How to Use Arizona Bridge Loans to Benefit your Small Business
Arizona bridge loans are gaining popularity in the housing market as a way to bridge the down payment gap and allow buyers to purchase a new home before selling their current home. They are also a valuable tool for small business owners to get cash quickly based on business collateral and upcoming deals.
Arizona bridge loans are short term loans that are designed to bridge the gap between needing liquid cash and a future investment paying off. The most common use of Arizona bridge loans are during the home buying process to bridge the gap between needing a down payment for a new home and selling a current home. The bridge loan is secured to the original home, the one that’s on the market. The funds from that loan are used as the down payment for the mortgage on the new home.
There are no strict guidelines when it comes to Arizona bridge loans so credit score and debt to income ratio are not usually factors that will automatically disqualify you. This is good news for borrowers with less than stellar credit or who may have a high debt to income ratio once they purchase their new home. Instead, bridge loans are based on a few different factors, including how likely it is that you will sell your current home quickly, and whether or not you can make both mortgage payments for a short time if it becomes necessary. If you default on a bridge loan, the lender has recourse to get their money back using the property you have on the market because it is the one that secured the loan.
A bridge loan can be a good option for individual borrowers who want to purchase their next dream home but have not sold their current home. A bridge loan usually has a higher interest rate but certain loans allow you to skip payments, making it unlikely that you will have to pay any of the interest as long as you sell your home quickly. A bridge loan also allows you to put your home on the market quickly and without any schedule restrictions. You can even stage it to make it sell more quickly. A vacant home will usually sell more quickly and for top dollar so a bridge loan can help you earn more money on your home sale.
A less common but still beneficial use of Arizona bridge loans is to help your small business when you are strapped for cash. Sooner or later most business experience a cash flow issue. A bridge loan can help “bridge” the gap between today’s need for immediate cash to pay bills and the final closing of a pending investment deal or long-term financing package.
If you find that you need some immediate cash before a big deal pays out, a bridge loan can be a good solution for your business. In order to secure the loan you will need to prove your ability to pay the loan back. A few ways to do that is through:
· Earnings. It is possible that a lender may be willing to extend a bridge loan on the basis of earnings alone. You will need to have a stellar credit history, a consistent track record of making profits, and strong sales to show you can repay the loan in a short amount of time. Unless you are able to fulfill all of these requirements, you will need to find another way to obtain financing.
· Collateral. If your earnings aren’t up to par, you can use business assets as collateral to obtain a bridge loan. Equipment, real estate, and other capital assets can all be used to secure a bridge loan.
A broker can help you navigate the ins and outs of Arizona bridge loans whether you need one for business or real estate. Having the right financial professional by your side can help you risk less and benefit more. You can get the cash you need and help protect your current assets. Call our office today for more information on Arizona bridge loans.
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