Commercial Bridging Loans

Cover immediate expenses while you’re waiting to receive longer-term finance through our commercial bridging loans.

Borrow from as little as £25,000 to over £10m
Rates from as little as 0.55% Per Month

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Understanding Commercial Bridging Loans

Commercial bridging finance (or a bridge loan) is a short-term loan that helps businesses bridge a lack in cash flow, primarily in relation to commercial property transactions, whilst waiting for additional expected income to arrive.

How Commercial Bridging Loans Work: A 3-Step Process

Apply Today: Our brokers will find the most suitable lender for your needs. Loan agreements in principle (AIPs) are issued the same day, subject to valuation.
Receive Funds: Bridging loans are often arranged within 4-6 weeks, helping you to get started quickly.
Repay: You repay the loan once your expected funds are available, such as proceeds from selling your old property. All fees and interest are paid when the loan is repaid (excluding valuations and legal fees).

Commercial bridging loans are designed to be repaid within a relatively short timeframe - typically between 3 months to 18 months. Fees or interest rates may also be more expensive than regular business loans because the finance is short-term.

Types of Business Bridging Loans Available

We offer many types of commercial bridging loans, of which the rates can be fixed or variable. Here’s what each involves:

1. Open Bridging Loans: An open bridging loan has no fixed repayment date, allowing flexibility in repayment, often used when the borrower is unsure when they’ll sell or refinance.

2. Closed Bridging Loans: A closed bridging loan has a set repayment date, often tied to a specific event like the sale of a property, providing more certainty for both the borrower and the lender.

3. First-Charge Bridging Loans: A first-charge bridging loan is secured against a property as the primary debt, meaning the lender has priority in the event of a default.

4. Second Charge Bridging Loans: A second charge bridging loan is secured against a property after the first charge, meaning the lender is repaid only after the first charge lender in case of default.

5. Auction Bridging Loans: Auction bridging loans are short-term loans designed to quickly fund property purchases at auctions, where buyers need to pay promptly.

6. Bridge-to-let Loans: Bridge-to-let loans are used to purchase a property with the intention of renting it out, providing short-term funding before refinancing into a buy-to-let mortgage.

7. Heavy Refurbishment Bridging Loans: Heavy refurbishment bridging loans are designed for properties undergoing significant structural changes or large-scale renovations, providing funding to complete the work before selling or refinancing.

Calculating Your Commercial Bridging Loan

The Loan-to-Value (LTV) ratio helps lenders decide how much to loan based on the appraised value of a property, quoted on a gross basis to include fees and interest.
To calculate the LTV, you need to:
1. Divide the desired loan amount by the property's value.
2. Multiply the result by 100 to express it as a percentage.
For example:
- Property value: £500,000
- Lender’s LTV rate: 60%
- Loan amount: 60% of £500,000 = £300,000

What Types Of Properties Can I Purchase?

There are many types of properties which businesses can fund using our bridging finance options, such as:

Warehouses, industrial units, and factories

Office spaces

Private educational accommodation

Business parks and retail units

Hotels, B&Bs, and guest houses

Leisure properties

Houses in multiple occupation (HMO)

Car parks, garages and plots of land

Pubs, bars, and restaurants

Care and retirement homes

Other mixed-use properties

What Are the Eligibility Requirements?

To qualify for our business bridging loans, there are several criteria you should be aware of.

The loan must be used for commercial property, semi-commercial property, or land.
Applicants must be aged 18+, and reside in England, Scotland, Wales, or Northern Ireland.
We only accept adverse credit on a case-by-case basis.
The interest reserve will be retained from the loan.
Borrowers must demonstrate a clear exit strategy that outlines how they plan to repay the loan.
Receive up to 75% LTV, on an interest-only basis.

However, if you fall outside of any of these, please contact a member of our team to discuss your needs.

Benefits of Our Business Bridging Loans

At Union Business Finance, our bridging loans are designed to provide fast and flexible financing solutions tailored to your needs. Here are the key benefits you can expect:

Quick Access to Funds

Time is money in business. Our fast application and approval process gets you the funds you need promptly.

Flexible Loan Terms

Short-term funding made simple. 12 months is typical, but we can help source loan terms from just a few months up to 18 months, providing you with the freedom to address immediate needs without long-term commitments.

Wide Range of Uses

Our loans are designed to meet a wide range of business requirements, such as purchasing a new office.

Unlock Your Assets

Turn property equity into working capital. Our bridging loans help you release funds tied up in assets, so you can reinvest and maximise your business potential.

Credit-Friendly Options

A varied credit history won’t hold you back. We focus on your collateral and exit strategy, not just your credit score.

Competitive LTV Ratios

Make the most of your assets with attractive Loan-to-Value (LTV) ratios that help you secure the funding you need.

Professional Guidance

Your business deserves the best financial fit. Our team offers professional advice tailored to your needs, ensuring you get the right solution every time.

How Can I Apply?

