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Commercial Bridging & Property Funding
For simple and short-term finance, bridging loans could be an ideal solution to your commercial development needs.
- Quick Funding, Short-term Repayments
- Borrow between up to £5m
- Flexible & Tailored-loan Structure
- A Secured Finance Option
Bridge-the-Gap & Get Funding For Your Business Developments
For your business to access short-term capital when you need it the most
At Portman, we understand that property development projects can sometimes create temporary cash flow gaps. That’s where our bridge loans come in. A bridge loan is a short-term financing option that can provide you with the capital you need to move forward with your project, getting you closer to completion so you can sell the property, or closer to hitting an invoice stage.
Applying for a Bridging Loan
What is a bridging loan?
Our commercial bridge loans bridge the gap between buying new and selling your existing property, as well as helping you finish a development for sale or reach a crucial stage. They can also address funding shortfalls in development projects, from light refurbishments to final construction, for residential and mixed-use projects. Funding between £200,000 – £5 million.
How much does a bridging loan cost?
Interest rates vary considerably from business to business and project to project. Broadly they range from 0.5% to 3% per month. These rates can be either better or worse than other forms of finance or short-term funding. A good approach is to talk through your options with a broker such as Portman.
How does it work?
- Fast & Flexible Funding – A bridge loan gets you the capital you need quickly, often within days. This allows you to secure funding quickly and keep covering your costs.
- Tailored Solutions – Bridge loans are designed for short terms, typically from a few months to a year. This aligns with the timeframe for finishing or selling a development and allows you to borrow to suit your build programme. /li>
- Smooth Transition – Once you sell your existing property or asset, you can easily repay the bridge loan with the proceeds. This allows you to seamlessly transition into your new location without financial disruption.
- Alternative Repayment Options – If the sale takes longer than expected, we can explore alternatives. Refinancing your bridge loan provides extra time to sell while potentially offering lower interest rates based on market conditions.
How a bridging loan can help
What sectors can benefit from a commercial bridging loan?
Several types of business sectors can benefit from a commercial bridging loan to access the necessary funds they require to ‘bridge-the-gap’. Any business that faces a short-term cashflow gap or needs quick access to capital for an unforeseen opportunity can benefit from a bridging loan. The most common sectors include…
- Construction – Construction companies can use bridging loans to cover costs between project milestones or completion and sale.
- Manufacturing – Manufacturers facing delays in receiving payments from customers can use bridging loans to cover operational costs and maintain production.
- Retail – Retailers facing seasonal fluctuations in cashflow can use a bridging loan to cover expenses during slower periods. They can also be used to fund inventory purchases for busy seasons.
- Technology – Tech start-ups can leverage bridging loans to finance product development or advertising while securing long-term funding.
- Science & Research – Research businesses can use bridging loans to fund R&D then repay when the development comes to fruition.
Loans and equipment finance for all types of business
Eligibility Requirements & Applying for a Bridging Loan
Eligibility Guidelines
- Have a clear plan for repayment – We will require a clear view on exit (repayment of the loan) via either sale of the funded properties or a refinance onto longer term debt.
- Have a valuable property – RICS certified full valuation on the property to be taken as security.
- PG – Personal Guarantees will need to be signed by any individual related to the funding.
- Company Type – A limited company or an LLP based in the UK.
What fees are associated with a bridging loan?
A bridging loan may require additional associated fees. These include:
- Legal fees – Incurred by the lender for solicitors and legal processes during loan setup.
- Valuation fees – Fees for the expense by the borrower to value the property according to the lender requirement.
What can a Commercial Bridging Loan be used for?
Bridging Finance can be used for a variety of purposes across many sectors but since these are short term loans designed to unlock future potential they are typically used in construction:
- To complete a project.
- To develop brownfield sites before planning approval is given.
- For auction properties.
- For properties where it’s not possible to get a typical mortgage.
- To buy a property before the current project is sold.
- Covering unexpected development costs.
- Fast & Flexible – We can help get bridging loan approval quickly and efficiently, so you can get the funding you need when you need it.
- Security Options – We offer a variety of security options to meet your needs, including using the value of your existing property or the property you are purchasing.
- Competitive Rates – We offer competitive rates on bridge loans, so you can be sure you’re getting a good deal.
