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.