Many businesses suffer from cash flow issues in the summer months. Workers take their annual leave, and many customers are on holiday too.
Despite the drop in income, wages still have to be paid and suppliers’ invoices settled. Many businesses, particularly in the retail sector, expect an upturn in business in October and leading up to the Christmas period. A commercial bridging loan is a short-term option that many businesses rely on as a solution for a temporary cash flow problem.
As website AccountingWeb.com stated in June 2016, there are a number of online lenders and brokers who specialise in lending to small businesses, and these could offer better deals than the high street banks. Lenders like to see that a business has been trading for at least a year, has good annual revenue, and boasts a good credit profile.
A major advantage of bridging loans is that they can be arranged quickly, often in a matter of a few days.
As well as covering short-term cash flow problems, businesses can use a bridging loan for one-off purchases of large quantities of stock that are offered at heavily discounted prices. Commercial bridging loans can also be used for purchasing property needed for business expansion.
As long as there is a clear exit strategy for how and when the bridging loan can be paid off, a short-term bridging loan can be a useful and shrewd tool for business financial management.