many others banks making access to finance a lot harder to secure. Since then, we have witnessed the finance market change to some degree with the introduction of other sources of finance, and a multitude of bridging loan lenders have stepped in to lend where the established lenders won’t.
Like we said, it is not unknown that the financial markets have changed. If you are not prudent, it is all too easy to lend funds from a source that may seem like a quick fix, but that will only come back to burn you later…for example. Some payday loans (that we are vehemently opposed to in their entirety) can cripple peoples finance and often they are seen to target the vulnerable.
Thankfully, the UK government has done a decent job of regulating that industry and making it harder for unscrupulous lenders to operate in underhand ways.
PRO LENDING TIP: Make sure you focus on the APR of any potential business loan and definitely do not go with the first offer that comes along. It might seem obvious but remember representative APR is the best way to work out the overall cost of credit. Make sure you have a contingency plan should your situation change unexpectedly.
Whatever the need of your business, the experts at Hamilton Wood & Co. can help you get the finance you need at the best rate based on your current circumstance.
Bridging Finance UK – Who Is It Aimed At?
- Up-and-coming property developers
- Established property developers
- Self-employed traders
- Established borrowers
We are seeing more and more developers lending on a short-term basis say for example when they are renovating properties that they intend to let out as a house of multiple occupancies (HMO).
Alternatively, they may have secured a property at auction and are looking to get it back on the market relatively quickly. In a nut-shell, if you need to secure a business asset, whilst waiting for another to sell for that embedded value to be ‘free-up’ then this is when this type of business loan will provide the life-line you need.
There has been some concern that some businesses are viewing this type of loan as a ‘quick-fix’ when compared more traditional avenues of funding but even with this in mind, they are a world away from much higher APR loans that are still allowed to be offered in the UK.
As with all types of finance, you must seek-out a number of options and then make the best decision you can based on all available information. Hamilton Wood & Co. only provides access to finance and funding for Limited Companies, not individuals.
If you have a development or acquisition in-mind and you are looking to secure a bridging loan, then please, call us now on 0161 791 1401 and we will be happy to help your company.