How a Bridging Loan Can Boost Your New Business Start-Up

Unlock your potential and get off the starting blocks

When launching a new business, securing the right finance at the right time can be the difference between success and failure. A new business start-up bridging loan, secured on residential or commercial property as a first or second charge, offers a flexible solution to overcome financial hurdles quickly.

Fast Access to Capital

One of the most significant advantages of a bridging loan for a new business start-up is the speed of funding. Unlike traditional loans, which may take weeks or months to process, bridging loans can be arranged within days providing efficient finance.  This rapid financing allows new businesses to seize opportunities without delay.

• Cash flow management: Bridging loans provide immediate cash flow to cover start-up costs such as equipment purchases or initial operations.
• Flexibility: Bridging loans are typically short-term, often lasting 12 months or less, which means businesses aren’t locked into long-term financial commitments. They are available to borrowers for business start-ups on either a regulated or unregulated basis, depending on the security for the loan.

A Stepping Stone to Further Funding

For many start-ups, obtaining initial funding is a major challenge. A bridging loan can serve as an interim solution that paves the way for more substantial funding once the business is more established.

• Building credit history: Successfully managing a short-term loan can help a start-up build a positive credit history, making it easier to secure long-term loans in the future.
• Leverage for negotiation: With immediate funding secured, businesses can negotiate better terms with suppliers and other stakeholders.

Enhanced Purchasing Power

When time-sensitive opportunities arise, such as the chance to purchase stock at a significant discount or acquire essential equipment, a bridging loan ensures that businesses can act quickly and efficiently.

• Negotiating discounts: With ready access to funds, start-ups can negotiate better terms on bulk purchases or early payments.
• Avoiding equity dilution: Instead of offering equity to raise funds, owners can maintain control over their business by opting for debt financing through bridging loans.

Efficient finance using a drawdown facility

A bridging loan can also be taken to benefit a business start-up as a drawdown facility – where interest is only paid on the outstanding balance, which can be repaid and drawn down on multiple occasions. At Alternative Bridging Corporation, we offer a drawdown facility called the Alternative Overdraft. Loans are from £250,000 to £2m over a two-year period and are best secured by first charge on under-utilised property assets or by first charge over commercial or residential and second charge over residential properties.

How to Apply for a Bridging Loan

Applying for a new business start-up bridging loan involves several steps, but with the right preparation, the process can be streamlined:

• Assess your needs: Determine how much funding is necessary and how quickly it is needed.
• Find a broker: a good specialist broker will have experience of the bridging loan sector.
• Prepare documentation: Gather financial statements, business plans, and any other documents that will demonstrate the viability of your business. You will need to formulate a valid exit strategy; i.e. how you will repay the bridging loan.
• Choose a lender: Work with the broker to establish the best lenders for your circumstances and who have a track record in lending to start-ups. For example, Alternative Bridging Corporation has been providing bridging finance to UK businesses for over 30 years.
• Submit an application: Complete the application process, which may include a detailed discussion of your business plan and financial needs.

A new business start-up bridging loan is a powerful tool for any entrepreneur looking to jump-start their venture. By providing quick access to funds, enhancing purchasing power, and serving as a stepping stone to further efficient finance, bridging loans are designed to propel businesses towards growth and success.

Incorporating these loans strategically can help manage the early stages of business development, ensuring that financial hurdles do not hinder innovation and opportunity.  So to jump-start and get ahead with your new business start-up venture, take a leap of faith and contact us now!