Commercial Bridging Loans: Complete Guide 2025

Commercial bridging loans are short-term finance solutions secured against commercial properties, typically completing within 7-14 days and offering loan amounts from £100,000 to £25 million. Commercial bridging finance is essential for time-sensitive business property transactions, including property purchases, refinancing, development projects, and business expansion. Rates typically range from 0.75% to 1.2% per month, with loan-to-value ratios up to 70-75% for standard commercial properties. Unlike residential bridging loans, commercial bridging finance focuses on business property needs and may include additional considerations like business plans, trading history, and commercial property valuations.

What Are Commercial Bridging Loans?

Commercial bridging loans provide short-term finance for business property transactions, bridging the gap until long-term finance is arranged or business circumstances change. These loans are secured against commercial properties including offices, retail units, warehouses, industrial units, and mixed-use properties. Commercial bridging finance offers the speed and flexibility essential for business opportunities that require quick action.

Uses for Commercial Bridging Loans

Property Purchase

Commercial bridging loans enable businesses to purchase properties quickly, securing opportunities before competitors. This is particularly valuable in competitive markets or when time-sensitive deals arise.

Refinancing

Businesses use commercial bridging loans to refinance existing commercial mortgages, often to secure better rates, release equity, or consolidate debt. Bridging finance provides flexibility during refinancing processes.

Development Projects

For commercial property development or refurbishment, commercial bridging loans provide flexible finance with staged funding releases. This enables businesses to start projects immediately without waiting for traditional development finance.

Business Expansion

Commercial bridging finance supports business expansion by providing quick access to capital for property purchases, whether for new premises, additional locations, or portfolio growth.

Commercial Bridging Loan Rates

Commercial bridging loan rates typically range from 0.75% to 1.2% per month, higher than residential rates due to increased risk. Rates depend on:

• Property type: Standard commercial properties achieve better rates than specialized or high-risk properties
• Loan-to-value: Lower LTV ratios secure better rates (60-70% LTV typically achieves best rates)
• Property location: Prime locations like London may achieve slightly better rates
• Business strength: Established businesses with strong trading history may secure better terms
• Exit strategy: Clear, realistic exit strategies improve rates

Commercial Bridging Loan Requirements

Property Requirements

Commercial bridging lenders accept various property types:

• Offices and business premises
• Retail units and shops
• Warehouses and industrial units
• Mixed-use properties
• Development sites

Business Requirements

• Business structure: Limited companies, partnerships, or sole traders
• Trading history: Some lenders require minimum trading periods (typically 12-24 months)
• Business accounts: Last 2-3 years of accounts may be required
• Business plan: For development or expansion projects

Loan Amounts

Commercial bridging loans typically range from £100,000 to £25 million, with most lenders offering maximums of £5-10 million. Specialist lenders may offer higher maximums for strong applications.

Loan-to-Value Ratios

Maximum LTV ratios for commercial properties are typically 70-75%, lower than residential (75-80%) due to higher risk. Lower LTVs secure better rates and terms.

Commercial vs Residential Bridging Loans

Key Differences

• Rates: Commercial rates are typically higher (0.75-1.2% vs 0.45-1.0% for residential)
• LTV limits: Commercial LTVs are typically lower (70-75% vs 75-80% for residential)
• Valuation: Commercial properties require specialized valuations
• Documentation: Business accounts and trading history may be required
• Exit strategy: Business-related exit strategies (sale, refinance, business growth)

How to Secure Commercial Bridging Finance

1. Prepare Business Documentation

Have business accounts, trading history, and business plans ready. Lenders may request additional business information depending on your situation.

2. Choose Suitable Lenders

Not all bridging lenders offer commercial finance. Work with lenders specializing in commercial bridging loans or brokers who understand commercial requirements.

3. Provide Clear Exit Strategy

Commercial lenders require realistic exit strategies, whether property sale, refinancing, or business growth. Clear plans improve approval chances and terms.

4. Consider Property Type

Standard commercial properties (offices, retail) achieve better terms than specialized properties. Property type significantly affects rates and LTV limits.

5. Work with Commercial Specialists

Commercial bridging finance requires different expertise than residential. Work with brokers or lenders specializing in commercial property finance for best results.

Regional Considerations

Commercial property markets vary significantly by location. Properties in major business centers like London, Manchester, and Birmingham typically achieve better terms due to stronger property markets and lower perceived risk.

