There are so many benefits of taking out a bridging loan; from a surprising amount of flexibility to a quick and relatively straightforward process. However, as with any loan, the decision to take out a commercial bridging loan is not one that should be taken lightly. There are many elements that can cause the downfall of your application (or even your business!) if you’re not careful before, during, and after the whole process.
It can be daunting knowing there are so many things to consider when taking out a bridging loan, so we’re going to discuss some key mistakes to avoid to ensure you have the best chance possible of a positive experience!
Not Being 100% Honest
Before you say it - yes, not being 100% honest during your bridging loan application can land you in some serious hot water, not to mention you may well be breaking the law!
While you may be ashamed of your credit history if you’ve had some rocky times in the past, commercial bridging finance is always secured against assets, so the property circumstances and exit strategy are more important than your individual credit history.
Not Managing Your Expectations
We get it, when that lump sum enters your bank it can be easy to get carried away with all the work you can do with it. It may sound obvious but it’s crucial to remember that:
Your bridging loan is not unlimited, spend it all and it’ll run out - simple!
You’ll need to pay back your loan: don’t always borrow the maximum amount just because you can!
Managing your expectations of how much things actually cost as well as how far you will realistically be able to make the loan stretch will go a long way in ensuring everything goes smoothly!
You’re Not Clear On Its Purpose
When deciding to take out a commercial bridging loan, it’s imperative you’re clear on exactly what it’ll be used for.
This could be a business purchase, landlord or small property development project but it is the circumstance that is more important than the buyer.
You Assume You’re Eligible
Automatically assuming you’re eligible for a bridging loan is arguably the quickest route to disappointment!
In fact, there are general criteria you must meet in order to be considered:
Individual, partnership or limited company
Over 18 years of age
Has a UK address
Has assets that the loan can be secured again
Purchasing or refurbishing commercial property
Has a clear exit plan - either plans to sell the property or refinance
It’s important to note, however, that every lender may require something slightly different.
At ASG Finance, we’re experts in commercial bridging finance. If you’d like to find out more about what we do, or if you have questions about taking out a bridging loan, contact us today to speak with our friendly team.