Those who have benefitted from bridging loans would tell you that they are easy to get and the process is faster. Bridging loans are categorized by high-interest rates, hidden administration fees and repaid within a short term. It’s a loan that is advanced to an organization that is already qualified for a loan and this is supposed to take care of the financial gap until the next permanent financing.
Bridging loans are very crucial and many organizations have found refuge in this type of facility. However, it is important to choose a lender that will give you the best terms of the loan and that is why this article is dedicated to giving you tips on choosing the most appropriate lender.
Processing time
Despite the high-interest rate, the bridging loans are preferred due to the ease with which they can be accessed and the time it takes to get the money. It’s more of an emergency loan where the borrower doesn’t have the luxury of time. The loan processing can take two to four weeks depending on the on the amount involved. They are meant to be processed in a few days and if the lender delays, you need to look for an option.
Transparency
Before you make any commitment, you must ensure that you read every detail; the interest rates, processing fee, administrative fees and such. Take note of the terms and condition and the fine print, ignoring these might lead to a shock. Let the lender disclose every detail and always ensure the commitment they make is in writing- verbal agreements don’t auger in law.
Check customer feedback
Before you settle on a specific lender, you need to hear what experiences others have about the same lender. Ask the lender to give you contacts of clients they’ve served before and talk to one or two. This could actually be the deciding factor. A lender who readily and willingly provides such information is confident about their services. Ask the previous clients about the pros and cons in dealing with that lender. Should the lender not be willing to give client data, its not unusual due to recent data protection laws, search for a loan comparison site to compare bridging loan lenders.
What are the exit strategies?
A bridging loan is not a long-term solution for your financial needs. Therefore, relying on them could hurt your revenues and the bottom-line due to the high interests and fees. Immediately you have procured permanent financing, it’s always prudent to opt out. You need to discuss with the lender on a backup strategy like a long-term loan. Discuss also the options of renewal in case the offer expires before you’re sorted. Again, you need to be careful and compare the bridging loan rates of as many lenders as possible.
Terms of repayment
These kinds of loans are a short-term fix. Repaying such loans for long period may hurt your business. In fact, it should not last for more than eighteen months. Do not be lured by the enticing repayment policies that most lenders provide, it would not benefit you buy them.
Lender-borrower relationship is based on the experience that the former gives the latter. You, therefore, must choose an institution that cares and is ready to give financial solutions and are ready to walk with you all through.
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