The current recession in the UK shadowed the whole economy, but the small businesses are the one that gets the most hit.
Do you know 99.9% of the UK’s economy stands on small businesses operating across the country? Yes, you heard it right.
SMEs should be given a fair chance to keep the economic wheel turning. That’s why most small companies have resorted to bridging loans to sail smoothly amid testing times.
They have diversified their investment and loan portfolio aside from high street lenders. In this article, we will highlight what bridging loans in the UK are and how SMEs can benefit from P2P platforms.
What are Bridging loans?
Bridging loans are the caveat loans that provide instant funds to small businesses. Using bridging finance, SMEs can bridge the financial gap. These financial gaps can be a lack of funds to start a new venture, cash flow issues due to delayed payments, or other business-related issues.
In short, you can get bridging finance to meet your financial needs. Thus, it can help a business grow and expand with fast finance.
P2P lending platforms provide swing loans on certain terms. The best thing about these platforms is that you can get money on your terms.
A typical peer-to-peer platform matches your borrowing needs with the right lender. You can get loan money in less time than banks. It makes bridging loans a beneficial source for small to medium-sized enterprises.
Current problems faced by SMEs in the UK:
The current economic crisis in the UK has created many problems for small businesses to survive, let alone grow. Starting with higher energy costs this year, SMEs will bear the brunt of sky-rocketing inflation.
Also, the looming recession makes spending more on employees and expanding the business hard. That’s why businesses plan to cut costs and lay off employees.
The primary reason is that banks have increased their interest rates more than ever, making it harder for businesses to get loans from banks. Hence, SMEs can’t sustain themselves without cash flow.
How can bridging loans help small businesses?
Bridging loans have been on the scene since the 2008 market crunch. To date, it has got enough eyes. While high street lenders still occupy the loans market, businesses expand their lenders daily.
P2P lending platforms can help small businesses during the current economic crisis. Let’s find some benefits.
Fast to arrange:
Bridging loans are easy to get as compared to banks. It makes a lucrative opportunity for small businesses.
Timing is very important in the business landscape. Sometimes you want instant money to proceed with your cash flows, and you may lose business value if you fail to arrange finance.
You can go for bridging loans to keep your business steady and in line with your objectives. Bridging loans are easy and fast to procure. You just have to sign in to an online P2P lending platform and request a loan.
You get a perfect match for your loan request within a short time.
Likeable terms and conditions:
Most high street lenders provide loans, but their conditions are strict. Also, you need to follow protocols of where to use that loan money.
That said, you feel free when you get the loan on easy terms. The main idea behind bridging loans is to provide ease of doing business.
You can hop on to any P2P platform and request a bridging loan. You can openly state your terms. The platforms provide you with the best lender. You can communicate with each other to crack a deal.
Easy to get loans:
Bridging loans are relatively easy to get when compared to bank loans. The reason is that most banks don’t accept applicants if you own a startup.
They believe that you are riskier than established businesses, so they tend to reject your applications. Also, banks don’t provide loans if you have a low credit score or fail to establish a good history.
Nonetheless, P2P platforms can provide you with many options, even if your credit scores are low or you are just starting your business.
Secured again various collateral:
Bank loans are mostly secured against UK property. Plus, most banks set restrictions on collateral and security, making it hard for businesses to get a loan.
But bridging loans are more viable in this regard. These loans provide you with various options to secure a loan. You can choose the security that’s suitable for your business.
Actually, mainstream lenders are bound to play risk-free. They play safe because they have to pay back the money lent to the central bank.
Bridging finance can be riskier for some reasons, but they provide tremendous opportunities to do business.
Cost-effective:
Most bridging loans are cost-effective, partly because of the terms and conditions. Apart from that, these loans provide instant money to help you generate better revenue. Thus, the overall costs become lower if you proceed with the repayments in time.
It’s important to note that the current base rates of banks have reached the decade-high number, making it hard to repay loans. So, right now, bridging loans can help SMEs save additional expenses on loans.
Final words:
Bridging loans are one of the best innovations of financial technology. Mostly, P2P platforms provide these loans.
Precisely, online peer-to-peer lending platforms connect lenders with buyers online to provide ease of lending money.
Bridging finance to small and medium enterprises in the UK has many benefits. The current economy of the UK is going into recession, and businesses find it hard to get investment loans UK.
However, bridging finance can help them bridge their payment gaps without visiting any bank. In this article, we have explained the benefits of bridging loans for your business.
If you have gone through it, let us know your feedback in the comments.
