Commercial Bridging Loans

A commercial bridging loan is a short-term loan designed to provide quick funding for your business. Think of it as a “bridge” to cover your financial needs until you secure a more permanent solution, like a mortgage or long-term financing.

Business problems such as purchasing from an auction, raising money quickly for one reason or another, or buying a new property whilst a sale goes through can be solved quickly utilising commercial bridging finance.

Commercial bridging loans typically last for up to 12 to 36 months and funds can be available within a few weeks.

No, not usually, you do not have to make monthly payments on bridging finance. They are usually repaid in one lump sum at the end of the term, typically within 12 months.

The monthly interest will roll up in a compound way and the amount you owe will be calculated at the end of the term along with any repayment charges, if applicable depending on your lender.

Speed is one of the biggest advantages of commercial bridging finance. Depending on the lender and your situation, you can get the funds in as little as a couple of weeks.

You can speed up a commercial bridging finance application by being responsive with our team with document requests and answering questions as and when they are raised during the process.

Using a solicitor that is used to dealing with fast commercial bridging loan applications will also help, you will be paying a premium fast service, so it is important they provide this for you. We can help recommend a solicitor if you do not have a relationship already.

Commercial bridging loans are very flexible and can be used for a variety of reasons including:

Commercial property investment – planning to buy a property to rent out or renovate and sell in the short-term.

Purchasing a new office or expanding – found a new business premises and would like to move quickly, a bridging loan can bridge the gap in finance while you sell or agree a regular commercial mortgage.

Semi-commercial or mixed-use properties – to purchase a semi-commercial or mixed-use property for investment or to move into.

Alternative to a commercial mortgage – if you have bad credit or you do not enough years accounts to qualify for a regular mortgage, bridging finance can help give you more time.

Auction purchases – a current way to buy commercial property is via an auction, these typically have a 28-day completion term meaning a mortgage is not an option. You will need to fund an auction purchase via cash or a loan.

Renovation project – if you need to expand quickly or renovate then a commercial bridging loan can provide the funds quickly, it is always worthwhile factoring in the cost of the loan into the overall investment to get a true rate of return.

Buying out a partner – for one reason or another you may need to raise money quickly to pay off a business partner. Bridging finance can do this with speed whilst giving you plenty of time to get more long-term finance in place.

Help cash flow – need to raise money quickly for a cash injection into the business? If so, commercial bridging finance can help you have the funds within weeks.

Pay a tax bill – you need to raise money quickly to pay an un-expected (or expected) tax bill and you need to manage your cash flow with the help of a commercial bridging loan.

Anything else? – The points above are only a few of the main reasons why a business owner would use a commercial bridging loan, often our clients’ situations are more complex. We can utilise our experience and knowledge to help solve your problems.

As with any specialist lending product, it is always best to seek independent mortgage advice to ensure that you get the right product for your needs.

The criteria for a commercial bridge will be based on:

1. How much deposit or equity that you have available as this lowers the lenders risk.
2. The type of property, how easy would it be for the lender to resell it and get their money back should you not repay your loan. With quirky buildings it could be tricky.
3. Your individual experience with commercial projects and raising capital and whether you are good at repaying debts.
4. Exit strategy, how solid is your exit plan to ensure the lender is repaid in time. The lender will need a clear plan in place as to how they are going to get their money back plus interest.
5. Your plans for the property, are you an investor looking to flip it, looking to do a refurbishment project, or looking to move in and trade from.

The amount you can borrow typically depends on the value of the property or asset you are using as collateral. Lenders offer up to 75% of the property’s value, but this can vary.

Interest rates for commercial bridging loans are higher than traditional loans due to their short-term nature. Rates can vary, but they often range from 0.4% to 1.5% per month. We can help you find the best rate available.

Your rate will be based on risk, therefore, if you are borrowing a low loan to value, you may qualify for a better interest rate than if you were borrowing at 75%.

Commercial bridging finance is designed to be short-term, so repayment periods usually range from 6 to 36 months. You will need a clear exit strategy, like selling an asset or refinancing, to repay the loan on time.

Common exit strategies include:

• Repaying via a regular mortgage, whether this be commercial or semi-commercial.
• Sale of a property, whether this be your existing business premises or this one once you have renovated it.
• Something else, you may have other assets in the background such as inheritances in probate etc due that can be used to repay the loan.
• Anything else or something more complicated, please get in touch.

Yes, a large deposit is typically required for a bridging loan. This is usually a property, cash in the bank, or other valuable business assets. You will need a minimum 25 to 30% deposit for a commercial bridge.

