Commercial Bridging Loans and Finance
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Written by:
Phil Greenwood
Ascot Bridging Expert
Last Updated:
29.04.2025
Written by:
Phil Greenwood
Ascot Bridging Expert
Last Updated:
29.04.2025
If your business needs quick access to funds, commercial bridging loans could be the ideal solution. Whether you’re buying commercial property, covering short-term cash flow issues, or waiting for long-term finance to come through, a business bridging loan provides flexibility and speed.
Here at Ascot Mortgages, we can guide you through the process of finding and securing the right bridging loan for your company.
Our expert advisers are highly experienced in business financing solutions, so we’re perfectly placed to offer advice and search for the best rates on your behalf. We take the hassle out of finding fast and effective short-term financing for your company. From initial advice to paperwork, we take care of it all.
Get in touch with our friendly team for a chat about your needs.
What is a Commercial Bridging Loan?
A commercial bridging loan is a short-term finance solution designed to “bridge the gap” between purchasing a property or funding a business and securing long-term finance or selling another asset.
It is typically used for urgent business needs, such as property acquisitions, development projects, or covering cash flow shortages.
How Does a Bridge Loan Work?
Bridge loans are designed to be quick and temporary. They provide funds for a short period (often 3-24 months) while you arrange permanent finance or complete a sale. The loan is secured against assets like commercial property, and repayments often only consist of interest during the term, with the capital paid off in full at the end.
The Different Types of Commercial Bridging Loans
Commercial bridging finance comes in a few different types, and it’s important to get the right fit for your business and its current needs.
Open Bridging Loans
Open bridging loans don’t have a fixed date for repayment, so can be used in situations where flexibility is required. For example, if you’re waiting on the sale of a property, which will give you the funds to repay the loan.
Closed Bridging Loans
A closed bridging loan does have a fixed repayment date. They’re designed for companies which know exactly when they’ll have the funds available to complete repayment. For example, if contracts have already been exchanged in a property sale, and a date for completion has been set.
First Charge Bridging Loans
These are secured when there’s no existing loan on the property, meaning the lender holds the first charge over the asset. If you default, this lender is first to receive repayment.
Second Charge Bridging Loans
These are taken out when there’s already an existing loan, like a mortgage, on the property. Here, the bridging lender is second in line for repayment if the asset is sold.
What’s the Difference Between First and Second Charge Bridging Loans?
A first charge bridging loan is when the bridging lender holds the first claim over the property or asset.
But in a second charge bridging loan, the lender is second in line behind the primary lender. For example, if your property already has a mortgage and you take out a second loan, the mortgage lender will always be repaid first, and the bridging loan lender second.
What Do Businesses Use Bridge Loans For?
Bridging finance can be used for several purposes, but most common is to fund the purchase or development of property. Here are just a few examples of what UK companies typically use bridging loans for:
- Acquiring new business premises before selling an existing property.
- Funding property development until long-term development finance is secured.
- Buying at auction where quick completion is needed.
- Covering cash flow shortages while awaiting future income or a sale.
Bridge Loan Examples
Still not sure whether a bridging loan or commercial property development finance is suitable for your needs? Let’s run through a couple of real-world examples of businesses who take advantage of this kind of financing solution:
- A property developer uses a bridge loan to buy a plot of land and quickly act on a time-sensitive opportunity. Once planning permission is secured, the loan is refinanced into a longer-term development loan.
- A business needing urgent working capital takes out a bridging loan while waiting for a property sale to complete, helping with operational expenses in the meantime.
How Much Can I Borrow?
With commercial bridging finance, the amount you can borrow depends on the value of the asset you’re using as collateral. Typically, lenders will offer up to 70% of the property’s value. Some loans may allow borrowing up to £10 million or more, depending on the lender and the property.
Here’s a quick look at a couple of examples of this in action:
| Property Value | Loan-to-Value (LTV) | Amount Available |
| £1 million | 60% | £600,000 |
| £2 million | 70% | £1.4 million |
However, the best way to determine how much finance you can access is to speak to an expert for advice tailored to your exact circumstances. Book an appointment with our commercial bridging finance specialists here at Ascot Mortgages.
What Information Will I Need to Provide When Applying for a Commercial Bridging Loan?
When applying, lenders will typically ask for:
- Proof of ownership of the asset or property.
- Details of any existing loans or mortgages on the property.
- A clear exit strategy, such as how you plan to repay the loan (e.g., selling the property or refinancing).
- Financial documents like bank statements and business plans.
How Long Does Commercial Bridging Finance Take?
