Our client came to us needing an urgent funding solution until they recognised several hundred thousand dollars.
With cash flow in short supply until their funds were paid, they needed a solution with capitalised interest that could be paid out at the end of the term.
While private lending solutions usually fit this description, they’re not viable to fund such a small amount as the cost of valuations and other fees means they’re generally unsuitable for loans under $250,000.
A new private lender providing funding secured by an asset of value was the perfect fit as our client had vehicles they didn’t need on the road during the term of the loan.
The lender literally describes their solution as “like a cash convertors for business.”
This is definitely not a loan for everyone but can be a solid solution in the event you need bridging finance or have an opportunity to secure when other lending solutions aren’t available to you.
Features and Benefits of the $40,000 Asset-Backed Bridging Loan
One of the key features of this loan is the flexibility in its security structure. Unlike traditional bank loans that require stringent credit checks, financial statements, and often property as collateral, this loan was secured by business assets, specifically vehicles. For businesses that are asset-rich but temporarily cash-flow poor, this form of financing can unlock much-needed liquidity without the long wait times associated with more conventional lending processes.
No Financials or Bank Assessment Needed
A standout feature of this loan is that the borrower did not need to provide detailed financial records or undergo a bank assessment. Many businesses, particularly those that are scaling or dealing with temporary cash flow shortages, often struggle to meet the high documentation demands required by traditional lenders. This can significantly delay the funding process, which is not an option when quick access to cash is critical. With this loan, the streamlined approval process meant that the client could secure the funds urgently without the typical barriers that banks often impose.
Capitalised Interest – Paid Out at the End of the Term
Another key benefit is the structure of the loan’s repayment. The capitalised interest feature allows borrowers to avoid making regular interest payments during the loan term, which can further strain cash flow. Instead, the interest is rolled up and payable at the end of the loan term. This provides breathing room for the borrower, who expects a large influx of funds to cover the total repayment once the loan matures.
A Good Fit for Bridging Finance
Bridging finance, in its essence, is designed to cover short-term financial gaps, making it an ideal solution for businesses in need of urgent liquidity to carry them over until they can secure a more permanent source of funding. In this case, the client had significant funds due to them, but these were not accessible immediately. The bridging loan gave them the flexibility to continue operating without disruption, with the peace of mind that they could pay off the loan once their larger funds came through.
Suitability for Smaller Loan Amounts
Typically, private lending is better suited for larger loan amounts due to the costs associated with valuations and other fees. However, in this case, the lender’s unique approach to securing the loan with any asset of value made it viable for a smaller loan amount of $40,000. This flexibility is rare in the private lending space, making this lender stand out for clients who need quick funding for relatively small amounts but do not wish to incur the high costs associated with larger valuations or more extensive due diligence.
Flexibility in Asset Security
The client’s ability to use vehicles they didn’t need on the road during the loan term demonstrates the flexibility of the lender’s requirements. Unlike traditional loans that may require property or significant business assets to secure the loan, this asset-backed loan opens up opportunities for businesses to tap into non-essential or idle assets. This feature can be crucial for businesses with fluctuating operational demands, such as logistics or transport companies that may have periods where their fleet is underutilised.
No Property Security Needed
For many business owners, offering property as security for a loan can be risky and undesirable, especially if they are already leveraging their real estate assets for other commitments. The asset-backed nature of this loan avoids the need for property security, allowing business owners to retain control of their real estate while still accessing funds. This is particularly beneficial for businesses that are in the growth phase and may need to reserve their property equity for future expansion plans or larger financing needs.
Conclusion
While not suitable for all borrowers, this $40,000 asset-backed bridging loan provides a niche solution for businesses needing short-term liquidity without the hassle of property security, financial assessments, or ongoing interest payments. It offers an innovative way for businesses to leverage assets they may not currently need, giving them the flexibility to maintain cash flow and operations until larger funds become available. By providing an option that is both fast and flexible, this loan serves as a valuable tool for business owners in need of urgent, short-term financing.
