Bridging Loan
Many small businesses require funding to help them get off the ground or reach their full potential.
There are various financing solutions available to you, but the suitability of each will be determined by your company's needs and current circumstances.
A bridging loan for business is an alternative worth exploring if your needs are short-term. In this article, we'll go over all you need to know about bridging loans in the United Kingdom.
Many people search for a bridging loan as a way to help their business grow. Some people may not even know what a bridge loan is.
For many people running businesses and self-employed ventures in the UK today – and for those looking to buy property or move home - it is becoming more and more commonplace that financings such as certain loans and credit options are being sought.
Bridge loan options are amongst the most popular with fledgling start-ups, home movers and established companies alike, mainly because they offer a brilliant amount of flexibility and support to those companies in need of short-term financial assistance.
We will help you to find the best bridge loan opportunities for you in your local area – as your nearby expert in a wealth of commercial finance (https://www.comparebusinessloans.org.uk/commercial-mortgage/) and mortgaging concerns, our team are ready and waiting to help support you in finding that perfect loan for that short gap between getting credit and paying for certain services.
Setting up a business is never as easy as it may seem – and sometimes, you are going to need a little extra help in getting started.
For homeowners and investors, too, bridging finance is especially recommended – especially if you have a number of assets and are looking for a straightforward, hassle-free loan.
Who Are We?
We are a leading business loan and finance company that can offer bridging loans for businesses.
Whether you require a first-charge loan or a second-charge loan, our experts can offer you monthly interest rates that suit you.
Why Use Us?
When you get a bridging loan from us, a team of specialists with an excellent reputation will meet you. This is why we separate ourselves from our competitors within the industry.
What is the Cost of a Business Bridging Loan?
Like most forms of borrowing, a bridging loan cost varies and is determined by several criteria, including the loan's amount and the length of time it will be repaid. On the other hand, lender rates are often higher for different types of borrowing.
A typical monthly fee is from 0.5 to 1% of the loan amount. The arrangement, valuation, and other administrative fees may also be charged. It's also crucial to understand the many bridging loans available and how their interest rate fees are computed.
Interest Rates
Interest rates for bridge loans vary depending on your creditworthiness and the size of the loan, but they often range from 3.25% to 8.5% or 10.5%. Business bridge loans have a significantly higher interest rate, typically 15% to 24%.
The rate will either be a fixed rate or a variable rate. A fixed-rate will mean that the interest rate won't change through the term of the loan. A variable interest rate means that the monthly interest rate can change.
If you have bad credit and you are worried about interest rates, please make sure to contact our team. We can discuss affordable interest payments at a reasonable monthly interest rate.
Fees
-
Bridging lender arrangement fee
-
Exit fees
-
Broker fees
-
Valuation fees
-
Legal fees (such as the lender's legal fees)
-
Facility fee
To find out more about bridging loan fees and arrangement fees, please contact us today.
Loan Calculator
Use our brilliant bridging loan calculator to work out whether or not this type of loan is convenient and practical for you – after all, this type of finance should never be treated like a traditional loan or borrowing solution.
Things you need to factor into this type of finance include your ability to repay monthly payments, your existing assets, your credit score and your credit history.
You may be required, in some circumstances, to advise on certain assets to secure a loan amount – and we will always advise you in advance if this is ever going to be the case.
Use our calculator and you will never be in the dark!
What is a Bridging Loan for Business?
A business bridging loan is a commercial loan that allows you to borrow money for a shorter amount of time than you might with a traditional bank loan, however, at a higher interest rate.
Enterprises in need of short-term finance often use bridging loans to help bridge the financial gap. For example, you may have invested in stock or new property and need to bridge the gap between when your payment is due and when another source of money becomes available.
So, when wondering how bridging loans work, they serve as a 'bridge' to a more long-term funding source for a business, such as a loan or sales revenue. Bridging loans are typically easy to set up and maybe easier to arrange than other types of financing.
What can a Business Bridging Loan be used for?
A business bridging loan can be used for a variety of purposes.
However, because they are short-term loans that might be more expensive than other types of financing, they are typically utilized for large purchases like real estate.
A bridge loan could also be used to cover operating costs or pay for a substantial volume of inventory that will be sold to customers later.
Bridging Finance
Bridging finance is essentially set up to help people bridge the gap between purchases and it is commonly tailored to meet commercial needs.
Talk with our team if you feel this may apply to you – as we are always happy to help commercial customers in our region and the surrounding areas.
When looking into financial loan companies, it is important to make sure that they are registered in England and Wales with the Financial Conduct Authority (FCA).
So, what is good about these bridge loans?
-
Only over a short-term period.
-
Can help improve your credit profile.
-
Helps you purchase a property quickly.
-
Bridging finance can be secured quickly.