Prime Location Benefits

Commercial properties in prime business locations achieve better terms due to:

• Stronger rental demand: Prime locations attract tenants more easily
• Higher property values: More stable and predictable valuations
• Faster sale potential: Properties sell more quickly in prime locations
• Lower perceived risk: Established markets reduce lender risk

Commercial Bridging Loan Application Process

Step 1: Initial Assessment

Lenders assess commercial bridging loan applications based on:

• Property type and location
• Loan amount and LTV ratio
• Business structure and trading history
• Exit strategy clarity
• Property condition and potential

Step 2: Documentation Submission

Commercial applications require:

• Business accounts (last 2-3 years)
• Company registration documents (if applicable)
• Property details and valuation
• Business plan (for development/expansion)
• Exit strategy evidence
• Director/owner information

Step 3: Valuation and Assessment

Commercial property valuations are more complex than residential:

• Income-based valuations for let properties
• Market value assessments
• Condition and potential assessments
• Location and market analysis

Step 4: Decision and Completion

Commercial bridging loans typically complete within 7-14 days, with decisions possible in 24-48 hours for straightforward cases. The process may take longer for complex properties or larger loans.

Commercial Property Types and Rates

Office Properties

Office properties typically achieve competitive rates (0.75-1.0% monthly) due to stable demand and predictable valuations. Prime office locations in business districts achieve the best rates.

Retail Properties

Retail properties may command slightly higher rates (0.8-1.1% monthly) due to changing retail landscape. High street locations in prime areas achieve better terms than secondary locations.

Industrial/Warehouse Properties

Industrial and warehouse properties typically achieve rates of 0.75-1.0% monthly. Well-located properties with good access and modern facilities achieve the best terms.

Mixed-Use Properties

Mixed-use properties (combining commercial and residential) may achieve rates between residential and commercial rates, typically 0.65-0.95% monthly depending on the mix and location.

Business Considerations for Commercial Bridging Loans

Business Structure Impact

Different business structures have different requirements:

• Limited companies: Require company accounts and director guarantees
• Partnerships: Require partnership agreements and partner information
• Sole traders: Simpler requirements but may face higher rates

Trading History Requirements

Some lenders require minimum trading periods (typically 12-24 months) for commercial bridging loans. Established businesses with strong trading history achieve better terms than new businesses.

Business Plan Requirements

For development or expansion projects, lenders may require detailed business plans demonstrating:

• Project viability and timelines
• Cost estimates and funding requirements
• Market analysis and demand
• Exit strategy and repayment plans

Frequently Asked Questions

What are commercial bridging loans?

Commercial bridging loans are short-term finance solutions secured against commercial properties, typically completing within 7-14 days and offering flexible terms for business property transactions.

What property types qualify for commercial bridging loans?

Commercial bridging lenders accept offices, retail units, warehouses, industrial units, mixed-use properties, and development sites. Property type affects rates and LTV limits.

What rates do commercial bridging loans charge?

Commercial bridging loan rates typically range from 0.75% to 1.2% per month, higher than residential rates due to increased risk. Rates depend on property type, LTV, location, and business strength.

What LTV ratios are available for commercial properties?

Maximum LTV ratios for commercial properties are typically 70-75%, lower than residential (75-80%) due to higher risk. Lower LTVs secure better rates.

Do I need business accounts for commercial bridging loans?

Some lenders require business accounts (last 2-3 years) and trading history, especially for larger loans or development projects. Requirements vary by lender and loan amount.

Can limited companies get commercial bridging loans?

Yes, commercial bridging loans are available to limited companies, partnerships, and sole traders. Business structure may affect documentation requirements.

How quickly can I get commercial bridging finance?

Commercial bridging loans typically complete within 7-14 days, with decisions possible in 24-48 hours for straightforward cases with complete documentation.

What's the difference between commercial and residential bridging loans?

Commercial bridging loans have higher rates, lower LTV limits, require business documentation, and focus on business property needs. Residential loans focus on personal property transactions.

Can I use commercial bridging loans for development projects?

Yes, commercial bridging loans can fund development projects, with staged funding releases available for larger projects. Development finance may be more suitable for longer-term projects.

What exit strategies are acceptable for commercial bridging loans?

Acceptable exit strategies include property sale, refinancing with commercial mortgage, business growth enabling repayment, or other business-related means. Clear, realistic strategies are essential.