What Is Bridging Finance in South Africa?


What does it mean when people in South Africa talk about “bridging finance“? Bridging finance is a type of loan that is used to make up for short-term cash shortages.

Bridging financing is a term for short-term money that a business owner can use to pay for expenses while they wait for money they expect to come in. In this way, you could think of bridging financing as a loan or advance that is given to you.

Bridging Finance, also called “bridge finance loans,” are short-term loans that help your business “bridge the gap” until it can get longer-term funding. Most of the time, these loans last between three months and three years.

Bridging finance is used when cash is needed quickly for a specific purpose, or in other words, finance to bridge the gap between two different kinds of financing. It is a secured loan that usually has a higher interest rate and is backed by assets like real estate.

In some cases, lenders pay for what the client buys or put limits on how the money can be used. With more flexible financial service providers, the money can be used to cover any personal or business costs. The gap that remains after the purchase of one property and the sale of another may often be bridged with the assistance of one of these bridging loans.

Bridging finance gives you access to cash right away while you wait for the money from a business contract or property sale. This type of loan is backed by future income and clients who can prove that they are owed money with a signed deed of sale, product purchase agreement, or tender document, can get cash advances.

Here’s everything you need to know about bridging finance loans as a short-term financial solution.

How does Bridging Finance work?

Bridge financing fills the gap between when a company’s money will run out and when it can expect to get more money in the future. Most of the time, this kind of financing is used to meet a company’s short-term working capital needs.

Bridge financing can be set up in many different ways. Which choice a company or other entity makes will depend on the choices available to them at that stage. A company that is doing pretty well but needs some short-term help may have more options than a company that is in more trouble.

Most bridging credit companies in South Africa let you apply for loans quickly and easily online. Their websites let you upload and send personal or business-related information and documents along with it.

Debt, equity, and initial public offering (IPO) bridge financing are all ways to bridge the gap, as well as a loan taken out that are secured against a property.

Of course there are a cost to bridge finance loans, though. Interest and an origination fee are often added to short-term loans and if the loan has to be paid back every month, a monthly service fee may be added.

Depending on the source of the loan, money is given up to a certain amount of rand or as a percentage of the money coming in.

You may also be interested in our other services; Asset Lending, Lend & Drive and Pawn my Boat.

Who Would Apply for Bridging Finance In South Africa?

Bridging loan is available to anyone with an outstanding lump sum payment. It might be for the sale of real estate or any other circumstance when cash are not immediately delivered.

You would consider application under the following circumstances:

  • If you don’t have a few months to wait around for a bank to get back to you.
  • If you’ve been rejected by banks for a loan because you “don’t tick all their boxes”.
  • When you are looking for a short-term loan to bridge the gap to longer-term funding solutions.
  • When you want to increase your business cash flow quickly.

How to Apply for A Bridging Loan

Today it is possible to apply online for a bridging loan. After filling out the provided forms on the company’s website, and your loan is approved, they will guide you through the necessary paperwork.

The cash will be deposited into your account almost immediately.

Finding Bridging Finance Against Your Property

Bridging finance on property is a term that refers to the practise of utilising bridging finance in order to acquire a property. Most of the time, property bridging finance in South Africa is used for real estate investments and development projects that need to buy a property quickly or get access to funds for a short time.

Secured loans against property in South Africa are loans that are taken out that are secured against a property. These type of loans are typically taken out for longer periods of time, usually for more than a year, and are frequently used to fund major projects such as house additions or renovations, hotels, office buildings, shopping malls, and apartment complexes.

Why Choose First Advance for Bridging Finance?

First Advance would be a good choice to approach for bridging finance, because:

  • It has some of the most experienced consultants in Southern Africa
  • Total privacy is guaranteed
  • Loan process is quick
  • Best deals at best prices offered
  • Safe and secure dealings

Loan Example

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How Long Does It Take to Obtain a Bridge Loan?

The time depends on the lending institution and the criteria used to evaluate the application. It may happen within 24 hours.

Is Bridging Finance Safe?

Yes, bridge financing is safe and a low-risk way to obtain short-term capital because the loan is backed by incoming money.

How Do I Get Bridging Finance in South Africa?

Most bridging credit companies in South Africa provide quick and simple online loan application options through their websites.

What Are the Costs Involved?

Yes, there are costs involved. You will pay an origination fee and interest, and a monthly service charge in the case of monthly repayments.

How Long Can a Bridging Finance Loan Be?

Bridge finance loans are short-term loans that typically have a term of 3 months to three years.

How Does Your Credit Rating Affect Raising Bridge Finance?

No, most lenders disregard your credit score and financial history.