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How to apply for a Bridging Loan

Published on 27th June 2018 - Last update on 8th January 2019

Transferring your business to new premises can be tricky. As well as keeping the potential disruption to your operations and services to a minimum, you need to ensure you have enough capital to cover both the cost of the move in the first place, but also for any extras along the way. However, if you’re a property owner, you could apply for external funding in the form of a Bridging Loan. By applying for a Bridging Loan, you could be offered an agreement in as little as 48 hours, granting you access to a large lump sum. So if you’re considering moving to other premises or expanding your property portfolio, here’s what you need to be aware of when applying for a Bridging Loan, including:

  • How Bridging Loans are secured
  • Presenting an exit strategy
  • What checks lenders will make
  • If there are any upfront fees

How are Bridging Loans secured?

When applying for a Bridging Loan you will need to present collateral, usually in the form of residential or commercial property that you own outright. There are no restrictions on the type of property that you can put forward, so you’re free to use anything from HMOs, flats, warehouses and land to even your own home. Plus, you can present more than one property as security in order to increase your chances of getting accepted. However, because Bridging Loans are a secured business finance product, it’s imperative that you keep up with the repayment process. Failure to do so can result in the lender seizing control over any property or land being used to provide security.

Need access to capital for property? Apply for a Bridging Loan, or learn more about how your business could benefit!

Will I need to present an exit strategy?

Before offering your business a Bridging Loan, lenders will want to know how you intend to raise the necessary capital to repay it. Will the money come from the sale of a property you currently own? Are you going to acquire the cash by applying for another business finance product, such as a Commercial Mortgage? Or is the cash going to be generated in the aftermath of a key business project? However you intend to repay the loan, lenders will want to know in order to gain greater confidence in your business and point you towards the most suitable product. Plus, when applying for a Bridging Loan, you can choose between an Open Bridge and Closed Bridge:

  • Open Bridge: allows you to repay the loan as soon as you possess the necessary capital, usually within an agreed term that could extend up to 12 months. That said, lenders may specify a cut-off period expressing how long they’re prepared to wait for full repayment of the product. This form of Bridging Loan could prove useful when working with a business project that has no set completion date.
  • Closed Bridge: requires you to fully repay the loan by a specific date, but still within a 12 month period, or term. This can be useful if you’re selling property and have agreed on a completion date, for example.

Will lenders ask to review my credit profile?

Although many lenders tend not to put much focus on your credit profile when making a decision, they may still ask to review it nonetheless. That said, lenders will still carry out all necessary checks before offering you any potential agreement, which is where seeking advice from a business finance expert could prove invaluable. Doing so will enable lenders to assess your business’ current financial situation, performance and any existing debts. However, lenders can usually afford to take a more flexible approach since a Bridging Loan is secured, usually by property or land which often carries a high resale value.

Are there any upfront fees?

Although fees and any additional charges tend to vary from lender to lender, you may be asked to make some payments upfront. These can involve arrangement and legal fees. However, you also need to take into account other costs, such as administration and exit fees which may arise throughout the course of the agreement, before committing. As well as interest, you need to be fully aware of these fees in order to work out the total cost of finance and know whether you could gain a more favourable alternative.

Need access to a large lump sum, and fast?

Ensuring the success of your vision can be tiresome and frustrating, but if done right it can also be highly rewarding. The biggest obstacle that you need to overcome with any business project is raising sufficient capital and on time. However, with so many business finance products available, knowing which one to choose is no small task. But if you’re a property owner looking for a large lump sum, a Bridging Loan could give you up to 80%, or possibly more, of the funds you need in as little as 48 hours. So if you’re looking for cash support in order to achieve your goals, apply for Bridging Finance today, or find out more with Rangewell.


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David Harrison

David Harrison

Content writer
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