Bridging Loans for Business

  • 1st Charge & 2nd Charge Bridging Finance
  • Loan term up to 36 months
  • Borrow up to £500,000
  • Search from 50+ lenders
  • Fee-free loan guidance

Start comparing commercial bridging loans up to £500,000

The property industry has been growing in the UK for the past couple of years. Therefore, businesses involved in commercial property have the right time to invest or acquire new property to seek their growth. Simultaneously, you must have the proper funding options to purchase the property quickly or refinance the present one without delay.

Commercial bridging loans provide an authentic short-term substitute to fund companies seeking to buy new properties. Finding the best commercial bridging lender is smooth because Thebusinessfunds, a responsible bridging loan broker, is here to assist you in finding and comparing various deals available in the UK. We have a vast panel of lenders, and they understand the obligations and risks involved when a company is looking for bridging finance.

We have a team of experts with years of commercial property investment experience. They assist you in getting the right bridging finance for acquiring commercial property, renovation activities or open equity from the current assets for business operations.

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Speak to our commercial bridging financing expert and get any advice on any loan deal. Call us now at 0208-123-7489 or post your inquiry here.

What are bridging loans for business?

A bridging loan for business is a funding alternative to bridge the gap in financing needed to cultivate a new property and grow their business sphere. It is a short-term finance that lasts for a maximum of 36 months. Businesses can use these loans to fill the gap during the due payment, either the primary funding supply being accessible or receiving the funds after selling a property.

A commercial bridging loan is mainly available for business activities, not residential properties. We have the expertise to work with companies and commercial enterprises providing bridging loans in London, Manchester, Leeds and all over the UK.

The companies generally utilise Bridging loans to support their long-term funding activities. However, many assume that finance is an alternative to traditional lending, but that may not be correct.

How do you prepare for it? If you have planned to obtain commercial bridging finance, you should be familiar with the exit plans. Make sure an affordable exit deal should be there. Moreover, a bridging finance can be a long-term finance – for instance, a commercial mortgage or buy-to-let mortgage. Still, we suggest you use commercial bridging finance to sell the property within the short time frame.

You should use at least 40% of your commercial property for a commercial bridging loan. For example, suppose you want to purchase a retail unit to expand your commercial base in the market. The value of the retail unit should be more than 40% of the total value. Commercial entities can buy it by using a bridging loan. Besides, the exit strategy generally includes renovating the unit, selling it, and refinancing towards a traditional commercial mortgage.

It differs from residential property, where the exit strategy would mean refinancing the loan towards the buy-to-let mortgage. It allows renovating the property to make it ideal for rental purposes.

There are not many bridging loan lenders in the UK providing commercial bridging finance. On the other hand, many offer bridging loans for residential property. Moreover, the commercial bridge loan is more expensive than the residential one because it involves a larger amount. You need to back your loan application with a commercial asset, i.e. the property, to secure the loan amount and calm down the interest rate.

Not to worry. As a trustworthy business finance broker, we have prepared a comprehensive list of lenders from which you can choose the most suitable.

What are the proper uses of business bridging loans?

Bridging loans for businesses have to be secured with commercial property. Some entrepreneurs also secure loans with semi-commercial properties. It is a property where a little part belongs to residential accommodation and commercial premises. An owner has occupied this or kept it for rental purposes.

You can use bridging loan financing for several reasons. Some of them are mentioned below:

  • Property development or buying

    You are running a property development business and want to buy a new property. The approval procedure from the local council will be lengthy, but you do not want to lose any time. This may be the reason why you require bridging loans for property development to manage the cost of buying that property before getting the approval of the council. If you get the loan approval and the nod of the local council, your business will be eligible for long-duration loans such as property development finance. Moreover, you will also get proper time to obtain approval on commercial property finance.

  • Instant bridging loans for short-term debts

    Several companies are in a situation where they are required to make payments to their suppliers in a limited period. Due to this reason, a standard business loan may take time to process. Instead, going for a commercial bridging loan can allow you to manage and pay those short-term debts on time. In between, they receive the payment for their product.

  • Managing the urgent expenses

    You are running a business and facing sudden or unexpected expenses while purchasing a property. You have insufficient funds to manage those costly expenses and suddenly need a funding backup. For example, you are running a restaurant which suddenly catches an accident. You have lost expensive equipment, but their replacement has to be done now. Quick bridging loans could be the source to generate urgent funds for your business.

