What is Bridging Finance?

Bridging Finance is short-term finance for anybody who expects some payment of money soon, typically within 3 months. A client uses Bridging Finance to turn profits or assets into cash, without the hassles normally associated with traditional forms of borrowing such as bank loans. Bridging Finance is therefore offered by specialist finance companies, which are able to respond quickly and seamlessly to clients’ applications.

It is usually possible to arrange Bridging Finance without actually visiting the offices of the finance company, since the whole process is normally done by e-mail, fax and telephone. In some instances it is even possible to obtain the finance on the same day as the application!

From the Bridging Finance company’s perspective, the credit approval process depends very much on the certainty of repayment. In other words, the more certain you are that payment will be made at some point in future, the more likely you will receive Bridging Finance.

Banks don’t normally provide Bridging Finance because it is a specialised process requiring trained personnel and it does not provide long-term income or regular business for them. Anybody with a short-term need for specialised finance and no time to waste should therefore approach a Bridging Finance company rather than the traditional finance sources.

Property bridging finance

The most obvious need for Bridging Finance is in the property industry – a seller has sold his house but may have to wait up to three months for the cash, a property owner has been awarded a new bond but now has to wait six weeks for registration, an estate agent has earned her commission on a sale, but will only see it once the transfer is finally registered.

It’s appalling that it takes so long to do a little paperwork and transfer your sold house over to the new owner, but as we all know, there’s always a backlog and they’re always playing catch-up. And the banks don’t pay out the money until the registration has gone through. So what do you do in the meantime?

Selling your house and using the profit to pay the deposit on your new home sounds easy, doesn’t it? Not so! You may have to wait a few months before you can buy that new home. What a catch 22 situation! Frustrated? Well, the solution is to get Bridging Finance.

 What can Bridging Finance be used for?

  • Obtaining cash for a deposit on a new home;
  • To pay outstanding rates and taxes on the home you have sold;
  • To pay transfer duties on a new home;
  • To free up cash for starting or buying a new business;
  • To settle existing debts sooner rather than later;
  • Advances on estate agency commissions;
  • Advances on 2nd and 3rd mortgage bonds.