Bridging Finance and Credit
It is given that banks check your credit history before approving any sort of short term finance. That wouldn’t be a problem, except they tend to be very strict and your application could be rejected because of one default. So how can you obtain bridging finance? With banks cutting down on the availability of credit for business owners, projects and investment for businesses now become a problem. It could cause delays, unsuccessful development, or even cancellation. This will then have an impact on employment and the economy as the amount of job positions is dramatically reduced; all because of shortage on bridging finance.
The prevention of bridging finance by banks applies to all business loans, and basically eliminates all financial solutions. But keep in mind there is no credit rating in Australia, and only a list of every credit entry you applied for. The way each bank interprets your credit history and defaults vary from case to case, and hence sometimes you will be approved for bridging finance. The banks also take longer to analyze your credit record than brokers or private lenders, hence “delaying” your application for bridging finance. Banks do have their advantages however, such as being trustworthy and reliable once the application is approved. They also offer unsecured short term finance, which is quite rare these days.
With the flaws of bridging finance from banks aside, brokers and private lenders remain an alternative option. Unlike banks, the private lenders are more lenient on offering bridging finance, and will accept less-than-perfect credit records. As long as the purpose of the loan is business related, then you are eligible to apply for bridging finance. In addition, secured short term finance from private lenders are generally cheaper than banks. Depending on the secured asset(s) and the lender itself, there may be additional benefit such as cutting down on interest rates or flexible repayment options.
Regardless of where you apply for bridging finance, keep in mind your credit history still has an impact on this. The amount you can borrow up to, the success rate of your application, and even repayment options could be affected. Secured short term finance is recommended for those with a poorer credit history, and it is also recommended to have a strong asset as security. Doing so will not only increase the chances of getting bridging finance, but it will repair your credit record too.
