Is Bridging Finance a Viable Option for Your Business?

In today’s increasingly restrictive banking environment, it is becoming more challenging to access commercial lending in Australia, and for businesses to attain funds quickly.

Nathan Daly
May 21, 2020

Is Bridging Finance a Viable Option for Your Business?

In today’s increasingly restrictive banking environment, it is becoming more challenging to access commercial lending in Australia, and for businesses to attain funds quickly. If you are a small business, it is likely you have or will be knocked back for funding from main-stream banking institutions, particularly if it is to cover cash flow, wages or to pay creditors. The banks are taking extended precautions on their lending practices to ensure they are meeting responsible lending laws and reducing their risk. Often, this means someone who may have qualified for lending previously, might no longer meet the benchmarks set out to protect them as the consumer. So what do you do if you need financial support to tide you over until your debtors pay their outstanding debt? Contacting Acumen is a great starting point, as our highly trained advisors understand your businesses needs.

Are You Struggling to Meet Your Creditors’ Overdue Notices?

Since the Royal Commission into Banking, more stringent processes for borrowing are in place. This means that small businesses who formally used big banks to fund their gaps in income versus expenses are struggling to meet their financial obligations, which has a flow-on effect for other companies. The Australian Banking Commission highlights that the new Banking Code makes it easier for small businesses by offering simplified contracts with fewer conditions for loans under $3 million AUD. This may be helpful, but it doesn’t always make the process of approval quicker, particularly if you do not have any real estate as collateral making your commercial lending unsecured and therefore considered risky by banks. Because payments to creditors and employees are time-sensitive, most small businesses don’t have the luxury of waiting for a decision of approval from lenders, and sadly, for many, a time-delay on meeting payments can drive their business to closure.

Are You Ready to Exit Your Business But Just Need a Few More Months to Plan the Strategy?

Have you made the decision you want to leave, sell or close your business? Often, a hasty decision, but sometimes it is the last or only option due to lack of funds or inability to continue in business. Bridging finance can give you breathing space to look at alternate options for the sale or rescue of your business. You can use this funding to pay wages, creditors and invest in people or systems to bring your company back to life, leaving it in a state where you may even be able to sell it for profit. The borrowed money can buy you more time to ensure your exit benefits you, your clients and the new owners of the business.

What are the Options for Short-term Bridging Finance?

Regardless of whether your business is encountering low or no cash-flow, or you are ready to leave the company, there are options to help relieve your financial stress. You may want to look at short-term bridging finance to tide you over while you create a strategy to either improve the business or implement an exit strategy and sell the business to someone who can take it to the next level. Don’t throw the baby out with the bathwater as there are options you may be able to implement through fund capacitors like the following.

You could attempt to increase your credit using unsecured loans, credit cards, overdrafts, or other traditional lines of credit, but with the increasing demand on banks to adhere to responsible lending this is progressively becoming more difficult to access. Banks are handing out refusals quicker than money, particularly after close inspection of spending habits. Even those with high equity and large incomes are still experiencing credit denial due to their lifestyle choices, which from a lending perspective have become unacceptable.

FinTech has already and will continue to disrupt the commercial lending sector in Australia, providing alternate options for businesses, helping to maintain the stability of the country’s economy. Given that small businesses make up 35% of Australia’s GDP, when they rise and fall, it has a considerable impact on the economy. If there is an option to protect a business in times of temporary financial stress, reducing the chance of them closing their doors and allowing them to come back and thrive, exploring it is a must. It is vital to support them in providing jobs for their employees and injecting more money back into local communities.

Acumen Finance specialises in commercial mortgages and private lending. With Acumen, you have access to theunregulated private lending market, through a variety of ultra-high net worth individuals and companies who are underwriting the money available for bridging finance. This peer-to-peer (P2P) lending is often a viable option in these situations, particularly when it is taking too long to obtain funding approval through other lending institutions.

So before you throw your hands up in the air and let all of your hard work go to waste, consider resurrecting your business with easy-access bridging finance with our help. As one of Australia’s most flexible private commercial mortgage funders, we will allocate a specialist to you and provide you with competitive interest rates and a quick turnaround, helping you bring your business back to life.

Give us a call, and we’ll connect you to the best specialist for you and your business.