Commercial Bridging Loans
Waiting for longer-term finance to be put in place? Unlock immediate capital with a commercial bridging loan. Ideal for seizing time-sensitive opportunities, our trusted advisers can help you secure short-term loans to keep your business moving forward until your long-term plan kicks in.
And 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:
- Commercial properties
- Buy-to-let properties
- HMO property investing
- Property refurbishments
- Other business purposes such as land purchasing, deposits for commercial property, resolving cash flow issues, or business growth
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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- Over 35 years experience
- Completely independant
- Honest Advice
- Tailor-made solutions
Eligibility
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.
What are the pros and cons of a Bridging Loan?
As mentioned, bridging loans are mostly used as a short-term finance solution, so if you require funds quickly to purchase a new commercial property then you’re likely right to apply for a commercial bridging loan.
They are commonly used to bridge the gap before a commercial mortgage is put into place, this then allows the sale of the property to go through quickly and smoothly, with an exit strategy to switch over to the longer mortgage solution in time.
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.
Benefits of a Commercial Bridging Loan
- 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.
- What do they have to be used for commercial property funds can be used in a variety of ways, including; the purchase of a commercial property, the redevelopment, refinancing.
There’s also a few things you should consider before taking a commercial bridging loan;
- 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 compare to other financing options, again our point above is important.
- Ensure you know and understand all of the finer details in the policy, and are happy with any terms that have been outlined. Again, as an experienced commercial finance broker we will take the time to go through this in detail with you.
- You should consider at your exit strategy. As mentioned, this is a short-term solution, so planning your longer term is crucial, we will help!
Benefits of working with Hilton Smythe:
- Market independence: Forget biased 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.
Apply for a Commercial Bridging Loan with Hilton Smythe
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.
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