What are unregulated commercial bridging loans?

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Unregulated bridging loans are loans used for commercial purposes such as purchasing commercial property or raising short-term capital.

Bridging loans regulated by the Financial Conduct Authority are for residential property, although a second charge loan on a residential building may not be regulated.

What are unregulated commercial bridging loans used for?

A commercial bridging loan can be used to purchase or develop commercial property, or it can be used to raise short-term capital. There are many reasons why short-term capital might be needed: some businesses have slow periods where income falls, and a loan can be used until business picks up again. Sometimes a business is offered stock at a large discount for bulk orders and a loan can be used to purchase the stock. Other times, a business might be owed money from overdue invoices but has low cash flow. A bridging loan can be used to increase working capital and repaid after the invoice payments are received.

How much can be borrowed, for how long, and when will funds be available?

Commercial bridging loans are available from around £30,000. In theory, there is no upper loan limit, but assets such as property worth more than the loan are needed for security, and the loan needs to be repaid within the loan period.

Bridging loans are short-term loans that can last from 1 month to 18 months, though sometimes longer loans are available.

Loan funds can be available from 3 days to 3 weeks after the initial loan offer.

What are the main benefits of commercial bridging loans?

Compared to commercial mortgages, bridging loans do not take long to arrange so are great if a business needs money quickly.

There may be an arrangement fee charged, but there are no other hidden fees. Normally, there are no fees for early repayment.

Most loan application assessments rely on the value of the property used for security rather than the business having a high credit score.

What is a bridge-to-let loan?

A bridge-to-let bridging loan is for landlords who want to purchase residential property for rent. The bridging loan can be used to complete the purchase of the property before a long-term commercial buy-to-let mortgage has been arranged.

Bridging loans for landlords is ideal for time-sensitive deals. A landlord may spot a property that is being sold at a below-market value price because the seller wants a quick sale. Bridging loan finance can be available quickly to secure the purchase.

Some matters to consider

Before applying for a commercial bridging loan, you must be certain that the business can afford to repay the loan and within the loan time period.

If buying commercial property a business must budget for additional costs such as maintenance, council tax and security.

Because the loan is unregulated, there could be perceived risk. Ascot Mortgages has had a long relationship with many established lenders and can source unregulated loans from reliable lenders. Whether you’re employed or self-employed, contact us to discuss your commercial borrowing needs.

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*Privacy Notice - Any information provided will be treated with confidentiality and will only be accessible within Ascot Mortgages