Common uses for commercial bridging loans
Buying commercial property quickly
Securing a purchase where the seller needs a fast completion or competing buyers are involved.
Auction purchases
Completing on commercial and mixed-use lots within the timescale set by the auction terms. More on auction finance.
Refurbishment and repositioning
Improving a vacant or tired building so it can be let, sold or refinanced. More on refurbishment finance.
Change of use
Funding a purchase while planning is obtained, or bridging the works for a conversion. More on conversion finance.
Capital raising
Releasing equity from commercial property for business investment or another purchase.
Refinancing a short-term loan
Replacing a bridge that is reaching the end of its term. More on rebridging.
How a commercial bridging loan works
- Initial review: we look at the property, the amount needed, the timescale and how the loan will be repaid.
- Packaging: we gather the information lenders need and present the case clearly, including the exit strategy.
- Lender terms: we approach suitable specialist lenders and compare the terms offered.
- Valuation and legal work: the lender instructs a valuation, and solicitors for both sides complete the legal process.
- Completion and exit: funds are released, and the loan is repaid at the end of the term through the agreed exit.
What lenders look at
- The property: its type, location, condition, tenure and current or expected use.
- The exit strategy: evidence that sale or refinance is realistic within the loan term.
- Your contribution: the deposit or equity you are putting into the deal.
- Your experience: your background with commercial property or similar projects.
- Leases and income: where the property is let, the tenants, lease terms and rental income.
Costs to budget for
Commercial bridging costs depend on the lender and the case. Interest is usually quoted as a monthly rate and may be paid monthly, rolled up or retained from the loan. Most loans also involve an arrangement fee, a valuation fee and legal fees, and some lenders charge an exit fee. We will set out the full costs of the terms available before you proceed, so you can compare like for like.
Commercial bridging or a commercial mortgage?
Bridging is designed for the short term. If the property is already let or trading and you plan to hold it for several years, a commercial mortgage or semi-commercial mortgage is usually more cost-effective. Many clients use bridging first to buy or improve a property, and then refinance onto a commercial mortgage once it qualifies.
Frequently asked questions
What is a commercial bridging loan?
A commercial bridging loan is short-term finance secured against commercial or semi-commercial property, or used for a business purpose. It is designed to be repaid within a short period, usually by selling the property or refinancing onto a longer-term commercial mortgage.
What can a commercial bridging loan be used for?
Common uses include buying commercial property quickly, purchasing at auction, funding light or heavy refurbishment, buying a property that is not yet suitable for a commercial mortgage, releasing capital for a business, and refinancing an existing short-term loan.
How is a commercial bridging loan repaid?
Through the exit strategy agreed at the outset. That is usually the sale of the property or a refinance onto a commercial mortgage once the property is let, refurbished or trading. Lenders will want to see evidence that the exit is realistic.
How much does a commercial bridging loan cost?
Costs vary by lender and case. Interest is normally quoted monthly, and there are usually arrangement, valuation and legal fees, and sometimes an exit fee. We set out all the costs from the lenders we approach before you decide to proceed.
Can I get commercial bridging finance for a property that needs work?
Often, yes. Many specialist lenders will lend on property that needs refurbishment or is currently unlettable, provided there is a clear plan and budget for the works and a credible exit.
Is a commercial bridging loan regulated?
Bridging loans taken for business or investment purposes are generally not regulated by the Financial Conduct Authority. We only arrange this type of unregulated, non-owner-occupied lending.