One of the key advantages of bridging loans is their speed. Approval and funding can happen in as little as 1-3 weeks, making them a great option for businesses needing quick access to capital. However, it’s worth noting that the timeline depends on the lender, the complexity of the deal, and the required documentation.
The best way to ensure a smooth, fast application and approval is to use a brokerage service like Ascot Mortgages. We’re here to ensure your bridging loan or commercial property development finance comes through quickly, causing minimum disruption to your plans and projects.
Is a Bridge Loan Different from a Commercial Mortgage?
Yes, bridging loans and commercial mortgages serve different purposes. While commercial mortgages are long-term loans (often spanning decades), bridging finance is short-term, typically lasting up to 18-24 months. Bridging loans are designed to act quickly, while commercial mortgages usually take longer to arrange.
Are There Alternatives to Bridging Loans?
Yes, businesses can also consider:
- Commercial mortgages for longer-term borrowing needs.
- Invoice finance, where you borrow against invoices due.
- Development finance, ideal for large-scale property projects with longer repayment terms.
- Business loans, which offer more structured, long-term financing.
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FAQ
01/ What Is A Commercial Bridge Loan?
A commercial bridge loan is a short-term loan that provides quick access to funds for property purchases or business needs, secured against assets such as property. It’s typically used while waiting for long-term finance.
02/ How Long Does It Take To Get A Commercial Bridging Loan?
It can take anywhere between 1-3 weeks to secure a commercial bridging loan, depending on the complexity of the case and the lender’s process.
03/ Are There Any Alternatives To Commercial Bridging Loans?
Yes, alternatives include commercial mortgages, development finance, or invoice financing, depending on the business’s specific needs.
04/ Is All Commercial Bridging Non-Regulated?
Most commercial bridging loans are non-regulated. This means they do not fall under strict FCA rules like residential bridging loans. Always check with your lender or broker to confirm the specifics.
05/ Does My Business Qualify For Commercial Bridging Finance?
As with all types of loans – both residential and commercial – you’ll need to meet the lender’s requirements as an applicant.
The criteria will vary between lenders, and may also be affected by the specific circumstances of the loan. But in general, lenders look at the applicant’s credit history and the financial stability of the business, as well as the value of the asset used as collateral. The profitability of the business may also be taken into consideration. Lastly, the lender will look at the timeline for the sale of any property, the proceeds of which may be used to repay the bridging loan.
It’s well worth getting personalised advice before applying for a bridging loan, to give yourself the best possible chance of acceptance. Contact Ascot Mortgages to arrange a consultation, and we’ll help you find the ideal financing solution for your company’s needs.
06/ What Are The Risks Of Commercial Bridging Loans?
Bridging loans offer many benefits, including fast access to funds just when you need them most. But like other kinds of finance, this type of loan also comes with a level of risk.
It’s important to be aware of these before taking out a bridging loan, so you can go in with your eyes open.
These risks may include potential delays in the sale of a property, the proceeds of which will cover the loan repayments. If this happens (and delays often do in the world of commercial property sales), you could be facing penalties for late repayment or higher interest costs. You may even need to find an alternative form of financing in the short-term.
Bridging loans may also have tax implications for your company. You should contact a tax specialist for advice, to help you understand your obligations and make the best choices.
07/ What Are The Pros and Cons Of Commercial Bridging Finance?
Bridging loans can offer the following benefits for businesses:
- Fast access to capital
- Deferred payment, usually once a property has been sold
- Flexible terms
- Easier access – bridging loans can be easier to get compared to some conventional business loans and mortgages.
However, there are also some potential pitfalls to consider such as:
- Higher interest rates and fees compared to some other financing options
- Short-term, so you’ll need to plan carefully to make sure you can meet key repayment dates
- You’ll usually need to offer significant collateral to guarantee the loan.
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Ascot Mortgages authorised and regulated by the Financial Conduct Authority and can be found on the FCA register (www.fca.org.uk) under reference 776062. The FCA do not regulate some forms of mortgages. The guidance and advice contained in this website is subject to UK regulatory regime and is therefore restricted to consumers based in the UK. There may be a fee for mortgage advice. The precise amount will depend upon your circumstances but we estimate it will be £599 per mortgage account. Ascot Mortgages Ltd give you the option to pay a non-refundable fee of £1299 payable with the application. If this option is taken, Ascot Mortgages Ltd will refund any procuration fee received by the lender.
Ascot Mortgages Limited is registered in England and Wales and have their registered office at 8 Webster Court, Westbrook, Warrington, WA5 8WD. The company’s registration number is 06764971.
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