Commercial Bridging Loans: How Business Bridging Finance Works

Commercial bridging finance is a tool for timing problems. The underlying asset is usually financeable on long-term debt, but not within the deadline the deal imposes, or not in its current condition. Common uses include:

Business bridging finance is most useful where the cash flow pressure is temporary and the repayment source is identifiable. A company that needs money for three months while a property sale completes or a contract payment arrives is a good fit. A company that needs working capital indefinitely is not, because the bridge will fall due before the underlying problem is solved. In that case invoice finance, asset finance or a term loan are usually better commercial finance options.

In each case the questions a lender asks are the same: what is the property worth today, what will it be worth when you exit, and how certain is the route from one to the other.

Commercial bridging loans are structured in a few standard ways. Knowing which one fits your deal helps you compare offers like for like.

A closed bridging loan has a fixed repayment date tied to a known event, such as an exchanged sale or an agreed refinance. An open bridging loan has no fixed exit date within the term, only a clear plan, such as letting the building and then refinancing. Lenders are more flexible on pricing for closed bridges because the exit is more certain, but most commercial bridging loans are open, since letting and refinancing timelines are hard to fix in advance.

A first charge bridging loan is the only, or the senior, loan secured on the property. A second charge bridging loan sits behind an existing mortgage, which stays in place, and is repaid after it on a sale. A second charge is useful when a business wants to raise funds against premises that already carry a bank loan it does not want to disturb, but it needs the first lender's consent and costs more. Second charge lenders cap the combined borrowing, not just their own loan. Our guide to second charge bridging loans explains consent, ranking and pricing in detail.

A business bridging loan is a commercial bridging loan taken by a trading company rather than a property investor, usually secured on the company's own premises or on property owned by its directors. The lender still underwrites the property and the exit, but it will also look at the company's accounts, cash flow and existing borrowing, because a business bridging loan repaid from trading income or a refinance depends on the business staying healthy.

The single biggest factor in pricing and leverage for commercial bridging loans is the type of property. Mainstream bridging lenders are comfortable with conventional, readily re-lettable stock. As the asset becomes more specialist, or its value depends on a trading business, the number of lenders shrinks and the maximum LTV falls. The ranges below are indicative for well-presented cases at the time of writing and are not offers.

Compare that with residential bridging loans, where 70% to 75% gross LTV is common. The gap exists because business property takes longer to sell, has a thinner buyer pool and can lose value quickly when it is empty. Lenders protect themselves by lending less against it.

Loan size also matters. Smaller bridging loans, below roughly £150,000, can be harder to place on commercial security because the fixed costs of the valuation and legal work are high relative to the fee income. At the other end, larger loans go to lenders with dedicated commercial credit teams; our guide to large bridging finance covers how those deals are structured.

Most commercial bridging lenders quote a maximum gross LTV, which includes the arrangement fee and any retained interest. The day-one net advance you actually receive is lower. On a commercial bridging loan, a lender offering 70% gross might release 60% to 63% net once twelve months of interest and fees are deducted, so it is the net figure you should compare with your deposit. Where one property does not support enough borrowing, some lenders will take additional security over other property you or the business own.

At the time of writing (September 2026), with the Bank of England Bank Rate at 3.75%, indicative pricing for commercial bridging finance sits within the 0.55% to 1.5% per month range we see across the bridging market. Semi-commercial and well-let investment stock can price close to residential bridging. Vacant, secondary or specialist assets price towards the top of the range. Arrangement fees are typically 1% to 2% of the loan, and some lenders charge exit fees. On top, budget for a RICS valuation, which costs more than a residential one and scales with the size and complexity of the property, plus the lender's and your own legal fees. Our guides to bridging loan costs and bridging loan rates break these down.

Run your own numbers on the bridging loan calculator, and check the tax line on the stamp duty calculator.

In England and Northern Ireland, purchases of non-residential and genuinely mixed-use property pay SDLT at non-residential rates, which do not carry the 5% higher-rates surcharge that applies to additional residential property. The non-residential bands are 0% up to £150,000, 2% from £150,001 to £250,000 and 5% above £250,000. Scotland uses LBTT and Wales uses LTT, with their own rates. New leases can also attract SDLT on the rent. Our guide to stamp duty on commercial property covers the detail.

VAT is the other cost that catches buyers out. Where the seller has opted to tax the building, VAT is added to the price unless the sale qualifies as a transfer of a going concern. Most bridging lenders will not fund VAT within the main loan, or will only do so with a short VAT bridge repaid when HMRC refunds the VAT, so you may need to fund it from cash. SDLT is charged on the VAT-inclusive price. Take specialist tax advice before you exchange, and budget too for environmental searches on industrial property and any insurance the lender requires from completion.

