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Bridging Loans and Commercial Property Finance

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It has been estimated that about half of the commercial property sector is financed through borrowed funds at any one time. So if you are looking to finance your new commercial property purchase, with a business loan, commercial mortgage or short-term finance, you’re not alone.

In some ways, the qualifying criteria for securing property development finance for your commercial property is much the same as any other bank loan.

Of course, you need to have good credit and you will need to be able to offer a hefty deposit too. but independent of this are a few things you ought to know when considering using a loan to fund commercial property finance.

One of them will be assuming you have to jump through hoops to get access to your property finance too and you’d be right. Many business owners might well be considering the financial limitations of asking for £450,000 to buy the old chemical works next door.

Essential to your purchase is ensuring you have a clear strategy for ensuring a return on your investment. Whether you want to repurpose it as a car showroom, block of apartments, hotel, pop-up restaurant, or even for a new manufacturing line might prick the hairs on the back of any potential lender’s neck. A clear strategy on how you will repay back the loan amount will satisfy lenders. For more information on what include in a business loan or property finance application, download our loan application checklist.

Gaining a loan for property finance, no matter how difficult-looking that property might be all boils down to the same criteria as any other lending vehicle.

Two essential types of commercial property finance vehicles to consider are bridging loans and short-term finance:

Bridging Loan

A bridging loan is used for as a short-term loan that can be arranged in a relatively short space of time. Its biggest benefit is that it helps bridge the gap between sources of funding (like a refinance or sale of an asset).

There are many reasons to bridge, but if you are developing property it can be used as part of your financial strategy. Depending on your circumstances a bridging loan can be quick to arrange (often just a few days and rarely more than a few weeks!). Use it to:

  • Raise finance quickly
  • Purchase property
  • Finalise a development
  • Refurbish a property
  • Bridge your shortfall of funding between buying and selling
  • Raise a deposit for property purchase

Similar to other types of funding lenders will want to know the credit strength of the borrower and the strategy in place for repaying back the loan.

Short-Term Finance

This is often another name for bridging loan. If you are looking to purchase property either at auction or through a private seller than using a short-term finance solution helps raise money quickly and allows for a quick and smooth sale of property.

Short-term finance packages can be used to purchase a wide range of property both commercial and residential:

  • Residential – landlords will often buy property using short-term finance because buy-to-let mortgages take longer to arrange.
  • Commercial – this includes shops, pubs, restaurants industrial units etc., and short-term finance can be used whether you are looking to invest in or occupy that property.

Although low credit scores might have precluded you from getting a loan in the past, today’s lending environment is more open to subpar credit ratings. Alternative lending sites tend to base lending decisions on the financial realities of a business rather than the financial history of business owners.

If you want to know more about funding your commercial property we can explain all of your property finance options. Call us on 03330 069141 or request a callback.


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Bobby Turner

Marketing, SEO & Stats Lead Content Expert. 12 years working with B2B, e-commerce businesses. Bobby has written for numerous accounting, financial, hospitality, and fashion publications worldwide.

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