Bridging finance for entrepreneurs in South Africa, also known as a bridging loan, is a form of short-term business finance ideal for growing businesses needing to invest in property, machinery, new trading licenses or even for trade finance purposes. As entrepreneurs ourselves we understand that you may from time to time be looking to cover funding requirements, such as investing in property or capital funding. Below we explore what a bridging loan entails and how it can benefit small business owners.
Why Bridging Finance?
One of the most popular short-term financing methods for entrepreneurs, bridge loans can be set up quickly and are often simpler to arrange than other forms of financing. Bridge loans may also be referred to as caveat loans, standby facilities, or swing loans.
Bridging finance allows all types of entrepreneurs, who are just starting out or running out money, to gain access to an interim loan – at higher interest. This bridge loan provides entrepreneurs with the time they need to get more profitable and worth greater value on future loans.
The goal of bridging finance for entrepreneurs in South Africa is to help fund deals that are time-sensitive, perhaps for failing to raise sufficient funds. This can often save your business from failure.
With a loan company, you can secure funding for your project in just days. There are two main types of bridging loans to consider: closed and open.
The repayment period for closed bridging loans is typically only about 6 months whereas it’s typically 12 months for open bridging loans.
Bridging finance is a type of available financing that, as a small business, you may need as it could be too short-term to use other finance options. Structured data and machine learning will create quality content for your blog post.
Bridging finance is where you’re borrowing funds until your supplies are sold, for example for renewable energy.
How does bridging finance for entrepreneurs in South Africa work?
Bridging finance for entrepreneurs is a crucial vehicle that provides assets and businesses with health funding, priority access to credit and can even assist in the transfer of ownership. This short-term loan is usually given only once per business plan timeline, and can be more expensive than traditional bank loans.
Bridging finance is effective for entrepreneurs who need to produce collateral or prove creditworthiness. With up to 95% of the value of your security, lenders can loan needs before needs start.
Bridging finance is used as a short-term solution to help entrepreneurs take on larger investment, as it offers an option for those who might not qualify as often as they would like to. The lender will charge interest on the loan, the rate of which is based on how much risk they believe it is taking by offering the loan and how much you borrow.
3 Ways Bridging Loans Can Become Your Most Valuing Tool
One reason for small business owners to consider financing through an accredited broker is the availability of bridging loans. Bridging loans are typically used to provide medium-term financial support when looking to make one-off investments or cover larger operating costs, with return rates significantly lower than an owner premium.
If you’re a start-up, small, or medium business looking for a large injection of quick capital in a tricky economic climate, bridging finance might be the answer!
We are able to arrange short term bridging finance quickly and with less stringent restrictions than other types of borrowing. Depending on the lending terms, you can access very competitive interest rates and flexible repayment options, provided your exit strategy and business plan are reasonable expectations.
Why bridging loans may work for your business
Bridging finance has become an increasingly popular way for companies to raise finance in South Africa. Since the economic climate is uncertain, many companies are having trouble getting loans from banks.
Banks have left small businesses without the assistance they need because of their own loyalty. Bridging finance for entrepreneurs provides alternative funds that can help them grow, including cash flow assistance during our periods of struggle and moments when timely financing is most needed.
What does bridging finance for entrepreneurs include?
Bridging finance can be used for bridging the gap, whether that be for purchasing equipment or finding working capital. A clear business plan and an exit strategy are required to help the lender decide whether they will fund you.
- A property goes up for auction – buy low low and sell high!
- How land for development can be bridged
- How does bridging finance for entrepreneurs work?
- The last type of crowdfunding
- How can entrepreneurs get financed by using machinery/equipment.
Understanding How Bridging Finance Works
If you’re looking for ways to bridge finance, there are some key questions to consider. Fortunately for borrowers who need an additional lump sum of cash, there are a number of businesses in South Africa through which you can find bridging finance for entrepreneurs in South Africa today. Before you take on bridging finance, dig into the details and ask these four questions: Is the current interest rate on the file high? What do they need the money for? For how long does it have to be repaid? How is repayment calculated or advanced payment made?
Bridging finance as a whole is dependent on the lender’s personal finances and perspectives; we will accommodate your needs and come up with a solution that will aid you in other areas.
Are You Eligible For A Loan?
The application for riding finance follows a process including presenting a clear and concise business plan with details on sales forecasts and financial projections. Investors are more attracted when they have this information up front, making the arrangement process easier. The Caban group which includes Caban Capital in the UK supports entrepreneurs across Sub-Saharan Africa with solving their business funding needs.
Need support with finding the right bridging finance? Contact us through the contact form below.