At a glance
- Available to UK trading companies and property SPVs
- Directors are usually asked for personal guarantees
- Unregulated, so terms are agreed case by case
- Secured on residential, commercial or mixed-use property
Bridging loans for companies
A limited company can take a bridging loan in the same way an individual can. The company is the borrower and owns the property, and the loan is secured against that property, or against other property the company or its directors own.
Many landlords and developers buy through a special purpose vehicle (SPV): a limited company set up only to hold property. Lenders are very familiar with SPVs and many prefer them for investment lending.
Common uses
- Buying investment property quickly, including at auction
- Funding refurbishment before refinancing onto a limited company buy-to-let mortgage
- Buying commercial premises for the business
- Raising short-term capital for the business against property it owns
- Refinancing when an existing loan is ending
What lenders check
- The company: when it was set up, who owns it, its SIC code and its accounts if it trades
- The directors and shareholders: identity, experience, credit history and other assets
- The property and its value
- The exit: sale or refinance, and evidence it is achievable
A newly formed SPV with no trading history is not usually a problem, because lenders focus on the people behind it and the property.
Personal guarantees
Most lenders ask directors to give a personal guarantee. If the company cannot repay, the lender can pursue you personally for the shortfall. Some lenders also want independent legal advice on the guarantee before completion. Take this seriously: a guarantee can put your personal assets at risk even though the company is the borrower.
Regulation
Bridging loans to limited companies are generally unregulated, because the borrower is a company rather than an individual. If a director or their family will live in the property, tell your broker, because that changes how the loan has to be arranged. See regulated vs unregulated bridging loans.
Costs and exits
Costs follow the usual pattern: monthly interest plus arrangement, valuation and legal fees, with extra legal work for the guarantee. The usual exits are a limited company buy-to-let mortgage, a commercial mortgage, or a sale. Tax treatment of company property and interest is a matter for your accountant.
Frequently asked questions
Can a new limited company get a bridging loan?
Yes. Lenders regularly lend to newly formed SPVs, looking mainly at the directors and the property.
Will I have to give a personal guarantee?
Most lenders ask directors to give one. It means you can be personally liable if the company cannot repay.
Are limited company bridging loans regulated?
Generally no, because the borrower is a company. Tell your broker if anyone connected will live in the property.
Can a trading company use a bridging loan for business purposes?
Yes. Bridging loans secured on property can be used to raise capital for a business, subject to the lender's criteria.
What SIC code do property SPVs use?
Property investment SPVs commonly use SIC codes such as 68100 (buying and selling own real estate) or 68209 (letting and operating own or leased real estate). Check with your accountant.
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.