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Secured loans and commercial bridging loans are similar financial products but there are notable differences that mean it’s important to carefully consider your business’s needs before applying.
Secured loans can be used for a multitude of purposes and are generally a good option for asset-rich businesses because one or more assets must be provided as collateral. This considerably reduces the lender’s risk and can open up access to lower interest rates.
Commercial bridging loans are a short-term form of funding that literally ‘bridge the gap’ for borrowers financially. A bridging loan is more appropriate if a business is purchasing a property but hasn’t completed the sale of its existing one. In this case, the bridging finance enables them to proceed with the purchase.
Loan term
Time to obtain
Focus on collateral
Interest rates
Whether a secured loan or a bridging loan is more appropriate depends on the purpose of the financing and whether it’s to provide short-term or long-term financial support for your business activities.
You may be able to obtain a secured loan with a low interest rate that allows your business to grow by investing in a property or other type of asset over a longer term. A secured loan offers financial stability to a business, as repayments are predictable and fixed.
If your financial needs are time-sensitive, however, a bridging loan is likely to provide the rapid and flexible access to funding that you need – perhaps to secure a commercial property without having to wait for your sale to go through.
UK Business Finance are commercial finance brokers with extensive experience in helping businesses access vital funding. We can guide you towards the best type of finance for your needs and offer our services free of charge. Please get in touch to find out more.
We work across a wide range of sectors throughout the UK, providing specialist advice to each sector.
What are my options if I need business finance urgently?
Regardless of how closely you monitor your company’s cash flow, the nature of business means you may still need finance urgently at some point.
What is equity finance?
Equity finance is a business funding option that involves selling shares in return for investment. It’s commonly used by start-ups or early-stage company directors wishing to get their businesses off the ground and propelled towards rapid growth.
Hard asset finance v Soft asset finance
Hard asset finance and soft asset finance both offer flexible ways to purchase business assets. Whether you need a new piece of machinery to increase output or state of the art IT equipment, these types of asset finance options are invaluable in buying them affordably.
Regulated v Unregulated bridging loans – what’s the difference?
Bridging loans are finance facilities that help consumers and businesses to complete property transactions when a financial ‘gap’ needs to be bridged. Examples include a consumer purchasing a new home to live in and a business investing in commercial property.