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Guide To Commercial Bridging Loans

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Discover how commercial bridging loans offer a swift and flexible solution for acquiring commercial property or releasing equity from existing assets. This guide outlines the benefits, eligibility criteria, loan-to-value ratios, asset types, costs, and borrowing limits associated with commercial bridging finance.

What is a Commercial Bridging Loan?

Commercial bridging finance provides a short-term funding solution for businesses looking to acquire commercial property or release equity quickly. It is often used in situations where there is a shortfall of funds, but a business needs to proceed with a transaction or investment quickly. 

Who Can Benefit from Commercial Bridging Finance?

Small and medium-sized enterprises (SMEs) may use bridging loans to manage cash flow gaps, fund expansion projects, or take advantage of sudden business opportunities. Similarly, property developers and investors can use a commercial bridge to secure an investment opportunity or to fund commercial renovations whilst waiting for a commercial mortgage to be put in place. 

Loan-to-value ratio and eligibility

Lenders typically lend a percentage of the value of the asset, known as the loan-to-value (LTV) ratio.Depending on the property type and your experience, you can typically secure up to 70% of the property’s value from day one. It is possible to access 100% finance if additional security is used for example, if the loan is secured against a residential property. 

What assets can I bridge? 

Any type of commercial asset can be financed, this includes land. 

How much does refurbishment bridging finance cost? 

Interest rates for commercial bridging finance start at 0.85% per month. Rates are influenced by the location and perceived risk. For an accurate indication of rates available, speak to your advisor. 

How much can I borrow? 

Bridging finance typically starts from £50,000 upwards, although some providers have a minimum loan size requirement ranging between £100,000 and £150,000.

Speed of Completion

The application-to-completion process for refurbishment bridging finance generally spans 2 to 4 weeks. However, in certain situations, expedited completion might be possible based on your unique circumstances and requirements.

Commercial bridging loans offer businesses a flexible and efficient solution for addressing immediate financing needs, acquiring commercial property, or funding expansion projects.

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