When talking about bridging loans, the first thought that may come to mind is an individual taking one for use in purchasing new property. That’s typically what the loan is for, but that doesn’t mean it’s limited to just that. Bridging loans offered by reliable moneylenders in Singapore can also be used for business purposes.
In the typical use case, an individual may need to immediately get their hands on the funds from the sale of their home or property to secure a new one on time. Similarly, bridging loans help businesses tide over periods when their funds or capital hasn’t arrived yet.
If you think such an event is bound to happen to your business sooner than later, read on to know more about bridging loans and their benefits for you.
Types of bridging loans for business
Bridging loans are generally classified into two types: open or closed. In an open bridging loan, no exact fulfilment date is agreed upon, and a borrower can make the full payment once their funds become available. But because of this indeterminate loan tenure, it’s usually accompanied by a high-interest rate to compensate for it.
In contrast, a closed bridging loan is a loan wherein the lender and borrower set a predetermined date for when the latter party needs to repay their debt. The loan tenure for this type of loan is usually up to 12 months, around which the borrower will need to repay the full amount owed. Due to the fixed or short loan term, its interest rate is relatively lower than that of open bridging loans.
Benefits of the loan to your business
- Resolves unexpected crises immediately
It’s not unheard of for businesses to encounter unanticipated events and circumstances that require cash to be resolved. Critical equipment or machinery failure and delayed accounts receivable are only a few of the common examples.
By taking a bridging loan to cover these unexpected occurrences, you allow your day-to-day operations to continue without a hitch. Paying for a bit of interest is much preferable to losing a lot more money by refraining from taking up a bridging loan.
- Allows you to secure ideal spaces when moving
Growth is inevitable for your business over time and will most often require you to move to a bigger location to house more employees.
Relocating to a new and strategic office or space can be difficult if you presently lack the funds for the down payment. But with the help of a bridging loan, you can secure the place that’s best for your business well before someone else gets to it first.
- Purchase key business assets on the fly
Apart from moving your base of operations, you may also need additional storage space to house an expected influx of business assets, such as those acquired from a promotion from your suppliers.
Bridging loans allow you to rent out storage as soon as possible without having to worry about where to find the necessary cash from your business finances.
Bridging loans don’t just help out the average person but businesses in need as well. To prepare for the time when you might need to take such a loan, it’s recommended to research well ahead for the best moneylenders that can grant you an instant cash loan at a low interest.