Commercial Bridging Finance

COMMERCIAL BRIDGING FINANCE

Need short-term financing to bridge the gap between buying or refinancing a commercial property and securing long-term funding? Our commercial bridging finance solutions offer flexible and efficient funding options to help you seize investment opportunities without delay.

What is Commercial Bridging Finance?

Commercial bridging finance, also known as bridge loans or bridging loans, is a short-term funding solution designed to provide interim financing for commercial property transactions. It allows borrowers to access capital quickly to purchase or refinance a property while awaiting longer-term financing or the sale of another asset.

Key Benefits of Commercial Bridging Finance

Speed and Flexibility: Commercial bridging finance offers rapid approval and funding, allowing you to act quickly on investment opportunities. Whether you’re purchasing commercial property at auction, renovating existing premises, or refinancing debt, bridging finance provides the flexibility you need to meet tight deadlines.
Bridge the Funding Gap: Bridging finance bridges the gap between the purchase or refinance of a commercial property and the availability of long-term financing. It provides immediate access to capital, enabling you to proceed with your transaction without waiting for traditional lenders to approve your loan application.
Short-Term Solution: Bridging finance typically has a short-term repayment period, ranging from a few months to two years. This allows you to access funds quickly and repay the loan once longer-term financing becomes available, such as through a traditional commercial mortgage or property sale.
Multiple Property Types: Our commercial bridging finance solutions are suitable for a wide range of property types, including offices, retail spaces, industrial warehouses, and development projects. Whether you’re a property investor, developer, or business owner, we can tailor a bridging finance solution to meet your needs.

Who Can Benefit from Commercial Bridging Finance?

Commercial bridging finance isn’t a one-size-fits-all solution, but it can be a valuable tool for a range of businesses in Australia. Here are some examples of entities that can leverage its advantages:

Property developers: Bridging loans can help developers secure land or initiate construction projects while they arrange permanent financing through the sale of completed units.

Growing businesses: A temporary cash flow shortage shouldn’t hinder a company’s expansion plans. Commercial bridging finance can provide the capital needed to cover operational costs or expenses associated with growth initiatives.

Businesses in transition: Companies undergoing mergers, acquisitions, or significant asset sales can benefit from bridge loans to manage cash flow fluctuations during the transition period.

Common Uses and Eligibility for Commercial Bridging Finance

Understanding your specific business needs is crucial before exploring commercial bridging finance. This section delves into the various scenarios where a bridge loan can be a strategic financial solution and outlines the key factors lenders consider while evaluating loan applications.

Common Uses of Commercial Bridging Finance

Commercial bridging finance goes beyond simply facilitating property purchases while awaiting a sale. Here’s a broader look at its diverse applications:

Property transactions: Bridging loans are commonly used to finance the purchase of a new property (commercial & residential) before the sale of an existing one is finalised. This allows businesses to secure a desirable location or take advantage of a limited time offer without their current property sale hindering the purchase.

Business acquisitions: Financing the acquisition of another business can be a significant undertaking. A commercial bridging loan can provide the necessary capital to bridge the gap between the purchase agreement and the completion of traditional financing arrangements.

Cash flow management: Unexpected expenses or temporary dips in revenue can strain a business’s cash flow. A commercial bridging loan can act as a temporary buffer, ensuring smooth operation during these fluctuations.

Renovations and construction: Renovating or expanding existing facilities often requires upfront investment. Bridge financing can provide the capital needed to initiate these projects while long-term financing for the completed project is secured.

Tax liabilities: Managing tax obligations can be crucial for businesses. A commercial bridging loan can provide temporary funding to cover tax payments until other sources of income become available.

Eligibility Requirements for a Commercial Bridging Loan

Obtaining a commercial bridging loan involves meeting specific lender criteria. Here are some general factors lenders typically assess:

Minimum & maximum loan amounts: Most lenders have minimum and maximum loan amounts for commercial bridging finance. This is usually between $100,000 and $10,000,000.

Loan-to-value ratio (LVR): This ratio reflects the amount of the loan compared to the value of the collateral offered (typically property). Lenders typically have a maximum LVR they are willing to accept for bridging loans. This is usually up to 70% of the property value including the new loan amount.

Business financials and creditworthiness: A strong financial track record and a healthy credit score can significantly improve your chances of securing a commercial bridge loan. Lenders will evaluate your company’s profitability, debt-to-equity ratio, and overall financial health.

Collateral: Commercial bridging loans are typically secured loans, meaning the borrower offers an asset (property) as collateral to mitigate the lender’s risk. The type and value of the collateral will significantly impact the loan terms and approval process.

Exit strategy: A clear strategy on how the loan will be repaid is also required.

The Commercial Bridging Loan Application Process

Securing a commercial bridging loan involves a series of steps to ensure a smooth and efficient process. This section provides a clear roadmap to navigate the loan application journey.

