Bridging Loans: A Short-Term Cashflow Solution
Bridging loans from SIS are a type of investment that can effectively be used by social enterprises and charities to secure finances to cover short-term cashflow shortfalls.
A bridging loan can be described as a sum of money lent by a financial institution to cover an interval between two transactions; most often in the case of our customers, between receiving grant funding and paying an invoice. It is essentially a short-term loan used by businesses until its more permanent solution comes into effect; as the name suggests, it “bridges” the gap between the two.
A bridging loan allows a business to manage the difference in timing of income and expenditure; or rather, the mismatch between when money comes in and when you need to spend it.
While bridging loans are one of the more straightforward types of investment that we offer at SIS, they can also be one of the most impactful.
Check out the infographic below to get a sense of a bridging loan experience.
Even very profitable businesses experience shortfalls in cashflow from time to time, so we encourage social enterprises to get in touch with us and have a simple conversation to discuss their needs and options.
If you think that your social enterprise might experience a short-term cashflow shortfall, or if you are looking for a longer-term solution to become more sustainable, don’t hesitate to contact our helpful team.
* This post was first published in July 2018 and has been edited to reflect the effectiveness of bridging loans as a short-term financing option for social enterprises and charities in 2021.