We often hear such terms “Bridging Finance” and “End-Financing” in the housing/property development industry.

This article seeks to give some simple clarifications of such terms used.

Bridging Finance is:

• A temporary advance to bridge the financial gap from commencement of a project until the eventual return of the cash when the project is completed;

• As it is on a temporary basis, it’s therefore a short term financing tool;

• Terms and conditions of the advance will be determined by merits of each project and

• Is popularly used by housing developers for developmental costs before sale proceeds of their houses are realized.

End-Financing is:

• A facility solely for the benefit of the housing/property developers;
• With this facility, the eventual recipient of the loans which are the individual property purchasers can then book the property;
• Very useful for the housing/property developer as the availability of end-financing encourage decisive and speedy booking by the public;
• The end-financiers which are the financial institutions ensure prompt progress payment on behalf of their clients/purchasers thus ensuring a smooth cash-flow to the housing developer;
• Quantum of end financing required depend on project’s viability, number of property units intended to be developed, the developmental costs and the total sale price of the properties.

If you found this post useful, keep updated with future posts by subscribing to FMAccounting (for free) through RSS or email.

Related Entries

• Sale and Leaseback
• Note Issuance Facility (NIF)
• Finance: Bankers’ Acceptance Facility(B/A)
• Finance: Trust Receipt Facility
• Short Term Financing-Bank Overdraft Facility