Bridging loans can help Britain’s entrepreneurs
With some entrepreneurs experiencing difficulty in obtaining a mortgage, it’s worth remembering that bridging finance can help business owners with short-term finance.
A business that is three years or less old may not yet show a profit in its last filed accounts. Many companies accounts may currently show a good profit, but banks tend to look at the last ones available at Companies House. These accounts could be almost 12 months old and may not reflect the current state of the company’s finance. This makes it difficult for business owners to get a mortgage, as they cannot prove that they have enough income to keep up with the mortgage payments.
Some lenders want to see at least two years’ accounts in order to make a decision on a mortgage application. The Daily Telegraph, in May 2017, quoted the case of a business owner whose company recently made a £40,000 profit, but the owner was unable to obtain a mortgage as the business started 18 months ago and he was unable to provide two years accounts.
Another entrepreneur, Dermot Campbell, took out a short-term bridging loan. His business was doing well, but because of raising capital, the accounts were showing a loss. He knew that the funds would be available soon from the business to repay the bridging loan.
A bridging finance broker can find bridging loans for entrepreneurs as long as, like Campbell, they are confident that they will have the funds to repay the loan.