  • Renovation of the property

    Many companies opt for bridging finance to manage the cost of renovation, restoration or expansion of their property. They do so because they do not want to disturb their revenue or savings for these expenses. Since these loans are available easily with the security of a commercial asset, companies feel comfortable going ahead with their plans to amend their commercial property.

What are the types of bridging loans for small businesses?

A bridging loan for commercial purposes is for short-term funding, which a company uses to bridge the financial gap. It must be secured against a commercial asset like property to buy another property or refurbish the existing one.

Exploring the UK loan marketplace, you will see some other business loans are available as the types of commercial bridging loans:

Auction Finance

You can use bridging loans for auction properties while purchasing one at the auction. Many businesses choose this option to avoid disturbing their savings.

Secured Business Loans

Since bridging loans are secured with a commercial asset, you can also look for secured loans for business. You can get assured approval on a lower interest rate.

Property Investment Loans

These funding products can also be utilised to purchase and sell a property. Some small businesses apply for them to refinance their existing property.

First-charge bridging finance

1st charge bridging finance that the companies take as the primary loan. It helps them acquire precedence over all other charges.

Second-charge bridging finance

Companies take out 2nd charge bridging loan on a property that already has a mortgage or a loan. It depends upon how much equity they have in that property.

Land Bridging Loans

These sorts of loans help the companies in meeting their development prospects. They avail this facility to construct a property on that land.

How does bridging loans for commercial property work?

Bridging loans for business are purposefully tailor-made for the companies which are indulging in applying or qualifying for a new property or refinancing it. This helps stay on top of expenses for a smaller duration. Moreover, you can explore this option until you get a long-term business loan approval. However, these loans function differently than any other form of business funding.

These loans are usually secured, requiring you to put an asset like commercial property or equipment as the loan collateral. Moreover, bridging loans in the UK come in two different types: open bridging loans and closed bridging loans.

  • Open bridging loans for businesses

    It is primarily the more flexible funding option. It suits small businesses that have not yet confirmed their decision to sell their current property. An open bridging finance lets aspirants obtain desired funds for a specific period of 36 months. With this option, companies can take more time to sell the existing property and repay the loan.

    The significant feature of an open bridging loan is that it is available with a fixed repayment schedule. You can repay the loan in full when you sell your property. It allows you to concentrate on the property sale and other business activities. You do not have the pressure of paying monthly instalments. However, you have one disadvantage: you need to pay higher interest rates than closed bridging loans. It happens because they have not yet sold their property, and to minimise that risk, the lenders keep interest rates high.

    The projected sale price, settlement term, and lender’s norms will determine the final amount and loan approval.

  • Closed bridging loans for businesses

    These loans have a comparatively shorter duration than open bridging finance. These work best for those companies who have done with the sale of their existing property. Therefore, lenders keep the loan duration smaller, such as for weeks or a few months. Companies have to repay the loan instantly once the property sale has been settled.

    Unlike open bridging finance, closed bridging finance has a fixed date to repay the loan. It means you have to repay in total for a particular deadline. It will happen even if you have settled the selling of property. Since the lenders have the assurance of fixed repayment and early settlement of the loan, they keep interest rates lower.

    To get the approval on closed bridging loans, you must provide proof of sale contract and settlement date for the current property. Your company’s current circumstances will also matter a lot.

What are the pros and cons of commercial bridging loans?

A bridging loan for small businesses can effectively fund your business to do convenient transactions. It is among the most applied short-term business loans in the UK, and you have our complete guidance in picking the right deal from a reliable lender. Still, you should understand the pros and cons of bridging loans before applying.

Advantages Disadvantages
Bridging loans for businesses are available on all credit scores. If your credit profile shows lower scores, lenders do not mind them as you secured the loan with a commercial asset. These loans always have higher interest rates than standard business loans. The primary reason is the smaller amount and shorter duration.
You may have had a bad time in your business a few years back due to unsatisfactory returns. Despite that, you still get the approval on a bridging loan. You will not qualify for these loans if you lack a commercial asset to pledge. Lenders will not be in the condition to approve your application.
You get a larger loan amount as compare to unsecured business loan. You have kept an asset that works as the loan guarantee, and the lender retains the amount on the larger side. Sometimes, you want quick funds, which is possible with bridging finance but you may need larger repayment schedule. This may not be possible with these loans.
Bridging loans involve a simple application process, both offline and online. You will get approval within a few days or sometimes on the same day. Despite the smooth application process, it is still slower than unsecured loans. The lender needs time to assess your collateral, value, and equity.

What will be the bridging loan cost?