Bridging loan options will effectively allow you to purchase a property or premises with immediate effect without having all of the available credit available – though you will be expected to pay the money back which you access at a certain level of interest.
This type of loan can generally be recommended for property developers and those who are looking to make money from selling and buying – with rates leading up to around 18% annually.
How to use a Commercial Bridging Loan
A commercial bridging loan can be used for cash flow injection, covering all the costs, from staffing to buying commercial premises, and more.
Cash Flow Injection
A bridge loan can assist businesses in covering occasional but urgently needed expenses. This could be to cover a tax bill or pay for additional goods lines. A business property, such as a warehouse, barn, industrial unit, or office, is used as collateral for the bridging loan.
This is either repaid before the bridging loan expires or refinanced into a different type of business borrowing, such as a business loan or commercial mortgage.
Staffing Costs
Wage expenses rise due to zero-hour contracts, which allow businesses to respond to variations in demand.
Businesses that extend credit to their customers may discover that their cash flow is squeezed due to the need to pay their employees and the income received from their customers.
If this happens infrequently, a short-term loan, such as bridging, might enable a company to fulfil its variable salary obligations until it can reclaim these costs from its client.
Those who anticipate this happening regularly may want to investigate a longer-term solution, such as invoice financing.
New Commercial Premises
A company can use a commercial bridge loan to buy a new property for expansion or investment.
The bridging loan can be returned when the property is sold or refinanced with a commercial mortgage. Bridging loans are less time consuming to complete than commercial mortgages, allowing firms to respond more swiftly.
Renovating a Property
Property developers looking to buy a property that requires extensive repair, repurposing, or planning may find commercial mortgage lenders reluctant to offer them the funds they need.
This is because they will have precise underwriting criteria for the sorts and conditions of properties they would accept, as well as the maximum loan-to-value ratios they will cover. The redevelopment work can be funded with a bridging loan.
After this, the property's worth should have improved, assuming no market-wide changes in values. It will be more likely to meet the requirements of a commercial mortgage lender.
If the property developer plans to lease or sell the property after repaying the bridging loan, they can transfer to a commercial mortgage.
Commercial Bridging Finance
We offer commercial bridging finance locally. A bridging loan is a secured loan, and you may choose to add your monthly interest payments to the loan balance, which will then be paid off all at once at the end of the loan term.
If you would like to find out more, please send an enquiry to our team and we will be happy to help.
What are the Criteria?
-
Borrow up to 75% Loan to Value (or 100% with additional security).
-
Property in a poor state of repair considered.
-
Rates from 0.55% per month for semi-commercial
-
Loans from £25,000 with no maximum loan size.
-
Borrow from 1 month up to 24 months.
-
Any security considered.
-
Interest can be rolled into the loan.
-
Loans with no early repayment charges are available.
-
We will consider any exit route.
-
Refurbishment or conversion accepted.
-
Adverse credit accepted.
-
Loans are available throughout the UK.
Who is Eligible?
We can provide loans in the name of individuals, partnerships, limited liability companies, offshore businesses, trusts, and pension funds.
Loans to UK residents, ex-pats, and foreign nationals are all possible. In most cases, bad credit isn't a concern.
How Much Can I Borrow?
Our minimum bridge loan amount is £25,000, and we don't have a set maximum to fund almost any loan. The secured loans for commercial properties are typically offered up to 75% of the property's value.
Interest must be addressed while attempting to maximize borrowing. When you roll interest into a loan, it is usually subtracted immediately so that you will receive less money upfront than paid monthly.
The maximum bridge loan a borrower is eligible for is determined by the property type, location, the market for similar assets, and exit strategy. Specialist lenders want to limit their risk; therefore, they'll only provide the highest LTVs when it's safe to do so.
If selling your home is your exit strategy, the lender will want to know how much demand is for such homes and how soon they are expected to sell. If there's a chance you won't find a buyer within the loan's duration, you'll probably be offered a lower LTV.
If you're exiting with a refinance to a business mortgage, the lender will want to make sure your new secured loan is feasible. They'll look at the maximum loan amount on a business mortgage and won't lend more than that unless you can cover the difference.
Other Services We Offer
-
Commercial Mortgage - https://www.comparebusinessloans.org.uk/commercial-mortgage/
-
Second Charge Bridging Loans - https://www.comparebusinessloans.org.uk/second-charge/
FAQs
What Types of Business Bridging Loans do We Offer?
-
Closed bridge loan
-
Open bridge loan
-
First charge bridging loan
-
Second charge bridging loan
-
Debt bridge financing
-
Equity bridge financing
-
IPO bridging loans
How Long Does a Commercial Loan Last?
A bridging loan is a type of company loan intended to be used briefly. Bridging loans can run anywhere from one month to three years, but most lenders won't provide them for more than 12-18 months.
Do You Need a Deposit for a Bridging Loan?
