Commercial Bridging Loans

One of the big benefits of commercial bridging finance is the array of potential cases it can be used for. They are as varied as the types of businesses needing short-term finance.

In many scenarios we find business are needing to fund a purchase to support the next stage of their business growth, such as funding new offices to support an expansion. In this case providing almost immediate funds, whilst arranging a traditional commercial mortgage, or disposing of the current premises. Helping ensure business continuity during the transition.

Businesses can also use a commercial bridging loan to inject cash into their business, to ensure a healthy cash flow is maintained. Often critical when you need to cover unexpected expenses or take advantage of new opportunities, that if missed could be regretted. Or for example we often we hear of businesses facing unexpected tax bills, whilst if not met can lead to fines being imposed, where quick access to funds can ensure obligations are met on time.

In addition, investing in growth such as purchasing new technology or working capital, is another ideal scenario where bridging finance can make a real difference. But often the reason can be as simple as buying out a business partner, winning at auctions, funding critical renovations, or investing in commercial property. If you’re unsure if your needs can be met then it’s always best to chat through with an expert, such as ourselves.

While many lenders will consider providing a commercial bridging loan to finance nearly any kind of project, there are also some criteria you will need to meet. Above all, the loan must be affordable, and you will need to show that borrowing is responsible in terms of costs, your detail business plan and that you are not overstretching your business financially. With an indication as to your exit strategy, i.e. how the loan will ultimately be repaid.

Perhaps the biggest advantage of commercial bridging finance is the flexibility it provides. Lenders will consider lending in all sorts of situations to help you achieve different objectives. Lenders often will consider offering loans even if your business is experiencing a dip in income or a cash-flow problem that you want to solve by raising debt. Provided you are borrowing responsibly, your business can afford the loan, and have a strong exit plan, commercial bridging loans are usually possible. 

Lenders can also offer various amounts – smaller loans of about £100,000 or more are just as possible as more significant deals of £1 million plus. The value of your business, the collateral, your plans and exit will influence what you can borrow, but if your finances and exit add up, you can borrow almost any amount. But of course the larger the loan required typically the additional complexity for arranging the loan.

The other big advantages of this type of finance is speed. You might be surprised to learn we can work to secure initial offers for a personal bridging loan in just 24 hours. And you can usually draw down funds in a couple of weeks, although we can, and have seen deals complete in 7 days if you need funds quickly.

This is especially useful if you are experiencing a cash-flow gap and need to access capital fast to see you through until your financial situation improves or you sell your property. By being upfront with us we can ensure we best meet your needs.

Commercial bridging loans are typically secured against a property or some other asset of value, meaning that you may lose those securities if you can't exit or keep up with any repayments. As a result, tou should always seek advice when considering any kind of lending to ensure you know the risks and the ins and outs of the deal a lender has offered you. You'll also need to know about any additional costs that you may need to cover that aren't immediately obvious when you're trying to access this type of bridging finance. 

It is true that typically commercial bridging loans are very competitive in terms of cost, but when compared to a convention commercial mortgage they can be more expensive, although the duration of the agreement is important to also consider. This is because they're designed to be used flexibly, meaning there is often more risk for the lender as they could be repaid early. Plus they are always short-term – around 12 months is standard, although some lenders will offer terms up to 3 years or will allow you to extend under certain circumstances.