As a business owner, you have likely considered the need for financial support to expand your business or address other financial obligations. While traditional loans are an option, they often come with a long wait, more back-and-forth, and less certainty about how much your business is eligible to receive. For that reason, more and more businesses are shifting towards commercial bridging loans to fund their business expenditures.
At Bridging Finance Solutions, we have provided commercial bridging financing to a number of businesses, giving them the working capital they need to fund expansion, cover cash-flow gaps, or serve as a temporary solution while long-term financing is secured.
In this guide, we will outline just some of the ways that commercial bridging loans can be used to support your business growth and explore various finance options available in the market.
What is Commercial Bridging Financing?
Commercial bridging finance is a short-term loan used by businesses to bridge temporary financial gaps and differs from residential bridging finance. Businesses could require finance for a number of reasons. For example, they may be looking to expand their current premises, renovate their existing base of operations, or simply have quick capital needs for property investment or development.
Bridging finance provides flexibility, making it an ideal solution for businesses that need quick funding for time-sensitive projects or to cover income delays, demonstrating that bridging loans can be beneficial beyond property acquisition. This type of business lending is particularly useful in competitive markets where immediate funding can make a significant difference.
Regardless of the business’s reasons, commercial bridging loans are a great option that provides the capital businesses need until a more long-term solution becomes available. At Bridging Finance Solutions, we can provide finance for semi-commercial properties (businesses that combine commercial space and residential quarters) and we have seen the funds provided used in a wide range of ways.
These include:
Buy Commercial Real Estate Fast
As every property investor knows, finding the right commercial property for your operations can be highly competitive, and when properties become available in the property market, it is important to act quickly or risk missing out on investment opportunities.
Because of flexible lending criteria and speed, bridging loans are a popular solution for businesses looking to purchase a commercial property, especially when they are waiting on the sale of their current base of operations. This type of secured lending can be particularly useful for property developers looking to capitalise on time-sensitive deals.
Although BFS do not provide bridging loans secured against purely commercial projects, we finance businesses that involve a mix of commercial and residential use, often referred to as mixed-use properties. Alternatively, residential property can be used as security. We understand the importance of making quick offers, especially if you want to acquire a property as rapidly as possible. Through the loans we’ve provided to our clients, we’ve observed how competitive this sector is and how crucial it is to act quickly in the commercial property market.
Renovate Your Business Premises
As your business grows, your premises may need to be expanded or updated to accommodate this growth or any new branding direction you choose to pursue. This is where property development finance can play a crucial role.
Renovation can be a lengthy process, and the timeline may lengthen if you are unable to fund every step. When you apply for a bridging loan, as part of your exit strategy, you outline to bridging lenders exactly when you will need money and how much you will need to complete the steps of your renovation. By choosing a commercial bridging loan for your business, you ensure you have the financing you need every step of the way, whether for office buildings, retail spaces, or industrial facilities.
Move to a Better Location
Location can play a huge role in the success of your business, and there have been plenty of businesses that have failed because, even though they have a good business model, the location that they have picked does not put them in front of their ideal clientele or simply doesn’t garner enough footfall.
Purchasing a property in a certain area can be costly, particularly if you’re waiting for your current property sale to complete. Additionally, you might require time and funds to renovate your new premises. Commercial bridging loans are ideal in this situation because they let you handle these tasks while waiting for long-term financing, such as a commercial mortgage. With a typical short repayment period of no more than a year, you can repay the loan swiftly without accruing long-term interest.
Cover Short-Term Cash Needs
There is a misconception that commercial bridging finance is only used for property transactions, and though that is the primary use of the loans, there is much more flexibility in terms of how the financing can be used that many are not aware of. Bridging loans can be a great solution for covering short-term cash needs that may arise for your business.
Bridging loans can be highly beneficial for these purchases because they provide quick access to necessary funds during periods of urgent financial need or timing gaps. For example, when funding a business takeover or merger, swift financing can enable the transaction to proceed without delays that might occur with traditional business credit facilities.
Similarly, if a business is facing temporary cash flow shortages, a bridging loan can provide immediate relief by covering operational expenses or payroll until revenue stabilises. It is not uncommon for businesses to use bridging loans to cover tax bills. This type of alternative finance can be crucial for maintaining business cash flow during challenging periods.
Commercial bridging loans are valuable when purchasing essential equipment or assets, as they can quickly fund acquisition costs, ensuring that the business does not miss opportunities due to delayed funding. Bridging loans offer flexibility, speed, and short-term financial support, making them an ideal solution for time-sensitive investments and operational needs.
Buy a Semi-Commercial Business
We at Bridging Finance Solutions have more experience providing commercial bridging loans for the purchase of semi-commercial businesses. Examples include buying a buy-to-let property or a shop with a flat above, which are typical examples of mixed-use properties.
Securing a semi-commercial business can come with high costs and often requires buyers to act quickly. Because commercial bridging loans provide rapid capital, you can act swiftly, making your proposition more appealing than other investors who may need to wait for slower, traditional mortgages. This can be particularly advantageous in property auctions where immediate funding is crucial.
Bridging lenders will assess the value of an asset/acquisition (which will serve as collateral for the loan), your business plan, and any potential rental income that could be achieved through the purchase of the business before agreeing to provide the finance to cover your immediate financial needs. The loan-to-value ratio is an important factor in determining the amount of funding you can secure.
Uncover the Power of Commercial Bridging Loans with Bridging Finance Solutions
Through this guide, we hope to have provided you with more information on how commercial bridging loans can be used as part of your property finance strategy. Commercial bridging finance is growing in popularity, with its flexibility and short-term nature well-suited to businesses that require fast cash and immediate funding.
Do you require quick funding for your semi-commercial business and want to work with trusted finance providers? You’re in the right place. Get in touch today to find out how we can help you with our range of finance products tailored for property investors and business owners.
Make it happen with BFS – your partner in bridging the funding gap and unlocking business opportunities.