Bridging loan lenders settle the final price on your loan depending on how much risk your application carries. Generally, the best bridging loan interest rates will be around 0.65% monthly. It can be a good deal, especially when your application is beyond any risks. Lenders may increase the rates if you have a high-risk factor by considering any downfall in your credit scores. These may be between 0.90% and 1.8% per month.

If your commercial asset has a higher value, you will get a larger amount to borrow at lower interest rates. However, we give you separate names of lenders, some of which provide fixed rates while others offer variable interest rates.

You may have to pay multiple fees alongside the interest rates when applying for bridging loan financing. These may include:

Arrangement charges of the lender: Your lender will charge this fee and add it to your loan instalment amount. It remains typically around 1-3% of the loan amount.

Valuation charges: Your asset value will be analysed before the loan approval. Some lenders charge a fee for that assessment, and you need to pay this during the application process.

Legal charges: Since you will avail of a bridging loan to buy a new property or refinish it, you may have to pay legal charges for that. Some lenders charge fees to do the process on their own.

Exit charges: Although this may not be a trend, a few lenders are still keen to charge loan exit fees despite the full repayment. It remains equal to a monthly interest rate.

How do you apply for bridging loans for business?

Applying for a bridging loan to fulfil your commercial purposes will not take too long. We suggest you choose a lender that provides online lending. However, you must first qualify your company to avail of these loans.

The qualifying requirements for commercial bridging finance are:

  • Your loan amount should be between £50,000 and £500m;
  • Your preferred loan term should be 36 months or less;
  • Commercial property will be preferred as the loan security, but other assets are also applicable;
  • Our lenders can consider all types of properties such as commercial or semi-commercial;
  • You must be running a limited company, partnership, or LLP;
  • Any credit score is eligible;
  • Your age should be minimum of 18-years-old

You can apply for business bridging loans once you confirm your qualification on the above conditions. Here are the steps:-

Step 01:

You should contact us as early as possible if you need quick business finance and keep your commercial assets ready to be pledged. Fill out our application form or call us.

Step 02:

Share all documents with us, and our representative will quickly review them. Based on your requirements and the strength of your papers, we will start searching for the ideal lenders.

Step 03:

Once we both finalise the lender, it will assess the value of your commercial asset. It will not take too much time as our lenders are digitalised in their process.

Step 04:

Once your lender approves your application and the asset, it will approve your bridging loan application, and soon, you will get the desired amount to your bank account.

Are you buying a commercial property as an investment and need funds instantly? Are you fed up searching on your own but not getting the desired outcomes? Want your bridging loan application to be approved on the same day?

If your answer is yes, then Thebusinessfunds is there to assist your business to grow. As among the most responsible business loan brokers in the UK, we vouch for smooth search and comparison of various deals from only reliable lenders.

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What papers do I need to qualify for a commercial bridging loan?

If you are buying a fresh property, lenders may require a copy of the Contract of Sale and a receipt of the deposit sum. Some lenders also consider your past credit performance and the business or owner’s personal credit report. Furthermore, you should carry copies of bank statements, annual business returns, and a license to run the business in that region.

How do you repay the business bridging loans?

First, you must decide whether you can repay weekly or monthly. Besides, repayments are also decided on whether you opt for an open bridging loan, where you pay repayment in full after completion of the property sale, or closed bridging finance, where there is a fixed repayment date, and you pay in monthly instalments. Be clear on all these aspects and then compare the deals accordingly.

Can I use bridging loan to consolidate my business debts?

Bridging loans for small businesses have the purpose of filling the funding gap while purchasing a new property. Consolidating your debts with these loans can be possible if you want long-term loans. First, you must get approval on a bridging loan with your commercial asset and obtain funds to merge debts into a single loan. Making all timely payments will impact the lender's approval of your long-term loan application. However, you should opt for a small bridging loan for debt consolidation.

Are commercial bridging loans better than unsecured business loans?

Bridging loans are better than unsecured loans for businesses in many scenarios. You can get a larger amount and lower interest rates. The lender is satisfied with your commercial asset as the loan security. Since this provision does not apply to unsecured business loans, you have to pay higher interest rates, and the amount will be smaller. However, unsecured loans are faster than bridging finance, and there is no risk of losing assets if you default.

Is it viable to get a new mortgage to cover the bridging finance?

It may be a helpful option, and many small businesses do that. It means you have applied for bridging finance and got the approval. Now, you are applying for a new mortgage or remortgage to cover the initial payment of that bridging loan. It may reduce the initial cost, but we suggest you consider all options carefully before finalising it. The role of the lender is also crucial in this process.