Applying for a business bridging loan with us couldn’t be easier. We understand that daily demands mean you may need funds as quickly as possible, so we’ve designed our process with this in mind:

1. Initial Consultation

Get in touch with our team to discuss your needs and goals. We’ll answer any questions you may have, and help you understand the options available.

2. Submit Your Application

Complete our simple online form, providing essential details about your business, the loan purpose, the required borrowing amount, and your repayment source.

3. Provide Supporting Documents

Submit key documents, such as proof of identity, financial statements, and your exit strategy. Our team will guide you on exactly what’s needed.

4. Loan Assessment

Our experts will assess your eligibility and loan terms, considering factors like the value of your collateral, your financial position, and your repayment plan.

5. Approval and Offer

If your application is successful, we’ll present you with a loan offer, including all the terms and conditions. You’ll have the opportunity to review and discuss these before proceeding.

6. Receive Your Funds

Upon acceptance of the loan offer and completion of the necessary legal and valuation checks, the funds will be transferred to you quickly.

Contact Us for Fast,
Reliable Business Bridging Loans

At Union Business Finance, we offer professional, reliable, and fast loans to help your business reach its targets effectively. If you have any questions about our business bridging loans or are interested in getting started with us, please don’t hesitate to give us a call today at 01442 617 799, or fill out our online contact form.

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FAQs

How long does it take to receive a business bridging loan?

We aim to provide you with your funds quickly once your application has been approved. In most cases, the loan will be issued within 4 to 6 weeks. This is dependent on how quickly you respond to the lender’s enquiries, and whether you have included all the required documents.

What is the difference between a commercial and a semi-commercial bridging loan?

A commercial bridging loan is used to finance purely commercial properties, such as retail units or warehouses. It’s typically secured against these types of properties and is repaid when the borrower secures long-term financing or sells the property.

A semi-commercial bridging loan is designed for properties that have both commercial and residential components, such as a mixed-use building with retail space on the ground floor and apartments above.

What are the associated interest rates with this service?

Since repayment for bridging loans is short-term, our lenders will calculate interest monthly instead of using an annual percentage rate (APR). This will typically start from 0.55% per month and can be paid back monthly or as a rolled-up deal, where all the interest is paid at the end of the loan term.

Most lenders charge a minimum of 3 months interest. For example, if you repay the loan after 1 month, you will be charged 3 months’ interest; repay after 4 months, you will only pay 4 months' interest.

Can bridging loans only be used for property-related projects?

No, bridging loans are not limited to property-related projects. While they are commonly used for property purchases, renovations, or development, they can also be used for other business purposes, such as funding working capital or covering cash flow gaps. However, our other business finance solutions may be more appropriate for non-property needs, so please consult with one of our brokers.

What is the difference between commercial bridging loans and cash flow loans?

Commercial bridging loans are short-term solutions that are secured against property or assets and are repaid once the borrower secures long-term financing or sells the property.

Cash flow loans, on the other hand, are typically unsecured loans that help businesses cover short-term operational expenses, such as payroll or inventory, without the need for property collateral. It is primarily based on the business's revenue and financial health rather than physical assets.

Is a bridging loan different to a commercial mortgage?

Yes - bridging loans are used to “bridge the gap” between purchasing a property and securing long-term financing, whereas a commercial mortgage is a long-term loan used to finance the purchase of commercial property, repaid over 10+ years.

What credit checks will you perform?

We conduct a light credit check as part of the application process for a bridging loan, primarily focusing on the value of the property you’re using as collateral and your proposed exit strategy. Our decision-making process is more flexible, allowing us to offer financing options to businesses with varying credit profiles.

What if I have a poor business credit score?

Your business credit score isn’t a priority when assessing eligibility; as long as you can demonstrate a clear plan for repaying the loan - such as the sale of a property or securing long-term financing - and have valuable collateral to back the loan, you may still qualify.

Are your business bridging loans regulated?

Our business bridging loans are not typically regulated by the Financial Conduct Authority (FCA), as they are considered short-term loans. However, we adhere to strict industry standards and ensure that all our lending practices are transparent, fair, and compliant with applicable laws.

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Disclaimer

Aintu Ltd T/A Union Business Finance is an independent Asset finance broker not a lender, as such we can introduce you to a wide range of finance providers depending on your requirements and circumstances. We are not independent financial advisors and so are unable to provide you with independent financial advice. Aintu Ltd T/A Union Business Finance will receive payment(s) or other benefit from the finance provider if you decide to enter into an agreement with them. Aintu Ltd T/A Union Business Finance is an appointed representative of AFS Compliance Ltd which is authorised and regulated by the Financial Conduct Authority under number 625035. Aintu Ltd T/A Union Business Finance aims to provide our customers with the highest standards of service. If our service fails to meet your requirements and you would like to report a complaint; please click on the link below;

https://www.afsuk.com/asset-finance-solutions/contact/complaints-procedure/