Time makes all the difference in business.
Whether it’s buying commercial property, funding urgent stock purchases, or managing cash flow gaps – quick access to finance often determines success. Yet traditional lenders can take months to approve funding, leaving many UK businesses watching opportunities slip away.
Business bridging loans fill this gap in the market.
These fast, flexible loans help companies access capital within days rather than months. While they carry higher costs, their speed and adaptability make them invaluable in the right situations.
What is a Business Bridging Loan?
A business bridging loan is a short-term secured loan specifically designed for commercial purposes.
In the UK market, these loans typically last from 3 to 24 months, with amounts ranging from £100,000 to £25 million. The loan is secured against property – either the asset you’re buying or another property you own.
Recent data shows that UK bridging loan books grew by 11.4% in 2023, with business purposes accounting for about 43% of all bridging finance. This growth reflects increasing recognition of bridging loans as a practical solution for time-sensitive business funding needs.
One key distinction from traditional business loans lies in the assessment criteria.
While banks scrutinise years of trading history and complex financial projections, bridging lenders focus primarily on two factors: the value of your security property and the credibility of your exit strategy.
How These Loans Work
Let’s look at a real example.
A London-based retailer recently spotted a prime high street location being sold at auction. The property needed renovation work, making it unsuitable for immediate traditional finance.
Using a £450,000 commercial bridging loan secured against the property at 70% loan-to-value (LTV), they completed the purchase within the required 28-day auction timeframe.
After completing renovations over three months, they refinanced onto a standard commercial mortgage – their exit strategy from the start. The higher cost of bridging finance was offset by securing the property below market value at auction.
Get access to expert brokers and specialist bridging lenders
Understanding Exit Strategies
Your exit strategy – how you’ll repay the loan – needs careful planning.
Recent market data shows that 72% of UK business bridging loans are repaid through refinancing to traditional lending, while 23% are repaid through property sale.
For refinancing exits, many bridging lenders now want to see at least an agreement in principle from your next lender. If selling property is your exit, you’ll need evidence of local market conditions and comparable sales.
Read more: What are some common exit strategies for bridging loans?
Security and Legal Framework
Most business bridging loans are secured with a first charge against commercial property. Second charge loans exist but usually carry higher rates.
The security property can be:
- Commercial Buildings: Retail, offices, industrial units
- Mixed-Use Properties: Often shops with flats above
- Land: With or without planning permission
- Investment Properties: Including portfolios
While business bridging loans fall outside FCA regulation, lenders must comply with UK financial regulations and anti-money laundering requirements. Many will follow FCA principles voluntarily and belong to the Association of Short Term Lenders (ASTL).
Read more: What Properties Can A Bridging Loan Be Secured Against?
Choosing Between Finance Options
While bridging loans solve specific funding challenges, they’re not always the best choice.
Here’s how they compare with alternatives:
- Commercial Mortgages: Lower rates but take 2-3 months to arrange
- Asset Finance: Good for equipment but not property purchase
- Invoice Finance: Helps with working capital but not capital purchases
- Business Loans: Cheaper but require strong trading history
The Application Process
Getting a business bridging loan involves several key stages.
Most UK lenders work exclusively through brokers, who help package applications properly and access the best rates.
Here’s what to expect:
Initial Assessment
Your broker will review your circumstances, focusing on the security property and exit strategy. They’ll want details about the loan purpose, timelines, and any potential complications. This stage often includes an Agreement in Principle within 24 hours.
Property Valuation
A surveyor will assess your security property, usually taking 3-5 days. For commercial property, they’ll consider both market value and potential forced sale value. The valuation helps determine your maximum loan amount and influences interest rates.
Legal Work
Solicitors handle the legal due diligence, including property searches and preparing loan documentation. You’ll need commercial property solicitors experienced with bridging finance – your broker can usually recommend several.
Fund Release
Once legal work completes, funds release quickly – often within hours. The whole process typically takes 7-14 days from application to completion, though complex cases may need longer.
Common Uses in Today’s Market
Recent market data shows expanding uses for business bridging loans beyond simple property purchase:
- Chain-Breaking: Securing new premises before selling existing ones
- Auction Purchases: Meeting 28-day completion deadlines
- Renovation Projects: Buying and improving unmortgageable properties
- Business Expansion: Quick access to growth capital
- Stock Purchase: Taking advantage of bulk buying opportunities
- Tax Bills: Managing unexpected HMRC demands
Next Steps
If you’re considering a business bridging loan, start by gathering basic information about your funding needs and security property. Speaking with an experienced broker helps understand your options without commitment.
Remember – while bridging loans cost more than traditional finance, their speed and flexibility can make them invaluable in the right situations. The key lies in using them strategically when their benefits outweigh their costs.
Need help exploring whether a business bridging loan suits your situation?
Our team of specialist brokers can assess your options and find the most appropriate solution. Contact us for a no-obligation discussion about your business funding needs.
Frequently Asked Questions
The minimum for our loans is £100,000.
No. While good credit helps, lenders focus more on your property’s value and exit strategy. Past credit issues can be acceptable if properly explained.
Most commercial property types work – offices, retail units, industrial buildings, warehouses, and even land. Some lenders also accept residential property.
Read more: What Properties Can A Bridging Loan Be Secured Against?
Yes. Using additional security can help achieve better rates or higher LTV. This is called ‘cross-collateralization’.
Read more: What is a cross collateral bridge?
Usually yes. Most lenders require personal guarantees from company directors, though some will consider other forms of additional security.
Common exits include property sale, refinancing to traditional lending, or incoming business funds. The key is providing clear evidence it will work.
