Bridging Loans for Companies: Secure Short-Term Finance for Business Growth
When your company needs swift access to capital for property purchases, renovations, or business expansion, bridging loans can sometimes provide the solution.
These short-term loans can help companies seize opportunities quickly, aiming for faster approvals than traditional commercial term finance.
At Kerr & Watson, we can assist in finding the most suitable bridging loans for your business needs, should they be the correct solution, and guiding you through the application process.
What Are Bridging Loans for Companies?
A bridging loan is a short-term, secured loan designed to “bridge” the gap between immediate financial needs and longer-term funding solutions.
Commonly used by companies for commercial property transactions, bridging loans are secured against business assets such as property or land. It may be that later on, there is a cheaper way to raise finance, or you plan to sell an asset in the future, but for now, obtaining the funds in the first priority.
Typical Uses of Bridging Loans for Companies:
- Purchasing commercial property or land quickly (e.g., auction purchases)
- Refinancing existing debt or paying tax bills
- Funding business expansion or renovations
- Bridging cash flow gaps during property sales or business acquisitions
- Buying stock or machinery for business operations
Contact Kerr & Watson to explore how a bridging loan may suit your company’s needs, or explore other finance options.
Find out Your Options
How Do Bridging Loans for Companies Work?
A company can secure a bridging loan against a business asset, with loan terms typically ranging from 3 months to 2 years.
You can repay the loan through methods such as refinancing with a commercial mortgage, selling the secured asset, or using company profits, subject to the lender understanding your exit strategy and agreeing to it.
Key Features of Bridging Loans:
- Loan Amounts: From below £100,000 to £100 million plus, depending on the project
- Loan-to-Value (LTV): Sometimes up to 80% gross loan, against the value, depending on the situation.
- Repayment Terms: 3 months to 2 years, perhaps more for bespoke lending.
- Interest Options: Monthly, rolled-up, or retained, subject to criteria
- Security: Commercial property, land, or other business assets
At Kerr & Watson, we can help you secure favourable rates and flexible terms tailored to your company’s needs.
Types of Bridging Loans for Companies
Commercial Bridging Loans:
Used for purchasing or refinancing commercial properties such as offices, warehouses, or retail units, buying adjacent land etc.
Development Bridging Loans:
Ideal for funding property refurbishments, conversions, or development projects. For instance, you are a developer building a block of apartments, this may the solution until you can refinance them once built.
Auction Finance:
Enables fast property purchases with quick access to funds to meet auction deadlines.
Advantages of Bridging Loans for Companies
- Speed: Access funds quickly to meet tight deadlines, the main reason bridging finance is taken.
- Flexibility: Use for various business purposes, from property acquisition to stock purchase.
- High LTV: Potentially borrow up to 80% of the property’s value including fees and retained interest.
- Short-Term Solution: Sometimes useful for bridging cash flow gaps for the correct borrowers.
Costs Associated with Bridging Loans
- Interest Rates: At the time of writing, starting from approximately 0.6% per month but this will very much depend on the project, so ask for individual terms.
- Arrangement Fees: Typically 1-2% of the loan amount
- Valuation Fees: Depending on the property value
- Legal Fees: For conveyancing and loan agreements, the borrower usually covers the lender’s legal costs in addition to their own.
- Exit Fees: May apply for early repayments, ask for individual terms.
Who Can Apply for a Bridging Loan?
- Limited Companies: Use business assets as security with or without personal liability depending on the transaction / situation.
- Property Developers: Secure funding for land / property acquisitions or renovations.
- Investors: Bridge cash flow gaps while awaiting property sales or arranging loans for properties which do not meet criteria for a standard mortgage.
At Kerr & Watson, we guide you through the application process, aiming for fast approvals and competitive rates.
Why Choose Kerr & Watson for Your Company’s Bridging Loan?
- Expert Advice: Our experienced advisers help you understand your lending options.
- Access to Lenders: We source deals from the whole of the market.
- End-to-End Support: From application to approval, we handle the process for you keeping you informed along the way.
Conclusion
Bridging loans can be a useful tool for companies seeking short-term finance for commercial ventures, acquisitions, property developments, or purchases of property not yet fit for a standard mortgage.
With faster approvals and sometimes flexible terms, they are a valuable solution for businesses looking to capitalise on opportunities quickly.
At Kerr & Watson, we combine knowledge with personalised service to help you secure the right bridging loan for your business needs.
Contact Kerr & Watson today for commercial / bridging loan advice and let us help to find the best solution for your company’s financial goals.
