Commercial Bridging Loans

A commercial bridging loan is a short-term loan secured on a commercial property. You may be keen to look into a commercial bridging loan if you want to purchase a business premises, to purchase property as an investment or to finance business expenses.

Commercial bridging loans require a clear exit strategy to repay the loan. This might be from the sale of the property, money made by the business or refinancing to a longer-term of borrowing with a lower interest such as a commercial mortgage.

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When to use a commercial bridging loan

Cash flow problems

You may need a cash injection for your business. A bridging loan can bring much needed breathing space for a business with a temporary cash-flow issue. It can be used to cover debt and expenses to keep the business going. The bridging loan is secured against a commercial property. The loan is repaid before it expires according to the terms from the lender. It may be refinanced to another form of commercial borrowing such as a business loan or a commercial mortgage. Your Mesa Financial adviser can discuss these options with you. Many businesses offer credit to clients and the pipeline for receiving funds can vary. This is where short-term lending like commercial bridging loans can be the perfect solution.

Unexpected costs

Another reason you may be keen to look into a commercial bridging loan is to meet unexpected bills. No business can predict everything and even the best prepared business plans can be forced to change. Short-term borrowing using a commercial bridging loan can prevent the business from missing payments and potentially facing penalties. However your Mesa Financial adviser can also discuss invoice finance with you if your cash flow issues are a more frequent problem.

Purchase of a business premises using a commercial bridging loan.

Businesses can use a commercial bridging loan to purchase a new property for business premises or as an investment. The bridging loan can be repaid when the property is sold or refinanced using a commercial mortgage. Many lenders now offer longer term solutions for bridging loan borrowers, refinancing the deal themselves at the end of the agreed term. This can be a more time efficient solution for the client. Bridging loans are faster to complete than commercial mortgages so allows businesses to respond quickly.

Bridging Loans for Developers

For developers who are likely to struggle to meet the lending criteria for a commercial mortgage, a bridging loan can be the answer. A major renovation project may appear too high risk for a commercial mortgage lender because they will have criteria to meet with regards to the types and condition of the property as well as the maximum loan to value that they will accept. Many developers use a commercial bridging loan to fund their refurbishment work. Once the work is complete a commercial mortgage is more likely to be deemed appropriate by the lender and the developer can switch if they wish. The loan can also be repaid by selling or leasing the property.

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