A deposit is usually required when you apply for a bridging loan. This is a one-time payment made in full. The amount you'll need to put down as a deposit is determined by the amount you want to borrow, the value of the home you want to buy, and your lender's LTV.
Because the LTV possible on a bridging loan is 70% LTV or 75% LTV unregulated, you'll need a deposit of at least 20% to 25%.
The deposit is the portion of the property you own outright, while the LTV is the percentage of the property you borrow money to pay off with a bridging loan.
Pros and Cons of a Bridging Loan
The most significant benefit of a business bridging loan as a source of finance for your company is how quickly it can be set up. Because borrowers control repayment alternatives, bridge loans are frequently more flexible than other small business funding options.
However, bridging loans are usually more expensive than longer-term options, even though the increased competition is driving prices down. Bridging loans might also come with many hidden fees because they are unregulated.
Bridging Loan Comparison
We are a bridging loan comparison firm with a view on hundreds of different financing brands and the best bridge loan rates in UK borrowing right now – take advantage of our calculator, our search engine and our friendly staff to find yourself a bridging loan option that works for you.
We can also offer help with second-charge loan mortgages https://www.comparebusinessloans.org.uk/second-charge/ so please do not hesitate to get in touch.
Fill in our contact form today to compare bridging loans and how to make your property purchase easier.
What can be used as Security Against Business Bridging Loans?
When taking out a bridging loan in the UK, most businesses, like most individual borrowers, utilize property or land as security. However, this does not imply that you or your company must own property to obtain bridging financing.
As security, you can utilize equipment, the value of unpaid invoices, or even the equity in your company. However, the amount you can borrow is determined by the value of the security you utilize, which is why expensive assets such as real estate are preferred.
How Long does it Take to Get a Bridge Loan?
The length of time it takes for a bridge loan to be approved and funded depends on the lender and the type of property used to secure the loan.
While some traditional lenders will give bridging loans, most banks and credit unions prefer to provide long-term loans. A typical lender will take 30-45 days to approve your loan and fund it.
Compared to a conventional lender's regular schedule like a bank or credit union, a bridge loan from a hard money lender can be accepted and funded rapidly.
Traditional lenders have a lengthy approval process that includes multiple application forms, paperwork, and waiting periods.
Although hard money bridge loans can be funded faster than other types of financing, the process and schedule will differ depending on whether the property is for investment or personal use.
Bridging Loan Companies
Many companies offer closed bridging loans and open bridging loans locally. They can provide bridging finance with fixed or variable bridging loan interest rates.
We advise researching whether fixed or variable rates are best for you before going ahead and agreeing to monthly repayments.
A closed bridging loan will have a fixed repayment date, but an open bridging loan will have no fixed repayment date.
Bridging loan companies and bridging loan lenders are nearby experts for many commercial and private investors – this type of financing is recommended for people who are in need of a considerable amount of money for a short term, or to bridge a gap (hence the name).
Speak to our experts today for a quote
This type of loan may not apply to all circumstances, therefore, it is always worth consulting our experts to take a closer look at your needs before you make any firm decisions.
Bridging loans are a great way for you to make that leap up the property ladder with a fair amount of money behind you – though you must also remember that you will need to have a strategy in place for paying such money off in the short term.
We will help you to consider all of the most important points before you sign on the dotted line!
Finance Brokers Near Me
We're a finance brokers company and we can help you compare bridging loans and bridging loan rates. Please get in touch today if you're interested.
Commercial Bridging Loans
Commercial bridging loans are a great way for you to effectively move from one premise to another without having to wait for a sale to go through on your existing property.
They are also a great way for you to start moving ahead in investment and property development, as you will effectively be free to start managing the more advanced areas of your portfolio while you put down a confirmed amount of money for the premises you are bidding for.
For commercial and private ends, bridging loan options are recommended for a wide variety of reasons.
What is a Bridge Loan for Commercial Property?
A company can use a bridging loan to purchase a commercial property swiftly. This property might be used to run a business out of or used as an investment to sell or lease after refurbishment.
Commercial bridging loans can be used to purchase a variety of commercial properties, including:
-
Public houses
-
Industrial units
-
Petrol stations
-
Retail units
-
Offices
-
Garages
-
Warehouses
-
Care homes
-
Farms and agricultural buildings
-
Schools
-
Doctors and dentists
-
Hotels
Different bridging lenders will have different criteria for which properties they will consider.
Summary
As a company, our primary goal is to conclude bridging loan cases as quickly as possible, and our average throughput from offer acceptance to completion and pay-out is only a few days.
We are one of the most flexible and quick bridging loan providers in town. We have relatively few typical standards, yet our loan capacity is entirely responsible.
From the outset, we complete all paperwork and get to know all of our clients thoroughly, including providing a solid and robust bridging loan exit route.
We are the best company to provide commercial bridging loans and we can attend to your enquiries immediately if you are interested.
