Commercial bridging loans

Commercial bridge finance

When it comes to lending ‘commercial bridging finance’ is a phrase thrown around regularly, but what does it actually mean? Here we’ve put together a short guide to help unravel the finance terminology and work out if bridging finance for businesses could work for you.

What is a commercial bridging loan?

Bridging finance is a short-term loan, as illustrated in the name itself to ‘bridge’ the gap between one situation to another. It’s a temporary solution to finance the business until you can either repay the loan in full or source alternative longer term lending. The bridge loans are often agreed within a matter of days and for many are an ideal go-to solution for quick, short-medium term finance.

Business bridging loans are most commonly used to purchase or renovate properties, both commercial and residential, this finance can be used for a variety of different business purposes. As well as financing commercial property projects, we’ve helped start-up businesses raise the finance they need, raise quick finance to pay off a tax bill and to purchase new stock. Whatever the reason, the key from the lenders perspective is what exit strategy is in place (see below).

Is commercial bridge financing an expensive way to borrow?

Traditionally short term loans such as bridging loans for businesses, tend to be more costly. However, in recent years there has been an increase in lenders entering the market, therefore reducing interest rates.

What are the benefits of bridge loans for businesses?

Businesses use bridging finance for number of reasons the main ones being;

· Raising funds quickly

· Refurbish premises

· Finish a development

· Purchase property at auction

· ‘bridge’ a shortfall between buying and selling

· raise money for deposit when purchasing property


Are there risks involved in business bridge loan financing?

The bridging industry is FCA regulated, meaning that brokers and lenders must act within strict guidelines and adhere to policies such as ‘treating customers fairly.’ There is risk with any form of borrowing, however dealing with approved brokers means that you will be fully informed of the risks before applying.

What does ‘exit’ mean to commercial bridge loan lenders?

Essentially when lenders use the word ‘exit’ they mean repayment. When arranging a short-term bridge loan for your business it’s imperative to have a clear exit strategy. This can mean repaying the loan in full, or finding alternative long term financing elsewhere.


What are open and closed commercial bridging loans?

Commercial bridging lenders used the term closed bridging loans, when the loan has a fixed end date in place. Open loans are agreed with no fixed end date; however, you have a set period to repay.

“Hidden costs” in business bridging loan agreements

Normally with most commercial bridging finance lenders you would expect to pay the following fees; application fees, administration fees, product fees and exit fees. These vary from lender to lender, it’s important to read the complex terms and conditions issued to you prior to signing on the dotted line, this way you will avoid any nasty shocks!


How quickly can I arrange a business bridge loan?

In some cases, loans have been agreed within 24-48 hours, however some lenders can take up to a few weeks. We will talk to you about time scales and make sure the lender you choose can work towards this too.

Can I obtain commercial bridging finance with poor credit?

Depending on when the credit issue occurred this may still be possible. Brokers may choose to use a ‘non-status lenders’ who do not use credit history when making applications, instead they will look at the potential value of the business prior to approval.

Which commercial bridging finance lender is right for me?

Finding the correct bridge finance provider can be a difficult decision, it’s important to choose a lender who will look at your businesses circumstances with an open mind. Speak to our experts today if you are searching for the following

Commercial bridging finance

bridging loans for small businesses

Bridging loans for companies with bad credit

Quick short term commercial finance for those that need finance urgently

At Merchant Advice Service, we deal with lenders and brokers who specialise in a range of different types of specialist commercial finance. We recognise that every person and every company is unique and we will tailor our service to your individual requirements, holding your hand throughout the process.


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