Pre-Application Assessment

Before initiating the formal application process, it’s crucial to thoroughly assess your business needs. Clearly define the purpose of the loan, the desired amount, and your preferred repayment timeframe.

Evaluating your company’s financial health and ability to repay the loan is also essential.

Gathering Required Documents

If there is no residual debt, then typically, no income and expense documents are required to evaluate the serviceability of the loan. However, if the loan is to be repaid by refinancing the property, then income and expense documents are needed.

If refinancing is the exit strategy, then typically the following documents are required:

Identity documents (driver licence & passport)
Business tax returns for the past two years.
Recent business financial statements
Business plan (if applicable).
Personal tax returns & financial statements of guarantors
Payslips of guarantors (if applicable).

Comparing Lenders and Loan Options

Research and compare offerings from various commercial lenders in Australia. Factors to consider include interest rates, loan terms, processing timelines, and any specific eligibility criteria. It’s advisable to obtain quotes from several lenders to secure the most competitive terms for your situation.

Submitting Your Application and Supporting Documents

Once you’ve chosen a preferred lender, formally submit your application along with all the required documentation. Ensure all information provided is accurate and up to date to expedite the processing of your application.

Loan Approval Process and Negotiation

The lender will review your application and supporting documents to assess your eligibility and risk profile. During this stage, you may be contacted by the lender for further information or clarification. Negotiating terms such as interest rates and loan repayment structures may also occur at this stage.

Settlement and Receiving Funds

Upon successful loan approval, a formal loan agreement outlining the terms and conditions will be presented for your signature. Once all legalities are finalised, the loan funds will be disbursed as per the agreed-upon terms.

Key Considerations for Commercial Bridging Finance

Understanding the financial implications and selecting a reputable lender are crucial aspects of securing a commercial bridging loan. This section delves into repayment terms, interest rates, and key factors to consider when choosing a lender.

Repayment Terms and Interest Rates

Commercial bridging finance is a short-term solution, with loan terms typically ranging from 3 to 24 months. It’s important to remember that bridge loans generally come with higher interest rates compared to traditional long-term loans due to the inherent short-term nature and associated risk for the lender.

However, the swift access to funds and the ability to bridge temporary cash flow gaps can outweigh the higher interest costs in specific situations.

Developing a Clear Exit Strategy

A crucial element of utilising commercial bridging finance is having a well-defined exit strategy. This strategy outlines how you plan to repay the loan within the agreed-upon timeframe. Common exit strategies include:

Sale of an asset: For property purchases, the sale of the existing property before the bridge loan term ends is a typical exit strategy.

Refinancing: Securing a long-term loan to replace the bridge loan upon completion of your project or business goal is another common approach.

Business growth: For businesses experiencing temporary cash flow issues, a well-defined plan to achieve sustainable profitability and generate the necessary funds for loan repayment is essential.

Choosing the Right Commercial Bridging Finance Lender

Selecting the right lender for your commercial bridging needs is vital. Here are some key factors to consider when evaluating potential lenders:

Eligibility criteria: Ensure the lender’s eligibility requirements align with your business profile and the purpose of your loan request.

Reputation and experience: Opt for reputable lenders with a proven track record in commercial finance, particularly those experienced in providing bridge loans.

Loan terms and interest rates: Compare the interest rates, fees, and overall loan terms offered by different lenders. Ensure you understand all associated costs before making a decision.

Customer service and processing speed: Consider the lender’s responsiveness to inquiries, the ease of their application process, and their processing timelines for loan approvals.

Apply for Commercial Bridging Finance with Assured Loan

At Assured Loan, we understand that securing the right commercial bridging finance is a crucial step in your investment journey. We are a team of experienced and qualified finance & mortgage brokers dedicated to helping individuals and businesses navigate the complexities of commercial bridging finance.

Here’s what sets us apart:

Licensed and accredited: We are a licensed finance & mortgage brokerage firm, adhering to the highest ethical and professional standards. Our team members hold relevant licenses and certifications, ensuring you receive expert advice and guidance throughout the loan application process.

Extensive experience: We possess a wealth of experience in commercial bridging finance, having successfully assisted numerous clients in securing financing for their short-term lending needs.

Dedicated team: We are committed to providing you with personalised support and clear communication throughout the process.

We encourage you to schedule a free consultation with one of our experienced commercial mortgage brokers to discuss your commercial bridging finance goals and explore your loan options.

Call Assured Loan on 0430 451 901 or click the button below to send us an email.

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FAQs on Commercial Bridging Finance

Commercial bridging finance can be a powerful tool for businesses, but navigating the specifics can be daunting. This FAQ section is designed to answer your most pressing questions and provide clarity.

Whether you’re considering a bridge loan for a property purchase or need to bridge a temporary cash flow gap, explore these FAQs to gain valuable insights and determine if commercial bridging finance is the right fit for your business goals.