Bridging Finance

Bridging Finance

Commercial bridging finance is a short-term loan that is used to bridge the gap between the purchase of a property or asset and the availability of long-term financing. It is often used in situations where a business needs to complete a property purchase quickly but does not have the necessary funds available at the time of purchase.

In the UK, commercial bridging finance is typically offered by specialist lenders, such as bridging finance companies and private lenders. It is typically secured against the property or asset being purchased and can be used for a wide range of commercial purposes, including the acquisition of new business premises, refurbishment of existing properties, and the purchase of land for development.

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Bridging loans and bridging finance still cause some confusion among a lot of the people and businesses we speak to.

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What are bridging loans?

Bridging finance is usually a type of short-term business loan. It’s best thought of as a temporary loan which gets you from A to B, until you can either clear the loan in full or secure a more permanent form of finance. That’s where the “bridge” idea comes in – finance to get you from one step to another.

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How do they compare to regular-term loans?

In theory, they differ because they are for a specific short-term purpose, whereas term loans often have more general commercial purposes. In reality, the speed of getting the cash in your account is the main difference. It can take weeks for some lenders to complete a term loan, but a bridging loan can be ready in 24-48 hours.

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What can I use bridging finance for?

Lenders that offer bridging loans usually do so for the purchase and renovation of property — it's a form of property development finance. They can be both commercial and residential, and the works can be ground-up property developments or just adding a bathroom to a flat.