how a bridging loan could help SMEs
Rising costs due to leaving the European Union coupled with the impact of the pandemic have left many business owners facing an uncertain future. In fact, a survey conducted by cloud accounting provider FreeAgent found that almost half (46%) of the SMEs surveyed are concerned about the future of their business.
According to recent figures from FSB, SMEs are responsible for 61% of total UK employment and contribute 52% (£2.3 trillion) of turnover to the UK economy, making them a vital part of our economy. The challenges they are facing are numerous though, from a decrease in footfall to more customers shopping online, as well as rising costs of produce and raw materials.
the challenges facing SMEs
Cash flow – or lack of it – has been a particular concern. As buyers’ spending habits changed – mainly due to the successive lockdowns and business closures – SMEs often had to find new or alternative ways of generating an income stream. Some have pivoted their business successfully, while others will be facing the prospect of purchasing new season stock or products without having the benefit of a successful previous season to fund it.
Reasons for needing a capital injection aren’t solely negative, though. According to data from Companies House, the number of businesses registered in the UK between January and June 2021 increased by 32% compared to the same months in 2019, showing that many have used the pandemic as a catalyst to start afresh.
how a bridging loan can help SMEs
Securing finances from a high street lender for new endeavors can be hard though. Approval times are often lengthy while many require an absolute minimum of two years of accounts before agreeing to a business loan.
This is a situation one of our clients recently found themselves in. They wanted to quickly expand their business and required £197,700 to purchase new premises for their cosmetic surgery company. They planned to use the equity in one of their but-to-let assets which was valued at £350,000 and had an existing first charge mortgage of £29,800. Despite this equity, they were unable to secure mainstream funding due to having less than two years of business accounts. Keen to ensure they didn’t miss out on this opportunity, their broker immediately contacted us.
As an asset-based lender, we don’t require evidence of trading history or accounts; instead, we focus on the asset in question and if the bridging loan makes commercial sense- which this case did. In just 9 working days, MT Finance released a £197,700 second charge bridging loan, at 65% loan to value.
Securing our bridging loan enabled the client to purchase the new business premises which allowed them to quickly expand their cosmetic surgery business as well as their property portfolio.
a bridging loan that works for you
Business owners need more innovative options, tailored to meet their needs and this is when bridging finance can help by providing the funds you need, exactly when you need them.
Whether funds are needed to purchase new premises, acquire stock, facilitate a new venture, or provide additional capital to stimulate growth, MT Finance can help fund your time-sensitive opportunity. We do not require evidence of trading history, accounts, or proof of income- allowing us to take a practical, common-sense approach to lending.
- 1st & 2nd charge loans
- Loans from £50k – £10m
- Up to 70% LTV
- Terms from 1 – 24 months
- Residential, commercial & semi-commercial property
- No up-front fees, no exit fees, no ERCs
MT Finance is committed to supporting the UK SME community. If you would like to find out more about how a bridging loan could help your business, our team can be contacted here, via email, or over the phone on 0203 051 2331.