- Expert Support – Our team of experienced professionals are here to help you every step of the way, from application to repayment.
The Difference between a Bridging, Flexi & Short-term Loans?
Bridging vs. alternative loan options
- Bridging Loans – Bridging loans are the fastest option but come with the moderate to high interest rates because of their flexibility and typically being secured on an asset that needs work to realise its value. They are best for short-term funding gaps.
- Flexible Loans – Flexible loans are another short-term loan but that typically includes an early repayment option. They can be secured or unsecured.
- Short-term Loans – Short-term loans offer fixed monthly repayments and can be secured or unsecured. Short-term loans are a good option for unexpected expenses with a clear repayment plan over a longer period (up to 2 years).
Bridging vs. alternative loan options At a glance…
| Bridging Loan | Flexible Loan | Short-Term Loan | |
|---|---|---|---|
| Common Use | A project that requires completion to maximise its full value. | Unexpected expenses, where you may be able to repay early | Unexpected expenses or a temporary dip in trade |
| Term Length | >1 – 24 months (typically) | 3 – 24 months (variable) | 3 – 24 months (fixed) |
| Repayment | Usually bullet payment (full amount at term end) | Flexible repayment options | Fixed monthly installments |
| Security | Secured (usually against property) | Unsecured / secured | Unsecured / secured |
| Process Speed | Typically a few days | Can be within 24hrs | Can be within 24hrs |
Additional Considerations
Remember to carefully consider your needs and financial situation before choosing any loan type. You may also wish to consider the following:
- Fees – Bridging loans often have additional fees like arrangement and exit fees.
- Eligibility – Qualifying for bridging loans might be stricter due to the security risk for the lender.
- Exit Strategy – A clear exit strategy for repaying the loan (e.g., selling a property) is crucial for bridging loans.
Bridging Loan FAQs
How does a bridging loan differ from a traditional business loan?
Traditional business loans typically have longer repayment terms and require a more extensive application process. Bridging loans offer faster access to funds (often within days) but have shorter terms and higher interest rates.
Are bridging loans a good idea?
Bridging loans can be a beneficial financial tool in certain circumstances, but their suitability depends on your specific needs and goals. They offer rapid access to funds, flexibility in usage, and can bridge financial gaps, which can be advantageous for property purchases, renovations, or business ventures. However, due to higher interest rates and potential additional costs, careful consideration is required. It’s recommended to assess the pros and cons, align the loan with your objectives, and have a well-defined exit strategy before deciding if a bridging loan is a good idea for your situation.
Are bridging loans expensive?
Bridging loans generally come with higher interest rates compared to traditional long-term loans, which can make them more costly over the short term. Additionally, there might be arrangement fees, valuation fees, legal fees, and other costs associated with the loan. While the higher costs are a trade-off for the speed and flexibility they offer, it’s essential to calculate the overall expenses involved and determine if the benefits outweigh the costs in your specific circumstances.
How long does it take to get a bridging loan?
The timeline to secure a bridging loan can vary depending on several factors, including the lender’s processes, the complexity of your application, and the availability of required documentation. In some cases, if all the necessary information is readily available and the lender’s processes are streamlined, you might be able to secure a bridging loan within a few weeks. However, it’s important to note that the speed of approval and funding can be one of the advantages of bridging loans, making them suitable for time-sensitive situations like property auctions or urgent investment opportunities.
How quickly can I secure a commercial bridging loan?
Bridging loans are known for their fast turnaround times. With the proper documentation, funding can sometimes be secured within days.
What documents do I need to apply for a commercial bridging loan?
The specific documents required will vary depending on the lender. However, it typically includes business financial statements, tax returns, and property valuations if applicable. Our expert Team can guide you through the entire application process.
Is my business eligible for a commercial bridging loan?
We can assess if a business is eligible for a commercial bridging loan based on factors like financial health, the value of any collateral offered, and a clear exit strategy for repaying the loan. Contact Portman today for whether a bridging loan is the right fit for your business. Get in touch
What is an exit strategy for a commercial bridging loan?
An exit strategy outlines your plan for repaying the loan within the term. This could involve selling an asset, securing long-term financing, or generating sufficient business income. We can help you develop a solid exit strategy.
