Bridge financing – staying away from financial crisis
March 28th 2019 at 5:45pm Published by firstdownadmin
Running start-up smoothly without having credit either good or bad is a myth. As it is near to impossible even for mega projects to not have a financial crisis at the early stages of the business. Meeting all the basic requirements of your business operations by earning revenues is a time taken process and this will eventually can lead your company towards a downturn. To manage each phase of manufacturing, you cannot afford the shortage of cash flow. In this case, bridging financing is the ultimate solution to get rid of all these worries. It is named as bridge funding particularly for filling the gap between revenues and the purchase of working capital.
Funds for progressive growth
Bridge financing is specifically designed for the progressive and productive growth of local businesses. This funding brings a significant difference for small-scale industries as it reduces the shortfall of cash that is used for maintaining business activities efficiently. Besides, flexibility is the main advantage of the bridge fund. This offers short-term liquidity for local business owners that allow them to meet their current budget, close assets fast, complete upgrades and encourage them to stay afloat.
The advantages of bridge financing are enormous that are discussing below:
- Bridge financing is the best option for raising your funds. This funding is provided instantly that enables you to meet your business requirements proficiently.
- It is an immediate cash flow solution due to flexible repayment criteria.
- Its fast approval encourages the entrepreneurs to focus on the core activities of their businesses.
- It maintains the sustenance of the businesses by filling the gap between two funding.
- It stabilizes the cash flow.
- Besides, most bridge funds are non-recourse, implying that only through the asset itself, the borrower may request redemption of the funding. The borrower has no financial duty for the repayment of the funding and the funder cannot seek compensation even if the value of the property does not cover the balance of the remaining credit.
Things to be aware of
Following are the disadvantages of the bridge debt:
- As it is designed to meet the immediate shortfalls therefore, it is not suitable for significant business operations.
- With short term repayment, it includes a higher cost of working capital.
- Due to the monthly installment, it is sometimes annoying for local business owners to pay the debt on time.
- The substantial fees and penalties in case of no repayment on time eventually make this funding less flexible.
- It can be termed as a costly funding as its payment is made every month.
- This funding is focused on take-off funding but due to the financial crisis, it is hard for local business owners to get that funding.
Why bridge financing?
There are many factors that affect business operations. In this case, Bridge funds provide opportunities to stay afloat. This funding is used for the following purposes:
- This funding is utilized for the purchase of working capital. Therefore, it assures the availability of the massive resource for manufacturing products even at the time of crisis.
- It is a fantastic option to deal with the mishaps occurring in industries such as the instant repair and maintenance of equipment.
- It assists in buying on sale supplies and inventory.
- It is used to pay debts.
Bridge financing with the first down funding
The First Down Funding is aimed for the growth and establishment of your businesses. It provides bridge financing with flexible terms and conditions that make it suitable for every local business. Hence, we satisfy your needs by meeting with your business requirements.