Is It Worth Arranging An Open-Ended Commercial Bridging Loan?
If you are in the final throes of completing on the purchase of new commercial premises that may also involve the sale of your existing business property you will not want anything to delay either of the transactions. Regrettably, things don’t always run smoothly especially with a long chain below you.
For instance, if your purchaser is let down at the last minute before contracts are exchanged this could have a knock on effect to you and the business that you are buying a property off. You may have spent a considerable period of time in finding suitable replacement business premises so do not want to miss out on the opportunity to buy them. You may already have been involved in quite a lot of expense in the process such as arranging a full structural survey and valuation of the property you are looking to buy and incurred significant solicitor’s fees to date.
Yes, a contemporaneous sale and purchase is always preferred but an option open to you may be to apply to arrange an open-ended commercial bridging loan. As long as you are aware of the pros and cons of such a finance arrangement and have done a great deal of ‘number crunching” and, perhaps, taken some sound financial advice, then such an option may be worthy of serious consideration in order to potentially avoid missing out on the opportunity to purchase the new business premises.
You and the potential lender will need to be confident that you can cover any new commercial mortgage repayments as well as covering the commercial bridging loan interest instalments with an open-ended finance arrangement for a potentially significant period of time. There will also be additional fees involved when arranging a bridging loan. You may also need to be prepared to reduce the asking price for your old business premises in order to effect a sale if the matter drags on.
As you can see, there is a great deal to consider about commercial bridging finance especially if it involves an open-ended arrangement.