what is bridging finance in South Africa

The term “bridging finance” refers to a type of business financing that is utilized to pay immediate expenses while waiting for an anticipated cash flow boost. A tightrope walker could describe the act of juggling what is coming in and what is going out as a difficult one. This can be especially true if you need to acquire pricey products right away rather than later.

Bridging a loan is particularly important if you expand your business or your physical location. As a result, cash flow might assist you in covering your costs in the short term for investments that you intend to generate a return on within a short period.

How To Be Accepted For Bridging Finance

To qualify for bridging finance, you must demonstrate to the lender that you are in a financially stable enough position to repay the funds. At Business Loans you will have to prove your company has had more than R1 million in sales over the last year, have been operating for more than 12 months and be registered as a CC, Company or Trust. After receiving your requested funds, you repay the loan over the period agreed upon. The repayments on a bridge loan include the initial loan amount plus the cost of the bridge loan.

How Does It Work?

Your agreement with the lender will determine the period of your bridging finance repayments. You start to repay the bridge loan when you get the funds, this will include interest and the fees. An unrestricted bridging loan is another type of bridging loan available from alternative lenders. This means that you can utilize the bridging finance facility for any business expense. 

How Much Interest Does Bridging Finance Come With?

The cost of your bridging finance is determined by two factors: the funder and the size of the loan. Business owners should carefully review the lender’s early repayment policy. Make sure you know about what the penalty costs if you choose to settle your debt before the end of the agreed term. This is inconvenient if you need an overnight facility, so make sure you know all the terms and conditions of your finance.

Where Can I Get Bridging Finance From

Bridge loans are provided by banks, reputable lenders such as Business Loans, and government financiers. Responsible lenders, such as Business Loans, assess your ability to repay the debt by requiring you as the business owner to complete a set of standards before approval. 

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