Commercial Bridging Loan

A commercial bridging loan is short-term borrowing secured against a property used wholly or partly for commercial purposes.

The property could include:

• Offices
• Shops and retail units
• Warehouses
• Industrial units
• Factories and workshops
• Restaurants and cafés
• Pubs
• Hotels and guest houses
• Medical or dental premises
• Care homes
• Farms and agricultural buildings
• Development sites
• Mixed-use properties
• Commercial land

The loan provides temporary funding until a longer-term arrangement or another source of repayment becomes available.

Unlike a standard commercial mortgage, which may run for many years, a bridging loan will normally have a much shorter term. The borrower must repay the amount borrowed, interest and fees by the agreed deadline.

A commercial bridging lender takes a legal charge against the property being used as security.

The amount available will usually depend on the property’s value, condition, proposed use and the strength of the repayment strategy.

The application process generally involves:

1. Establishing the amount and timescale required.
2. Reviewing the property being offered as security.
3. Assessing the proposed use of the money.
4. Examining the exit or repayment strategy.
5. Completing credit and background checks.
6. Instructing a valuation.
7. Completing legal due diligence.
8. Issuing a formal loan offer.
9. Completing the loan and releasing the funds.

The loan must then be repaid on or before the agreed date. Failure to repay could result in default interest, additional charges and enforcement action against the property.

Commercial bridging finance can be used for a range of legitimate property and business purposes.

Possible uses include:

• Purchasing commercial property
• Buying property at auction
• Completing a time-sensitive purchase
• Refurbishing business premises
• Converting a commercial building
• Purchasing mixed-use property
• Buying a vacant commercial unit
• Replacing an expiring commercial mortgage
• Repaying another short-term lender
• Resolving a broken property chain
• Raising funds against an existing property
• Purchasing land
• Completing planning or building work
• Funding a business acquisition involving property
• Preventing the loss of a property transaction

The lender will need to understand exactly how the funds will be used.

Where the loan supports a struggling business or is being used to repay overdue creditors, the lender may require more detailed evidence showing how the borrowing will improve the position and how it will be repaid.

Commercial bridging applications require careful consideration of the property, timescale and exit strategy.

MortgageKey can review:

• The amount required
• The completion deadline
• The commercial property
• The purchase price and value
• Existing secured borrowing
• The deposit and its source
• The purpose of the loan
• Proposed refurbishment work
• Planning requirements
• Your personal or company circumstances
• Your property experience
• Your credit history
• The repayment strategy

We can then search for lenders whose commercial bridging criteria may fit the transaction and explain the potential interest, fees, term and conditions.

All loans are subject to status, valuation, legal work, eligibility and the lender’s criteria.