What are Commercial Bridging Loans?

Commercial bridging loans, or commercial bridging finance is designed to help borrowers who are looking to purchase or refinance a commercial investment property quickly.

This type of bridging finance product provides you with the time needed to arrange alternative longer-term finance; bridge a shortfall when a sale is delayed; obtain planning permission; undertake light refurbishments; and organise tenants. See how a bridging loan might look for you with our bridging loan calculator

Who Can Apply for Commercial Bridging Loans?

If you are the legal property owner, or will be once the property transaction is complete, you can apply for commercial property bridging finance.

The property needs to be in the UK and finance is accessible to both UK and Foreign Nationals. Borrowing is available to Individuals; Trading Ltd Companies; Special Purpose Vehicle (SPV); and Offshore Borrowing Vehicles.

How a Commercial Bridging Loan Can Help

Quick Commercial
Property Purchase

Property Investors, Landlords and Owner Occupiers are often under pressure to complete on a property purchase or refinance quickly. When there are such time pressures, using a short-term bridging loan is a quick and easy way to access funds.

Commercial Mortgage
Delays

Sometimes a Commercial Mortgage application can collapse at the last minute due to the commercial mortgage lender not being happy about the property or your personal circumstances. Or the commercial mortgage application is taking too long to agree, and you need to secure the property. Commercial property bridging finance will enable you to release funds quickly and complete on the purchase.

Auction
Purchase

Purchasing a property at auction and arranging a mortgage within the 28-day time frame for completion can be very difficult. Failure to complete the auction purchase within 28-days will result in the loss of your 10% deposit and other fees or costs that you have incurred. The property you are purchasing might not be mortgageable as the property requires significant refurbishment. In these circumstances bridging finance can be arranged and agreed ahead of the auction. Giving confidence that finance is available for the purchase.

Purchase And Refurbish
A Dilapidated Property

Many Property Investors like to purchase vacant commercial properties as they are for sale at attractive prices. With such properties it is often difficult to obtain a commercial property mortgage due to the condition of the property and the need for refurbishing. Bridging finance is ideal for such a purchase and in some cases additional funding over and above the LTV can be agreed to finance the refurbishment works. Once completed the property can be re-mortgaged with a long-term lender or sold and a profit made.

What Type Of Commercial Property Is Acceptable?

Subject to criteria, most types of property are acceptable for a commercial property bridging loan including…

  • Hotels
  • Guest Houses
  • Public Houses
  • Retail Units
  • Nursing and Care Homes
  • Restaurants
  • Cafes
  • Warehouses
  • Industrial units
  • Factories
  • HMO
auction business farming land refinancing residential

Commercial Bridging Loans Lenders and Rates 

There are a limited number of specialist lenders that are prepared to offer commercial bridging loans. A lender will normally only consider loans that are of a particular amount or over a certain period of time. This means that when you are looking for a commercial bridging loan you need to ensure the one you choose meets the specific needs of your project.

A commercial property bridging loan is unregulated which means they are not overseen by the Financial Conduct Authority. As such lenders are not required to undertake an affordability assessment, however in most cases they will do this to ensure they are not exposing themselves to too much risk.

Because of this there is more flexibility with a bridging loan for a commercial property as clients can tailor it to meet their specific needs. The rates for commercial bridging loans tend to be bespoke as they are based on the individual needs and circumstances of the particular client.

The Benefits of Commercial Bridging Loans

The main benefit of bridging finance is the speed at which funds can be made available to the borrower. A lending decision can be agreed within a couple of hours of us receiving the initial enquiry and funds made available within days. In a competitive and fast-moving property market this allows the borrower to act quickly and secure or refinance a property.

what are the benefits of a commercial bridging loan?

How to Get The Best Rate

There are a number of steps you can take to ensure you get the best rate for a bridging loan on a commercial property. We have listed some of the points below to ensure you are well informed prior to making your application.

