What are bridging loans?
Bridging loans are a type of funding option which act to bridge the gap between the period a debt becomes due and the time when the main line credit source becomes available to be used to settle the debt. Bridging loans serve as a source of short term loan in times of urgent need.
Bridging loans have many advantages over other types of finance. It serves to provide the cheapest option for accessing short term loans in urgent situations. They are timely and easy to arrange and have an added advantage of having flexible lending criteria which allow the loans to be approved without long checking and inspection processes.
Bridging loans could be obtained for any kind of property. It is often the most available form of loan that could even be easily obtained by using property which other types of lending could find unsuitable as collateral.
HMRC tax bill
The HMRC, often written as HM Revenue and Customs (means Her Majesty’s Revenue and Customs), is a non-ministerial department of the United Kingdom government whose purpose is to collect taxes, make state support payments, and foresee the administration of regulatory regimes such as the national minimum wage.
Failure to pay tax bills imposed by the HM Revenue and Customs (HMRC) is accompanied by grave consequences. Although the HMRC may sometimes grant payment extensions to enable individuals to have more time to obtain the needed capital to settle their tax bills, it is not often the case as these payment extensions are not always available.
The HMRC would demand for the immediate payment of an individual’s tax bills when they perceive that the individual might have the ability to make the payment immediately or when they are not convinced that the individual is in a position to get his tax bill payments up to date.
Bridging loans come in handy
Bridging loans are increasingly being used to pay off HMRC tax bills because they come in handy as a highly practical and serviceable lifeline in times of such pressing needs. They come with relatively low interest rates and provide the option of rolling up interest until the loan term comes to an end. It also provides the capability for finance to be obtained against the tied in equity with already owned properties.
Individuals who run their own businesses and find themselves currently unable to keep up with business finances, as a result of cash flow inadequacies and other unforeseen problems, and who are then suddenly faced with HMRC tax bills can find an easy way out from their current financial situation through securing bridging loans. These loans provide business owners with the ability to buy the time the time they need to get back on their feet. Also, property developers who lack the capability to acquire the necessary capital to pay off HM Revenue and Customs tax demands often seek respite through sourcing bridging loans. Obtaining bridging loans is efficient and timely and therefore enables individuals to save their businesses from the impact of immediate HMRC demands.
Sources:
https://www.lendingexpert.co.uk/how-to-use-bridging-finance-to-buy-property-at-auction/
