Services - Commercial Bridging Loans

Commercial Bridging Loans

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Commercial Bridging Loans

Waiting for longer-term finance to be put in place? Unlock immediate capital with a commercial bridging loan. Our experts can secure your funding today.

Ideal for seizing time-sensitive opportunities, our trusted advisers can help you secure short-term commercial bridging loans to keep your business moving forward until your long-term plan kicks in.


With 35-years’ experience in the market, we have the expertise required to build a robust business plan that stands up to funder scrutiny, while defending value in due diligence.

What is a Commercial Bridging Loan?

A commercial bridging loan is a (generally unregulated) short-term finance loan that can be used for a variety of different purposes, including:

Unlike traditional loans, bridging loans are typically processed and approved quickly, often within 5-7 working days, depending on complexity. This makes them ideal for borrowers who need immediate funding to close deals or act on time-sensitive opportunities.


Bridging loans often come with flexible repayment terms, accounting for possible delays and unforeseen costs. There are also no early repayment plans with commercial bridging loans, and they come with options to “roll up” interest to be paid at the end of the term.


While bridging loans typically come with higher interest rates than traditional loans, they are still more competitive than other short-term financing options.

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What would you use a commercial bridging loan for?

Commercial bridging loans are designed for various business purposes when you have a funding gap to fill.


Here are some scenarios whereby a company might turn to these types of bridging loans:

  • Purchasing Properties – If you sell an existing property to purchase another commercial property, you can use a bridging loan. For example, you may be relocating your business or expanding your operations. In the competitive UK property market, bridging loans give you an edge because you can access funds quickly.
  • Auction Purchases – Organisations may also take advantage of auction purchases, where payment is required within 28 days. Auction properties provide tremendous opportunity for cut-price real estate, but only if you have the money available.
  • Property Development – Developing, renovating or converting a property provides ample opportunity for success. Using bridging loans, you can lock up your project before obtaining long-term financing. You can use your loan for everything from materials and building costs to legal expenses.
  • Cash Flow – Alternatively, you can deal with short-term cash flow problems if your business is expanding or needs temporary funding in an emergency. For example, perhaps you are renovating or need a temporary boost to your operating funds.

These financial instruments have become so popular with businesses over the years because of their flexibility and versatility. Strictly speaking, there’s little you can’t accomplish because they don’t come with the same restrictions as other finance products.

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Eligibility criteria for commercial bridging loans

Eligibility for a bridging loan will be assessed on a case-by-case basis, however typical considerations include:

Security type and value

The property type itself has to meet lender criteria, although most semi-commercial or fully commercial properties can be financed. Bridging lenders minimum loan size start from £25,000; many are in the range of £50,000 – £75,000 as a minimum.

Viable exit strategy

When securing a commercial bridging loan, a clear and viable exit strategy is crucial. Common strategies include:

  • Sale of the property.
  • Remortgage.
  • Rental Income.
  • Alternative funding sources.
  • Loan to value ratio.

When securing a commercial mortgage, the loan-to-value ratio (LTV) plays a crucial role. It simply means the maximum loan amount a lender is willing to offer compared to the property’s appraised value.


For commercial properties, the typical LTV ranges between 65% and 70%. So, if your property is valued at £200,000, you can generally expect a maximum loan of £130,000 to £140,000 (65% to 70%).


Credit score

Borrowers’ credit score and history will play a role in securing a bridging loan. While severe credit issues will limit options for bridging loans and commercial mortgages, some lenders specialise in lending to those with poor credit. Being upfront with your lender or broker about your credit history is key: it will allow them to assess your overall financial health and business strength beyond just your credit score.

How long does commercial bridging finance take?

 

Commercial bridging finance is prized because of how quickly it can be arranged. Depending on your circumstances, your loan could be arranged in as little as five to seven business days. However, even more complicated cases could see your money being dispensed within a couple of weeks.

 

What information do you need to provide to apply for a commercial bridging loan?

 

Be prepared to provide the correct documentation when applying for your loan. The biggest reason loan applications are delayed is because borrowers fail to provide everything the lender needs when applying.

Here’s a non-exhaustive list of what you may be asked to provide:

  • Proof of ID.
  • Proof of address.
  • Three to six months of bank statements.
  • Evidence of current assets.

  • Planned exit strategy for the loan.

    Project details.

  • Personal guarantee (if you are using one).

  • Information about the asset you will be using as security.

Preparing the required documentation is best handled through a broker. Doing so streamlines the process and ensures you provide everything a lender needs to process and approve your loan.

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Benefits of a Commercial Bridging Loan

They are one of the quickest ways to raise funds: Typically taking between 2-3 days.

Flexible term times from a few days up to a year: They give you the funds quickly and then if you continue with your purchase or development plans, whilst you can also make longer term finance arrangements. They offer the solution you may need whilst waiting for a commercial mortgage to process.

The quickness and flexibility of them is what is the most attractive aspect of this type of finance. They can be applied and completed in a matter of days, along with the term being taken out for a matter of days or months also.

Commercial property funds can be used in a variety of ways: This includes the purchase of a commercial property, the redevelopment and refinancing.


Is a commercial bridging loan right for you?


Consider whether this is the most suitable option for you and your business. Could other commercial loans, or a commercial mortgage be a better option?


Our team of experts will be able to educate you and guide you through your options.


They can often have higher interest rates compared to other financing options – So, ensure you know and understand all of the finer details in the policy, and are happy with any terms that have been outlined. 


You will need to consider your exit strategy – As mentioned, this is a short-term solution, so planning your longer term is crucial. Our team can help!

Benefits of working with Hilton Smythe

Market independence: Forget biassed recommendations. We’re 100% independent financial advisers, free from funder or product restrictions. No commissions, no conflicts, just your best shot at financing tailored to your goals.

Access to a wide panel of lenders: We source exclusive loan deals unavailable through traditional lenders, unlocking bespoke lending solutions that meet your specific needs.

A leading SME finance specialist: We’ve been focused exclusively on SMEs since 2018, helping countless businesses reach their growth goals.

Applying for a Commercial Bridging Loan 


Applying for a loan is a big decision for any business, and should not be overlooked. It is increasingly important to ensure that you are getting the right option and finance deal that is most suited to your specific requirements.


All too often, with the increase in online brokers, people and businesses take out finance solutions that aren’t always the best for them. Before you proceed with any application, it is advisable to speak with a specialist broker.



How much does a commercial bridging loan cost?

 

Bridging loan costs are primarily the interest charged on your loan. However, other fees also feature in your costs. Generally, interest rates could be as low as 0.5%, depending on your strength as a borrower, how much you’re borrowing, and the project you’re using the loan for.

 

Various additional costs must also be factors into your overall loan costs, including:

  • Arrangement Fee – Also known as a facility fee, this is the entrance fee for setting up your loan and could be up to 2%.
  • Exit Fee – Certain lenders may levy an exit fee when you pay off your loan. They are valued at 1-2%, but they are gradually becoming less common.
  • Legal Fees – You must enlist the services of a solicitor to set up your loan. You will also be required to pay the lender’s legal costs for arranging the facility.

  • Administration Fees – Limited administration fees may also be included in your loan terms, but this varies from lender to lender.

  • Valuation Fees – Commercial bridging loans are secured against a high-value asset, which will require an official valuation report to confirm its value. The borrower is expected to cover these costs.


Note that you may have to pay brokerage fees if you are arranging your loan through a broker. However, the best brokers no longer charge borrowers their fees but levy these costs against the lender instead.

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