Lending criteria for commercial bridging loans fall into three areas: what the property is worth on the lender's chosen basis, the quality of any leases, and the borrower's credit and financial position.

With residential property there is usually one number: open market value. With commercial property the RICS valuer can reach quite different figures depending on the basis instructed. Market value with vacant possession assumes the building is empty and available to an owner-occupier or a new landlord; it is the lender's fallback for vacant buildings and for any property whose tenants are weak or whose leases are short. Investment value (market value subject to the existing tenancies) capitalises the rent at a yield that reflects the tenant's covenant strength, the unexpired lease term and the location. A well-let industrial unit on a long lease can be worth materially more as an investment than with vacant possession; a poorly let building can be worth less.

Some lenders also cap the loan by reference to a restricted realisation value, typically a 90-day or 180-day figure, particularly on specialist assets. For pubs, hotels and care homes, valuers usually report both a value as a fully equipped operational entity, which depends on trading, and a lower vacant or bricks-and-mortar figure; bridging lenders tend to lend against the lower one. Our guide to commercial property valuation methods explains the investment, comparable and profits methods.

Commercial bridging lenders are asset-led, but they still look at the borrower. Expect questions about your experience with similar property, your assets and liabilities, and the credit history of the company and its directors. Adverse credit such as historic county court judgments or defaults does not rule out business bridging finance, but it narrows the lender pool and tends to reduce the LTV and raise the rate. Recent or unexplained arrears on other secured borrowing are harder to place. Disclose issues at the start: a specialist broker can then approach lenders whose criteria fit, rather than discovering the problem at credit committee.

Every bridging lender underwrites the exit first. With commercial bridging loans there are three realistic exits, and the lender will want evidence that yours is achievable within the term.

Refinance onto a commercial mortgage. The most common exit. For an investment property the term lender will look at rental income cover and lease quality; for an owner-occupied property it will look at the trading business's accounts, cash flow and ability to service the debt. Commercial mortgages take longer to arrange than residential mortgages, so allow several months within the term. Our commercial mortgages service and the commercial mortgage guide explain what term lenders need, and commercial buy-to-let mortgages covers investment lending specifically.

Sale. Selling the property, or part of it, repays the bridging loan. Commercial sales take longer than residential ones and are sensitive to the wider investment market, so lenders often want an agent's marketing report and a realistic timetable, with a margin for slippage.

Refinance after adding value. Where the business plan is to let vacant space, re-gear leases or complete light works, the exit is a refinance at a higher value. The lender will test both the value uplift and the timescale, and will usually want to see the leasing strategy or the works programme.

A large share of commercial bridging finance funds buildings that will not stay commercial. Former offices, shops and light industrial buildings are converted to flats, either with full planning permission or, in England, through permitted development routes such as Class MA (commercial, business and service uses to residential), which requires prior approval from the local planning authority.

Lenders fund these deals in two stages. The purchase bridge is sized against the current value in its existing use. Once consent is in place, the project either moves onto refurbishment finance for lighter works, or onto development finance for a heavier conversion, with the loan sized against the gross development value. Some lenders will offer a single facility covering purchase and works where consent is already granted, and our guide to moving from bridging to development finance covers the handover.

Buying a building before prior approval or planning permission is granted means bridging against the existing use value only, and accepting the planning risk yourself. Lenders will want a planning consultant's view on the likelihood of consent and a fallback exit if it is refused, usually a re-sale or letting in the current use. Our guide to permitted development rights finance explains how lenders treat PD schemes, and the commercial-to-residential calculator helps you test the numbers.

Commercial bridging finance solves specific problems well and is an expensive way to solve the wrong ones.

If your timeline is not genuinely urgent, a commercial mortgage arranged from the outset will almost always be cheaper. Our guide to alternatives to bridging loans compares the options.

Commercial bridging loans can complete quickly when the paperwork is ready, but the valuation and legal work usually take longer than on a residential bridge. A well-prepared application contains:

Most commercial bridging lenders take a first legal charge over the property and a personal guarantee from the directors. Our guide to personal guarantees explains what that commitment means.

A specialist broker earns their fee on commercial bridging by matching the property type, the exit and the borrower's credit profile to lenders whose criteria fit, before valuation costs are spent. Our founder, Matt Lenzie, has more than 25 years in property finance. If you have a commercial purchase, refinance or business bridging need in view, submit your deal or read more about our bridging loans service.