Commercial Bridging Loans
Similar in many ways to residential bridging loans, commercial bridging loans are designed to fill temporary yet potentially urgent financial gaps. The only difference being that commercial bridging loans are available exclusively for transactions and projects involving commercial property.
In order to qualify for a commercial bridging loan, at least 40% of the property in question must be used for commercial purposes. For example, if the property in question combines a retail unit with a residential flat above, the commercial part of the property would need to represent at least 40% of its overall value.
More often than not, commercial bridging loans are repaid when the initial borrower completes the refurbishment or redevelopment of the property in question and sells it on.
When Are Commercial Bridging Loans Used?
As mentioned above, a commercial bridging loan can technically be used to partially or fully finance the purchase, refurbishment or redevelopment of any kind of commercial property. Bridging loans are becoming increasingly popular among entrepreneurs buying new businesses, commercial properties and semi-commercial properties of all shapes and sizes.
New businesses and start-ups in particular are finding intelligent financial services like commercial bridging loans uniquely accessible and useful. Likewise, a commercial bridging loan is often ideal when looking to purchase rundown or derelict sites or premises prior to renovation works going ahead, for which it may be impossible to secure a conventional mortgage.
Just as is the case with residential bridging loans, commercial bridging loans can allow investors and developers at all levels to ensure they do not miss out on key purchase opportunities at property auctions.
In fact, just as long as the required security can be provided alongside a valid exit strategy for repaying the money, a commercial bridging loan can be used for almost any business-related purpose whatsoever. From initial business establishment costs to financing tax liabilities to simply providing additional working capital as and when necessary, commercial bridging loans represent uniquely accessible and affordable short-term financial solutions.
The Small Print…
There are a few important specifics to bear in mind if considering a commercial bridging loan, which include the following:
- Commercial bridging loans are available as first- and second-charge mortgages alike
- Typical terms range from one month to 18 months, though some lenders are more flexible than others
- The required capital can be made available in as little as 72 hours
- Loan values start from a minimum of £30,000
- With most commercial bridging loans, there are no charges or penalties for early repayment
- Interest rates and fees vary significantly from one service provider to the next
Advantages for Businesses and Professionals
By their very nature, commercial bridging loans provide businesses and professionals with a variety of benefits, which include:
- Easier access to short-term finance for foreign nationals and limited companies
- Ideal for any business in need of the fastest possible cash injection
- Limitless potential for use in a business setting
- Clear fee structures and flexible interest rates
- Countless options to explore from dozens of UK service providers
Criteria for Commercial Bridge Loans
- Maximum 1st Charge Loan — 55% LTV. This can increase to over 100% with additional security
- No minimum loan size
- Minimum term — 1 day
- Maximum term — 12 months. Extensions can be agreed in certain circumstances
- Interest Rate from 1.0% per month
For more information on anything to do with commercial bridging loans, our dedicated customer service team is standing by to take your call.