If you’re considering applying for bridging finance, it’s important to understand eligibility so that you know if your application is likely to be accepted.
Who is eligible for commercial bridging finance?
All lenders tend to have their own criteria for borrowers before an application can be accepted but there are some general eligibility criteria.
Individual, partnership or limited company
Over 18 years of age
Has a UK address
Has assets that the loan can be secured again
Purchasing or refurbishing commercial property
Has a clear exit plan- either plans to sell the property or refinance
Can you get a bridging loan with bad credit?
Since commercial bridging finance is secured against assets, credit history and proof of income is not as important as it would be with other types of finance.
What can a bridging loan be used for?
Bridging loans are typically used for fast, short-term funding on property acquisition. This could be a business purchase, landlord or small property development project but it is the circumstance that are more important than the buyer.
Fast property completion
With a bridging loan, funds can be made available much quicker than the time it takes to process a mortgage. This allows lenders to complete on fast property purchases with bridging finance designed to ‘bridge the gap’ until a long-term finance solution can be arranged.
Property refurbishment
Bridging loans can also be used for small property developments or refurbishment projects. It can be more difficult to get a mortgage if the property you’re purchasing doesn’t have a kitchen or bathroom, for example. There may be times when you need to cover refurbishment costs quickly in order to sell or let a property, in which case you may also be eligible for a bridging loan for initial costs and then refinance as a long-term solution.
Property chains
If you’re moving to a new premises, you can end up with a delay on your hands if you are yet to sell your property. This commonly happens with residential purchases and is known as a property chain but it can affect commercial property too. In these situations, bridging finance can also be used to allow you to transfer your mortgage to the new property.
Auction purchases
Auctions are another type of property purchase that require a quick completion so it’s important that you have the funds ready to go before you make that bid. Since it can take longer to arrange for long-term finance, a bridging loan can also be a good option here.
Short term commercial bridging facility
Commercial bridging finance allows you to access funds to cover essential costs such as tax to support your business if you’re selling a property and can’t yet access the funds or in a temporary cash flow shortfall. Bridge loans are also a suitable short-term option to help fund business needs such as stock replenishment, or cover marketing and advertising costs.
If you’re looking for more help and advice around riding finance, give the team at ASG a call on 01226 352752 or get in touch with us here.