When clients delay their payments, it directly affects your business cash flow. If it is the 25th of the month and your bank balance is low and salaries are due. You will need a fast cash injection to keep your business liquid.
Traditional channels like banks can take weeks for approval. Banks also do not offer unsecured loans to business owners. Instead, they have a long list of requirements you must have in place before you open an application.
When time is not on your side you need to act fast and work with a partner that can make it happen within 24- 72 hours.
This is where bridging finance supports business owners. The finance solutions are paid over a short-term period (maximum 12 months). Interest is charged and included in the monthly debit order. However, there are no penalties charged for early settlement.
The main advantage of bridging finance is swift funding. You can receive funds in your account within 24 hours depending on the product you use. It is there to bridge the gap while you wait for additional finance or your invoices to be settled.
Premier Finance bridging finance products
Unsecured Business Loans
From R20 000- R3 000 000
Repayment period: 6-12 months
Use our unsecured loans for a cash injection to carry your projects, buy short term stock or keep your business floating.
Invoice finance
From R50 000- R5 000 000
Repayment period: 6 months
Turn unpaid invoices into cash.
A smart way to use bridging finance
It is human nature to want to compare bridging finance interest rates with bank interest rates. But the reality is they are two completely different products offering different solutions.
Bridging finance is fast credit and therefore it comes at a cost. When clients hear 2%-6% per month, they naturally multiply the interest by 12 to calculate an interest rate of 20%-30% per annum.
These figures work out more than what the banks charge for business finance. The reason for the difference is because banks work with secured loans. They require you to attach assets or cede your debtors book to grant the loan. With assets as security, they are able to offer lower interest rates.
Bank loans are also taken for a longer period and not just over 12 months like with bridging finance. This means you pay a lower interest per year, but you pay interest over a longer period.
Instead of comparing the two options and choosing one product. You should make use of both bridging finance and secured loans to take care of your finance needs. Use bridging finance to give you an immediate cash injection while you wait for your secured finance application with the banks.
Our clients have seen great success by bridging with a quick cash injection and settling the latter once their bank loan has been disbursed. This helps to save on interest and other fees usually charged through alternate solutions.
That is why it’s best to look at bridging finance as a short-term solution and not intend to repay it over 12 months. Instead of taking the maximum that you qualify for, just take what you need for the short-term period. If you are short R50 000, take R50 000 and repay it when you receive your next payment.
This will not only save you on expensive interest charges but will also build good rapport with the financier. If you manage your account efficiently, they will be more inclined to extend further credit facilities. This includes a permanent credit facility that allows you to draw down as and when you need it without reapplying each time.
Conclusion
Bridging finance is a useful tool for securing cash fast. It keeps your business afloat while you wait for clients to settle invoices. You can also use it for a cash advance while you wait for your bank loan to be approved.
Our bridging finance solutions have an easy application process. Simply complete our online form on the product webpage (see above) and email us your 12 months bank statements to get started.
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