The amount of deposit you have available will influence how much you can borrow and the interest rate that you receive. The more cash or equity that you have available the better your chances of being accepted for an application.

Yes, having bad credit does not automatically disqualify you. As no payments are usually required, bridging lenders are more focused on your assets and your exit strategy then your credit score.

If you have bad credit, we can help you navigate the options available to you.

Commercial bridging loans are not cheap, a good amount to factor in is around 5% of the amount you a borrowing.

Common fees include arrangement fees, broker fees, valuation fees, legal fees, and sometimes exit fees. It is important to understand all the costs involved upfront. We can walk you through the details.

Due to the speed of the receiving the funds, bridging loans require more admin work such as underwriting and processing. Often, it is a condition of the loan that you pay for the lender’s legal fees also.

If you use a specialist bridging broker like us, we will do everything for you. You will need to provide details about your business, the property or asset being used as security, and your exit strategy.

We can help streamline the process for you and get your application processed with speed in mind. You can book a free, no-obligation consultation by calling up or book online to start your process and find out your options.

As a company we do specialist in mortgage advice for the over 60s, and there are a lot of options available. This is the same with commercial bridging finance, it is possible to get these over the age of 50, 60, 70, or 80.

A bridging finance application is not underwritten like traditional mortgages, the lenders are focused on the short-term exit strategy, i.e. how you are going to repay the loan.

Absolutely! Commercial bridging loans are perfect for auction purchases because they provide quick access to funds, allowing you to meet the tight payment deadlines typical of auctions, unlike regular mortgages.

Typically, you will have a 28-day completion limit when you buy a property at auction, therefore time is critical. Please do not hang about or you risk losing your deposit and fees if you fail to meet this deadline.

Yes, you will need one and the cost of the valuation is usually down to you. The fees for a commercial bridge can vary depending on the lender’s requirements and the type and size of the property; however, they are usually in the region of £500 to £1,000.

If you are securing your bridging loan over multiple assets, then a valuation will be required for each. We always recommend factoring in the cost of valuations into the overall investment to get an accurate return yield.

If the property is down valued for any reason, depending on the amount you are wanting to borrow, your loan amount could be reduced accordingly.

It is best to get the valuation done quickly at the start of the process as if it down values and you are not able to proceed, it may save you legal costs.

If you cannot repay on time, you might face additional fees and higher interest rates. It is crucial to have a solid exit strategy. We are here to help you plan and avoid any pitfalls.

It may be possible to apply for a re-bridge, this is where we move your current loan to another provider. Please note, there are strict criteria rules surrounding re-bridging and if you will be able to do this. It is not guaranteed to be allowed.

They are typically for 12 months, however, in certain circumstances the lender may let you go up to 2 to a maximum of 3 years in rare cases.

Yes, most bridging loans are repaid via a mortgage. The sooner that the property can be mortgaged the more money you will save as the interest rate is likely to be much lower. Your property will need to be in a condition that is accepted by the lender.

If a remortgage the way you would like to repay your bridging loan, then we can apply for a commercial mortgage. You will need to go through a full commercial mortgage application process and meet the lending criteria to be accepted. This will include reviewing your personal situation and credit history along with that for your business.

Yes, it can be a great option for short-term expansion needs, like opening a new location or purchasing new equipment. Just remember, it is a short-term solution, so you will need a plan to refinance or pay it off within the time limit.

Having access to money quickly can allow your business to stay competitive and jump on an investment opportunity ahead of a competitor.

Yes, whether it is minor repairs or major refurbishments, a commercial bridging loan can provide the quick funds you need to get the job done and increase your property’s value.

Once the renovations are complete, you will remortgage the property using a regular mortgage to pay off the bridge. A schedule of works will usually be requested by the lender to prove that you have a plan in place for the loan repayment.

Your exit strategy is how you plan to repay the loan. Common strategies include selling the property, refinancing with a long-term loan, or using business revenue. We can help you figure out the best plan.

Not at all. While they are often used for property purchases, renovations, and expansions, commercial bridging finance can also help with cash flow issues, paying off debts, or covering unexpected expenses such as a tax bill.

Paying off a business partner is another use of a loan for those that would like to exit a business relationship quickly whilst more long-term finance can be arranged in background for the bridge repayment.

Yes, consolidating debts into a single commercial bridging loan can simplify your finances and potentially reduce your interest payments. We can assess if this is a good option for you.

Things to consider with debt consolidation are the fees involved with the finance and the compound roll up interest you will be paying on the loan. Our specialist bridging loan advisors will help you work out your options.