Commercial Bridging Finance: A Guide From Catalyst Property Finance
What is commercial bridging finance?
A commercial bridge is a short-term loan which is secured against commercial property. They are non-regulated business loans.
Commercial bridging finance is designed to cover the cost of a specific business property project, such as a purchase, renovation, extension, expansion, or other improvements. It can also be used to raise funds for any legal purpose, most commonly to pay off business debt or add value to the company by investing in equipment or other resources.
This finance is short term and is repayable within the pre-agreed timeframe, typically between 1 and 24 months. A clear exit strategy must be in place when the loan is granted.
How can I get a commercial bridging loan?
A commercial bridging loan is usually provided by a specialist lender, such as Catalyst Property Finance. This type of finance can be arranged directly with the lender (apply here) or via an intermediary, such as a finance broker.
What is commercial bridging finance used for?
This type of finance is used to buy, refinance, capital raise against, or refurbish commercial property.
Here are some Catalyst examples:
- £1,550,000 to purchase retail units and ready them for let.
- £5,850,000 to purchase a hotel, extend the restaurant space, and refurbish some of the bedrooms.
- £7,300,000 for a property investor to refinance an existing loan against their office block and raise capital to pay off business debt/invest in upgraded equipment.
What types of property can commercial bridging finance be secured against?
Catalyst provides short-term finance for an extremely wide range of commercial property, including:
- Vacant property
- Care homes
- Health care centres
- Retail units
- Larger schemes
- and many more!
How much can I borrow?
Commercial Bridging Loans from Catalyst Property Finance range from £250,000 to £10,000,000.
At the time of writing this article, Catalyst provides finance up to 65% of 180 Day property value. So if the 180 day value of the commercial property is £1,000,000, the borrower can request finance up to £650,000. All loans are subject to a clear exit strategy and underwriting.
How quickly can I arrange commercial bridging finance?
One of the benefits of bridging finance is that it is quick to arrange.
You or your broker can submit your loan enquiry to Catalyst directly on the phone, by completing our loan application form or using our website form: https://catalystpf.co.uk/quickloan-enquiry/
Once we have received your enquiry, one of our New Business Team will personally respond within 2 working hours.
Depending on the information you have supplied, we will either provide you with Heads of Terms or we may call you in order to understand a little more about your project.
Once you are happy with the Heads of Terms (which details the term, rate, and fees) we will help you with your application requirements and obtain valuer quotes. The application pack is sent to our Credit Team and reviewed within 24 business hours.
Typically, bridging finance is arranged within 59 days. This can be quicker, for example if you are able to provide all the information upfront and if you have a solicitor who is well-versed in bridging finance. We will work towards your deadline with the utmost urgency.
If you are buying a commercial property at auction, we will work towards the required auction payment date.
How do I receive commercial bridging finance?
Depending on the project, your loan will be transferred in its entirety to your solicitor on the day of loan completion. If you are refurbishing your property, you will receive an initial day one loan, followed by drawdowns as the refurbishment work is completed. Our Servicing Team is on hand to talk you through the process and make sure you have the funds you need, when you need them.
How do borrowers ‘exit’ and repay their commercial bridge loan?
Borrowers exit their loan by repaying it back in full. Typically they repay using funds from the business, the sale of the property, or by refinancing to another loan type, such as a longer term commercial mortgage.
Occasionally, borrowers request to extend their commercial bridging loan. This is done at the discretion of the lender and may incur extension fees. Catalyst encourages borrowers to speak with their servicing team at the earliest opportunity if there is a chance that they may be unable to exit their loan at the end of the pre-agreed term.
Want to know more about commercial bridge loans or have an enquiry?
Our New Business team are experts in specialist property finance and have helped hundreds of property investors and developers. They can structure heads of terms quickly, so that you understand how much you can borrow and at what cost.
They are happy to answer any questions you may have, you can call them on 01202 112 900 or email email@example.com.