At a glance
- Secured on commercial or semi-commercial (mixed-use) property
- Unregulated, so terms are agreed case by case
- Lenders look closely at the property, its income and your exit
- Typical terms of 3 to 18 months, with some up to 24
What is a commercial bridging loan?
A commercial bridging loan is short-term finance secured against property used for business. That covers offices, retail units, warehouses, workshops, pubs, hotels, care homes and land with commercial use. It also covers semi-commercial property, such as a shop with a flat above.
Commercial mortgages can take months to arrange. A bridge lets a buyer or business owner move first and arrange longer-term funding afterwards, or raise money against a property while a sale or refinance goes through.
Common uses
- Buying a commercial property quickly, including at auction
- Buying a vacant or run-down building that needs tenants or work before a commercial mortgage lender will lend
- Change of use projects, such as turning offices into flats (often combined with refurbishment finance)
- Raising capital for a business against property it owns
- Refinancing when an existing commercial loan is coming to an end
What lenders look at
Because commercial property values depend heavily on use and income, lenders tend to be more cautious than with homes. Expect questions on:
- The property: type, condition, location, planning use class and how easy it would be to sell
- Income: whether there are tenants, lease lengths and rent
- You: property or business experience, assets and credit history
- The exit: sale, a commercial mortgage or another refinance, and evidence it is realistic
Maximum LTVs on commercial property are usually lower than on residential, commonly in the region of 60% to 70%, and specialist property types may be lower still.
Borrowing through a company
Many commercial bridging loans are taken by a limited company or SPV rather than an individual. Lenders normally ask directors for personal guarantees. Our page on limited company bridging loans covers how this works.
Costs
As with all bridging, interest is quoted monthly and costs include arrangement, valuation and legal fees. Commercial valuations are more involved than residential ones, so valuation fees and timescales are often higher. Ask for the total cost of the loan over your expected term, not just the monthly rate.
Exit strategies for commercial bridging
The usual exits are a commercial mortgage once the property is let or improved, a sale, or refinancing onto another product. If your exit depends on securing tenants, lenders will want to see a realistic letting plan and local demand. A weak exit is the most common reason commercial bridging applications are declined or scaled back.
Frequently asked questions
Are commercial bridging loans regulated?
No. Loans secured on commercial property for business purposes are not regulated by the FCA. If part of a mixed-use building is your home, the loan may fall under regulation, so tell your broker.
Can I get a bridging loan on a mixed-use property?
Yes. Semi-commercial property, such as a shop with a flat above, is widely accepted by bridging lenders.
How quickly can a commercial bridging loan complete?
Timescales depend mostly on the valuation and the legal work. Simple cases can complete in a few weeks; complex properties or tenancies take longer.
Can a limited company take a commercial bridging loan?
Yes, and many do. Lenders normally ask directors to give personal guarantees.
Do I need tenants in place?
No, but if your exit is a commercial mortgage, the lender will want to see how and when the property will be let.
Important: Your home or property may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it. Think carefully before securing other debts against your home.
This page is general information, not financial advice. Bridging Finance Comparison is a free to use lead generation service run by The Lead Advisory Company Limited. We are not a lender and do not give advice. We introduce enquiries to Curzon Financial, who are authorised by the Financial Conduct Authority (FCA), who may provide advice and arrange finance where appropriate. Rates, fees and criteria depend on your circumstances and the lender.