Need Project or Bridge Financing? Consider an Interest Only Loan

With all the lending products out there, it can be difficult to determine which one best fits your needs. How do you know if the product your loan officer or broker is pushing is the best for your business or the highest commission for them? One way is to let your business financing needs be your guide. For instance, if you have an ROI generating project in mind or are looking for bridge financing, would a regular amortizing loan with equal payments be best? Probably not. In this case, you may want to consider interest only business loans with lower payments during the initial payback and an option to roll any unpaid principal into a regularly amortizing loan.

Project Financing
Many borrowers look for money to finish a build out, expand, or increase marketing. In this situation, you may not expect to generate increased revenues initially. But once the expansion is complete or the marketing gains traction, you do expect revenues to increase. Instead of carrying the financing costs equally over the term of a business loan, you may be better off using interest only financing.

You will likely appreciate the lower, interest only payments while you finish out your new location or launch your marketing programs. By the time the principal is due, the locations are open or the marketing is generating new business, providing additional cash flow to repay the business loans.

Bridge Financing
Other borrowers may use interest only loans as bridge financing. These operators may have permanent financing in the works, but with approval times increasing, the interest only money is used to keep projects on track while the borrower navigates the permanent financing maze. Once the permanent financing comes through, the business owner pays off the principal on the interest only business loans.

Alternative Lenders Filling the Gap
While the newspapers and talking heads continually obsess about the credit crunch, tightening lending standards, and lack of creative financing options, many companies are quietly expanding their funding offerings. Advance Restaurant Finance, LLC (ARF), is one such lender that has added interest only business loans to its portfolio of financial solutions.

ARF’s interest only loans typically range from $100,000 to $1,000,000. Each loan has an interest only period of 6 months. At 6 months, the borrower can pay off all, some, or none of the principal. Any unpaid principal can be rolled into a regular amortizing business loan at rates previously locked in.

Another unique feature of ARF’s interest only loan is the collateral. ARF doesn’t require any. These are unsecured small business loans, guaranteed only by the borrower. In addition, these loans are low documentation and quick to fund. Approvals can be had in as little as 2 business days with funding occurring as quickly as 48 hours later.

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