What is a commercial bridging loan?

A commercial bridging loan, also known as a commercial bridge loan, is a type of short-term financing that is used to bridge the gap between the purchase of a new property and the sale of an existing one. This type of loan is often used by businesses and property investors to secure quick funding for a short period of time.

A commercial bridging loan is typically used when a business or property investor needs to purchase a new property, but has not yet sold their existing property. In this scenario, the bridging loan can provide the necessary funding to purchase the new property, with the expectation that the existing property will be sold within a short period of time, allowing the bridging loan to be repaid.

The terms of a commercial bridging loan can vary depending on the lender, but they typically range from a few months up to a year. The loan is secured against the property being purchased, and the lender will typically require a first or second charge on the property as collateral.

What are the benefits of a commercial bridging loan?

One of the key benefits of a commercial bridging loan is the speed at which it can be obtained. Unlike traditional loans from banks or other lenders, which can take several weeks or even months to be approved and funded, bridging loans can often be secured within a matter of days. This makes them an ideal option for businesses or property investors who need quick access to capital.

Another benefit of commercial bridging loans is that they are often more flexible than traditional loans. While traditional lenders may require extensive documentation and proof of income and creditworthiness, bridging lenders may be more willing to provide financing based on the value of the property being purchased. This can be particularly helpful for businesses or investors who may not have a strong credit history or who may be looking to purchase a property that is not eligible for traditional financing.

What are the risks of commercial bridging loans?

It is important to note that commercial bridging loans often come with higher interest rates and fees than traditional loans. This is due to the increased risk that lenders take on by providing short-term financing with less stringent credit requirements.

It is also important to consider how you will exit the loan when the term ends. The exit could be sale of the commercial property for example. It is likely that the lender will ask what your exit strategy will be when you are enquiring about the loan.

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Our flexible approach

Speed

We are proud to be a lender who can deliver loans at a fast approach, to consumers. We make this possible by carrying out our own legal checks, in house for loans under 100k, within hours. We can offer automated valuations, which are available to produce financial solutions in an instant.

Mercantile Trust regularly help their customers carry out renovations with heavy refurbishment loans, by providing finance fast.

No minimum income

At Mercantile Trust, we put our customers at the forefront of what we do.

We offer top slicing, where we can use your personal income when carrying out affordability calculations. If your rental income does not cover your mortgage repayments, we will top up the remaining amount that you cannot cover so you are able to get the loan you require.

No Exit Fees

We want you to be in control of your finance.
With no early repayment or exit fees, Mercantile Trust will strive to find a loan to meet your financial requirements.

How are commercial bridging loans useful?

Overall, commercial bridging loans can be a valuable financing option for businesses and property investors who need quick access to capital. However, it is important to carefully consider the costs and risks associated with this type of financing before making a decision. Working with a reputable lender who is experienced in providing bridging loans can help ensure that borrowers are able to secure the financing they need while minimising their risk.

Looking for a commercial bridging loan? Our sister companies could help. Call our freephone number above to find out more.

Our bridging loan criteria

We aim to help absolutely everyone, however there are certain criteria that must be met in order to make a successful application:

  • Unregulated bridging applications only
  • Rates from 0.99%
  • Up to 75% loan to value
  • Most property constructions accepted
  • No personal income requirement
  • No exit fees
  • Minimum property value £75k
  • Minimum advance £25k max £500k
  • Confirmation of exit required
  • Minimum of one buy to let or residential property required
  • Serviced and rolled interest available
  • No ERC (Early Repayment Charge)
  • First and second charge available