1 / 15

Reichman Partners | What is Bridge Financing and how it works

What is Bridge Financing and how it works is the topic for today, which is explained by Reichman Partners?

reichmanpartners
Download Presentation

Reichman Partners | What is Bridge Financing and how it works

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. What is Bridge Financing and how it’s works Reichman Partners

  2. Bridge financing is a method of financing , used to maintain liquidity while waiting for an anticipated and reasonably expected inflow of cash. • Bridge financing is commonly used when the cash flow from a sale of an asset is expected after the cash outlay for the purchase ofasset.

  3. Bridging financearranges large sums of money to be borrowed within a short period of time. The repayment period may vary between six to twelve months and the finance is usually provided to help purchase property.

  4. .. • Eg-:Bridging Financeis ideal for a home owner who has yet to receive payment form the sale of their home and whishes to purchases a new property. • When selling a house the owner may not receive the cash for 90 days, but has already purchased a new home and must pay for it in 30 days. • Bridge finance covers a gap of 60 days in cash flows.

  5. Bridging financeensures that you do not miss out on a deal simply because there was no cash at that point of time. Moreover it provides an easy and fast approach to processing and makes bridging finance a popularchoice.

  6. Another type of bridge financing is usedby companies before their initial public offering(IPO) to obtain necessary cash for maintenance of operations. • These funds are usually supplied by the investment bank underwriting the new issue. As payment , the company acquiring bridge financing will give a no of stock at a discount of the issue price to the under writers that equally off sets the loan.

  7. Bridge financing may be provided by banks underwriting an offering of bonds. • If the banks are unsuccessful in selling a companies bonds to qualified institutional buyers(QIBs) , they are typically required to buy the bonds from the issuing company themselves.

  8. There are two types of bridgingfinance: • Closed bridging finance – where the lender and borrower settle a certain date in the future for the repayment of the loan amount and this agreement is backed by legal contracts. This type of bridging finance is secured for lenders and is usually given for a purchase of aproperty. • Open bridging finance – Do not define a date for repayment and the amount may be used for other purposes other than purchasing a property.

  9. Benefits of bridgingfinance: • Speed of processing: Bridging finance may be raised within a few hours Compared with other types of finances may require anywhere between two to three months. The processof • availing bridging finance is similar to a regular mortgage procedure, except different steps are carried out in parallel order to help speed up theprocess

  10. Condition of security: Property that can require renovation or is incomplete for living may be kept as security for bridging finance. This allows the owner to complete any pending jobs and renovation work with the loan and refinance for theproperty.

  11. Flexibility: Funds receivedfrom • open bridging finance may be utilized for any purpose including renovation, vacation, auction financing, debt consolidation, building a new construction or sponsoring higher education. This may be ideal when you require money urgently but it is locked in assets. Bridging finance lets you spend now and repay later when funds areavailable.

  12. Eligibility: A borrower with good credit history, that can provide details of income and assets to lenders, maybenefit • from bridging finance with better terms and rates. These types of bridging loans are called Full Status. A borrowerwith • an adverse credit history canalso • benefit bridging finance but at higher rates and more stringent terms. People from wide age groups, professions and with varied credit histories are eligible for bridging finance.

  13. Large finance: Depending on the type and value of property offered as security, duration of loan and credit history of the borrower, bridging finance can offer a large amount of money within very short period. The lender also takes into consideration if the security offered is 1st or 2nd charge while deciding the sanctionedamount. • Bridging finance is not offered by all banks or financial institutions. Many lenders perceive it as a risky move. So it is not easy to find a good professional organisation offering bridging finance at competitive rates. Most lenders tend to charge high rates of interest.Good • professional lenders not only have rational charges butalso help borrowers with all paperwork.

  14. COMPANYPROVIDINGBRIDGE FINANCING REICHMAN PARTNER

  15. THANHK YOU

More Related