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Commercial Bridging Loans: An Help At The Need
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Posted On :
Jun-29-2011
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Article Word Count :
474
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Bridging loans are turning to be a great immediate help for borrower. These borrowers are sure to get the money in the near feature, but for the time being they lack money. Lender charge a high interest rate for this short period of loans as there is a serious risk involved in these types of loans.
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Commercial bridge loans act as a medium by serving the business conduit the gap between current financial obligations and securing an enduring source of financing, which can be at any later date. These loans are generally meant for short period of time and the sole aim of this loan is to Bridge the financial gap between an investment and earning. It helps the company to fulfill the financial compulsion previous to any feasible source of commercial or business financing becomes accessible. These loans are often termed as swing loans and interim loans due to its nature. The lender of a business loan or commercial bridge loans normally persists on terms of clarity for exit strategy. ‘Exit strategy’ is the means by which a lender can expect to recuperate the sum total of the money he lent.
The dearth or absence of any assured exit strategy is sure to make you non eligible for bridging loans. These loans also carry higher rate of interest as compared to other common loans. The borrower who is seeking for the loan will have to pay a higher rate of interest. The rate may be somewhere from 3% to 4%. Above all commercial bridge loans characteristically hold no forestallment penalty.
Who All Can Get Commercial Bridge Loan
• Any borrower who can assure a sure sort exit strategy to the lender can seek for bridging loans.
• In situations where borrower requires the money for any new investment or venture, he needs to persuade or influence the lender about the feasibility and the prosperity of the planned or projected business in the near future. The lender in this case may ask details and expected income from the project.
• If you are borrowing money to invest it in a well established business, then your lender may ask for complete monetary and fiscal statements to know about financial profit and inbound cash coming in the business.
• A loan to worth ratio of 70 to 90% is also a compulsory requisite.
• Bridge loans that are protected or say secured by different movable and immovable asset gets the commercial bridge loan easily for a time span of 5 years.
• In the case of unsecured commercial bridge loans time even comes down to a period of 6 months.
• Last these loans also required a good credit history; this means that a good arrears service ratio which means net operating income divided by total debt service is also wanted.
• Commercial bridging loan are mainly of two types Commercial Property Bridge Loans also called Mortgage Bridge Loan perfect for buying property and Commercial Construction Bridge Loans for providing temporary finance for construction related works. There is one more type of bridge loans which is called fractured condo scenario loans, these loans carry a very high interest rate and for lenders these are risky loans.
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Article Source :
http://www.articleseen.com/Article_Commercial Bridging Loans: An Help At The Need_64866.aspx
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Author Resource :
Mike John is a well known Financial Consultant. He provide useful advice through his articles on Commercial bridging loans , Bridging Finance and Bridging loans.
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Keywords :
Commercial bridging loans, bridging loans, bridging loan, bridging finance, loans for bridging, loans with bridging,
Category :
Finance
:
Loans
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