  • If you are able to put down a large deposit then it will benefit you when it comes to deciding the rate you pay. A commercial bridging loan is normally available with a Loan to value of 75%. However if you are able to bring your LTV down to around 50% it is likely that you will be offered a significantly lower rate for your loan.
  • We would always advise working with a broker, such as the team here at Pyxis Capital, that have specialist knowledge of bridging loans. Bridging Finance Specialists like Pyxis will generally have good relationships with lenders allowing them to help you achieve the best possible rates.
  • Being able to offer some form of additional security will help you achieve the loan you want. A bridging loan can be secured on the property you intend to buy, however if you have another property in your portfolio that the loan could be secured against you are likely to get a much better rate.
Commercial Bridging Finance Basic Criteria
Loan To Value Up to 70%
Loans Available 1st & 2nd Charge
Loans Size £100,000 to £25,000,000
Terms 1 Month to 36 Months
Adverse Credit Acceptable
Rates From 0.45%

How Much Will A Commercial Bridging Loan Cost

As we alluded to earlier the cost of a commercial bridging loan will usually depend on your particular circumstances and the particular needs of the project you are undertaking. To give you some idea of what your repayments could look like you can use the bridging loan calculator below.

Commercial Property Bridging Loan Eligibility

There is no specific eligibility criteria laid down when it comes to commercial bridging loans. Lenders will take a number of factors into account when deciding whether or not to approve your application. Some of the main considerations when it comes to getting a bridging loan for a commercial property are:

Having a clear exit strategy is probably the most important factor when you are looking to get approval for a commercial bridging loan. If the exit strategy you are proposing involves the sale or mortgaging of the property concerned, lenders will take into account the likelihood of you being able to do that.

When assessing your application a lender may well look at the location of your property, fluidity of the current market or the level of refurbishment required before it becomes mortgageable.

Having a strong exit strategy will sometimes mean that having a good credit score is not always essential. Nevertheless your credit score could play a part in whether your application is approved or rejected when combined with other factors.

If you are a business or limited company making an application for a commercial property bridging loan you may be required to submit your accounts. This will allow lenders to make an assessment on profitability by looking at earnings before interest, tax and amortisation.

A lender will usually look at your track record in property development when deciding on your suitability for a bridging loan. If the project you are undertaking is particularly complex a lender may well want evidence of your ability to complete the project successfully by looking at work you have done in the past.

Commercial Bridging Mortgages

Commercial Bridging mortgages are agreements whereby the bridging loan is used to secure a commercial mortgage once the term of the loan comes to an end. The purpose of the bridging loan is to provide the borrower with the funding they require until they are eligible for a commercial mortgage.

Clients often choose this type of arrangement if they have a short term problem that prevents them qualifying for a business mortgage. For example you may be waiting for the funds from an investment, sale of a property or maybe you have a credit issue that will be resolved in the near future.

A commercial bridging loan gives you the opportunity to purchase the property you are looking at immediately, while giving you time to arrange a mortgage at a later date. The same lender could be used for your bridging loan and commercial mortgage, however you may choose to work with different lenders if that offers you more favourable rates.

Commercial mortgage bridging loan

Why Use Pyxis Capital For Your Commercial Bridging Loans?

The specialist nature of bridging finance means that it is imperative that you choose a broker who has wide ranging experience of working within this market. The Team here at Pyxis Capital have extensive knowledge of bridging finance as well as and take time to understand a client’s needs and requirements. Throughout our many years experience we have built good relationships with a large number of lenders leaving us ideally placed to negotiate the best deal for you.

When you use our services you will have a single point of contact from start to finish and will also be provided with direct contact details for one of our Company Directors. Most importantly you won’t be left with the worry of finding an Exit Strategy from your bridging finance facility. As this is something that will be researched on day one and if possible, agreed in principle with a long-term lender. So, if you are considering a commercial bridging loan contact the team here at Pyxis for a confidential discussion.